Many of us need more than just a few seats in our cars when we buy. And as a result, light trucks and SUVs are highly popular cars. But their popularity has been taking off, and it turns out there’s more to it than just our taste for hauling friends and family.
SUVs, light trucks and crossover have never been in danger of going extinct, but the last few months in particular stand out. Last month, sales of the market segment rose 4.6% and almost every automaker saw some sort of boost from selling light trucks. Even luxury automakers such as Porsche and Audi saw an increase in sales thanks to their SUV models. But what’s behind the boom?
There are two factors at play here, according to auto industry pundits. The first is one you’ve probably already guessed: Gas prices are relatively low and as a result, people are more likely to buy cars with lower gas mileage compared to other vehicles. It helps considerably that the bad old days of single-digit SUVs are a thing of the past; even the less fuel-efficient models are still getting more out of what you put in the tank. This is especially true of crossover SUVs, which are easily the most popular segment of this particular market.
The second is just as important: People can finance them. The overall financing boom, the increasingly tendency of lenders to issue longer loan terms, and the low interest rates that have been driving it means that people can borrow more and fit the payment into their budget more easily. As a result, they’re considering a wider variety of vehicles, like SUVs and crossovers, that just weren’t in the running for many consumers before.
It’s great for the auto industry, and auto lenders. But what about consumers? Should you be considering getting a light truck or a crossover?
Whether or not you buy a crossover or a SUV should depend on what you need, not what you can afford. The reasons they’re selling are also reasons you should think ahead before you buy.
Let’s start with gas prices. As we all know, those prices can go up and down in what feels like minutes, and in the long term, it’s likely to rise again as oil-producing nations settle disputes and as demand keeps rising. You can mitigate this somewhat, by buying a hybrid or by getting a car with strong gas mileage, but it’s a factor to keep in mind.
Similarly, if you don’t need the space, there’s no point in buying the car. Keep in mind that as gas prices rise, your monthly auto payment won’t drop to make room in your budget. And the longer you’re committed to an auto loan, the less your SUV’s trade-in value will be and the more likely you are to go “underwater”, or have a car that’s worth less than what you owe on it.
If you need the cargo space, or the seats to haul people, an SUV or a light truck is worth buying. Just get it because you’ll use it, not because you can afford it.