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While gas-guzzling SUVs are losing value these days, credit unions across the U.S. can get ready for an increase in demand for sedans and a surging class of autos called "cross-over utility vehicles," or CUVs.

Higher prices at the pump will also have some bearing on another aspect of credit union lending: loans on used SUVs, as the value of the collateral is expected to decline more sharply than it has in the past.

National Automobile Dealers Association (NADA) Chief Economist Paul Taylor told The Credit Union Journal that the decline in the value and attractiveness of sport utility vehicles (SUVs) due to the rising cost of gas means credit unions should be prepared to underwrite more loans for full-size sedans and CUVs. One large vehicle type is running counter to the trend: Taylor said full-size pick-up truck purchases are on the upswing as the business community is jumping onto a strong economy to make larger purchases.

"People have come to the realization that this economy is for real. It's on the used (SUV) market people are concerned about prices," Taylor said. "We think there's business support on pick ups, not SUVs."

Taylor said full-sized SUV prices obviously do tend to fall in wholesale price, but it takes approximately one month after a sharp rise in gas prices to see the decline. Taylor said the big increases will be in CUVs and family-sized sedans. Taylor said too many media outlets are lumping SUVs and CUVs together and are missing the strong trend in smaller, unibody CUVs that seem to be here to stay.

CUVs first appeared in 1999 with the introduction of the Lexus RX-300 and Toyota RAV 4 and are growing in popularity as the public has sought a small yet powerful vehicle that can carry the family, all their stuff and still look a little sporty on city streets, he said. Other popular models include the Ford Escape, Buick Rendezvous, Toytota Highlander and Honda CRV. Another trend is people opting to buy a four-cylinder versus six-cylinder engine, he said. Taylor said CUV growth since 2001 has been especially strong and is here to stay.

"Since then it's been double-digit growth," he said. "This year CUVs will outsell SUVs for the first time. They offer the 'configureable' space of an SUV without the bulk and size of SUVs in the city. It's on the used market that people are concerned about prices."

"The trend in that growth is multi-year and it should continue. CUVs should be a better long-term (purchase), because they should sell well regardless of gas prices."

Taylor said sedans are attractive for American families as the large cars can seat four or five adults, travel well on long trips and have improved their gas mileage over the years to the 21- to 27-miles per gallon range similar to the CUV class.

"It turns out to be a pretty smart choice with $3 a gallon gas," he said.

Taylor said he doesn't expect high gas prices will affect the summer vacation driving season, saying that Americans will still hit the road, perhaps offsetting higher fuel costs with fewer fast food stops or carpooling at home for the kids' soccer practice. Americans love their summer vacation on the road and will pay up to have it, he said.

Taylor said American families aren't in a "belt tightening" phase, but readjusting their finances and schedules as summer approaches.

Taylor added that the car market "isn't going to quit" with Detroit introducing new vehicle models that it expects to be profitable for a 10-year run.

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