NEW YORK (CNN/Money) -
Gas prices have gone north of the $2 mark, and could head higher still. So, naturally, it's time for Americans to end their love affair with massive, gas-guzzling sport/utility vehicles, right?
| 
| |
|
|
|
|
|
 SUVs are backing up on dealer lots across the country, prompting automakers to offer rebates. CNNfn's Chris Huntington takes a look at incentives and rising gas prices.
|
Play video
(Real or Windows Media)
|
|
|
|
|
|
Not so fast. If you were thinking of buying a big SUV -- and don't care what environmentalists think of you -- there's not much reason to change your mind now.
Yes, the recent run-up in gas prices will hit your pocketbook. But at the same time that gas is rising, so are incentives on the biggest SUVs. In fact, the savings at the dealership should more than make up for the extra fuel costs, at least over the relatively short term.
Take the GMC Yukon XL, which gets about 15 miles to the gallon in combined city and highway driving, according to the Environmental Protection agency.
Driving 15,000 miles a year at $1.60 a gallon (the average as recently as February) would have meant annual fuel costs of about $1,600.
At $2 a gallon, the annual fuel cost would be $2,000, an added expense of $400.
But these days, General Motors is offering $5,000 in cash incentives on the Yukon XL, $2,000 more than it was offering in February.
If the equation were that simple, GM's generosity would cover your extra fuel costs for about five years.
There are some complications to keep in mind, however.
First, remember that rebates do come at a cost. Every dollar of that rebate acts like a pebble tied to the resale value of your car. The bigger the rebate, the faster the vehicle's resale value sinks.
But cars that have poor resale value for other reasons are most affected by rebates, said James Bell, director of sales for IntelliChoice, a company that tracks long-term ownership costs. The good news for SUV buyers is that those vehicles tend to hold their value well, said Bell. The GMC Yukon XL, for example, is rated among the best in its class for retained value.
"Your best move is to look at how particular vehicles are doing in the market," said Bell. You'll get the most out of a rebate with a vehicle that depreciates slowly and that you keep for a long time, he said.
If you want to use that rebate to offset your fuel costs, warns Bell, avoid pouring it back into expensive options, a common mistake.
Smart optioning can also save you money on those gasoline bills, he added. Passing on the 4-wheel-drive option or the bigger engine can save you money in your monthly payment and at the fuel pump.
In addition to rebates, you might be able to negotiate a better deal on the actual price of a big SUV than you could earlier this year, said Michael Chung, pricing market analyst for Edmunds.com.
For large SUVs, the so-called "days to turn" -- the number of days an average vehicle stays on a dealer's lot before it's sold -- has increased from 63 in February to 70 last month. That's also far higher than it was last year at this time.
That increase could mean auto dealers will be more willing to discount the price to clear out floor space, said Chung. That would be especially true, he said, with big vehicles like SUVs that just plain take up a lot of room.
Last week, Edmunds.com reported that its index of new vehicle prices, which charts prices controlled for similar options, found that large SUV prices were off 1.5 percent during the month of April.
|
