With gas prices up, time to buy an SUV?

Today's SUV deals, which include cash-back offers and special financing terms, have gotten fatter over the past several months as sales have continued to slide.

In April, automakers offered an average of $5,786 in discounts on midsize SUVs, according to the most recent data from Autodata, up from $4,909 a year earlier. On large SUVs, manufacturers offered an average of $4,829, up from $3,070.

Among the better deals are Ford's flagship SUVs, the Expedition and the Explorer. An Expedition with four-wheel drive has a sticker price of about $35,000, but in many areas, consumers can drive one off the lot for around $30,000 after discounts and negotiations. The all-wheel-drive Explorer with V-8 engine, meanwhile, lists for about $31,000, but can be had these days for under $25,000.

• Gas pain: Where does the money go?

GM, meanwhile, is offering $2,000 back or low financing rates on many of its SUVs. Chrysler and Toyota Motor are offering discounts on SUVs, too.

Great lease deals on SUVs are less common, though some can be found. Leasing an SUV could be a winner if resale values continue to decline sharply, because you get to hand the vehicle back to the manufacturer at the end of the lease.

Peter Tse, the 46-year-old director of international sales for the Grand Hyatt hotel in New York, chose to lease when he got rid of his Mercedes ML350 SUV. He originally considered trading it in for a more-efficient car.

But with a daughter heading to college this fall, he decided to lease a new BMW X5 instead, craving the extra packing space -- even though the X5 takes premium fuel and doesn't do better than about 18 mpg in combined city and highway driving.

Still, it's a bit better than the roughly 15 mpg on his 2003 Mercedes.

Tse's new BMW is a so-called crossover, or SUV built on a car frame, as opposed to a truck frame. Sales of these vehicles have been rising but are starting to plateau.

"We needed a car for the family," says Tse, who lives on Long Island and is paying a little more than $600 a month for 36 months. "We decided we had to have the space regardless of the gas mileage."

The allure of cheaper gas

Some manufacturers are dangling more-unconventional offers. Chrysler is offering customers a promotion that locks in gas prices at $2.99 a gallon for three years, usually instead of its financing and cash-back offers. (Some vehicles offer the gas program and $3,000 in cash rebates.) Consumers use a special card linked to their credit card to take advantage of the discount, for up to 12,000 miles a year. In general, this deal makes sense only if gas prices stay high for several years.

Still, people who crave an SUV but worry gas prices could shoot above $5 could take this promotion to sleep better at night.

Deals are even better for used vehicles. Average auction prices for used full-size SUVs in April plunged 17.5% from a year earlier to about $12,500, according to Manheim Consulting, which runs dealer auctions of used vehicles nationwide. In many cases, price tags on used SUVs are running as much as $6,000 below year-earlier amounts, dealers say.

The median age of Manheim's auctioned SUVs is about four years old, with about 80,000 miles on them. Some dealers say wholesale auction prices are lower than they've ever seen. When buying a used SUV from a dealer, "you should probably not be paying much above the wholesale value," says Tom Webb, Manheim's chief economist. He adds that dealers are "anxious" to sell before the vehicles depreciate further.

The plummeting resale values have put many consumers under water on SUV loans they signed a few years back, meaning they owe more than their vehicles are worth. Even so, recent energy price shocks have sent commuting SUV owners to trade in their vehicles for whatever they can get, dealers say. That's adding to the glut of SUVs and further depressing prices.

Big discounts are less prevalent among foreign-brand SUVs. Some, such as the 2008 Toyota Sequoia and 2008 Honda Pilot, carry cut-rate financing or cash-back offers, but not all. Similarly, deals on luxury SUVs are easier to find among domestic brands than foreign ones. On the used market, wholesale luxury SUV prices overall are off 10% from a year ago.

This article was reported and written by Mike Spector for The Wall Street Journal.

Bad mileage, good deals

Vehicle (2008 model)	Discount	Annual percentage rate on loan
Acura MDX	None	0.9% to 2.9%
Acura RDX	None	0.9% to 2.9%
BMW X5	None	2.90%
Cadillac Escalade	$2,000	5.9% to 7.9%
Chevrolet Suburban	$2,000	2.9% to 6.9%
Chevrolet Tahoe	$2,000	2.9% to 6.9%
Chevrolet TrailBlazer	$2,000	2.9% to 6.9%
Dodge Durango	$3,750 to $4,500	0.0% to 5.9%
Ford Expedition	$2,500 to $5,000	0.0% to 3.9%
Ford Explorer	$2,500 to $4,000	0.0% to 4.9%
GMC Yukon	$2,000	2.9% to 6.9%
Honda Pilot	None	0.9% to 2.9%
Hummer H2	$4,000	5.9% to 6.9%
Jeep Grand Cherokee	$2,500 to $5,500	0.0% to 5.9%
Nissan Pathfinder	$2,250 to $3,250	1.9% to 4.9%
Toyota Sequoia	$0 to $2,000	0.0%
Note: Deals may vary by region or vehicle style.
Source: Edmunds.com

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