Shocker: Gas-guzzling SUVs are today's best buys
By Terry Jackson • Bankrate.com

What's the best buy in the auto market these days? Try a gas-guzzling sport utility vehicle.

That's right -- those same fuel-thirsty SUVs that went from being the darlings of American drivers to the pariah at the pumps might just give you the best bang for your buck over the coming months.

Surprised?

True, consumers are still gagging on prices at the pumps, even with the recent drop in gasoline prices -- the national average is less than $2.40 a gallon for regular. And there's no doubt the bigger SUVs are true gas hogs.

But some analysts suggest that now is the time to scoop up a bargain by purchasing a used, late-model sport utility vehicle.

"If you are a contrarian, now is the time to buy an SUV,'' says Jack Nerad, executive market analyst at KelleyBlueBook.com, long the authority on used-car values.

"In terms of overall transportation costs, the prices of SUVs have fallen to the point that the savings match or outweigh whatever you may pay in added fuel costs.''

Here's the logic of it all:

A combination of several factors has created a glut of three- and four-year-old SUVs on the used-car market.

Some SUV owners, upset at spending $50 or more to fill the tank, have jettisoned their vehicles in favor of more fuel-efficient models.

"The wholesale market for SUVs has dropped considerably,'' says Javier Vazquez, a senior buyer for Carmax, who says there has been an increase in people coming to Carmax lots seeking to unload their SUVs.

Added to that was the new-car buying frenzy that accompanied this past summer's employee-pricing campaigns among U.S. manufacturers. That meant dealers took in an abnormal number of trade-ins, particularly SUVs.

The buzz about gas-sipping hybrids, combined with the temporary gas shortages caused by Hurricane Katrina in the Southeast, also had some owners eager to go from a Ford Explorer to a more-efficient Ford 500. Those factors added up to an approximate 20 percent drop in the value of SUVs.

But wait. Isn't all this an argument for NOT buying an SUV?

If there were an ongoing shortage of gasoline, then that would be true. But what's currently at work in the marketplace is simply a rise in prices caused in part by an increase in global demand.

"We see the gas supply remaining stable, and the recent jumps beyond $3 per gallon more as market spikes, rather than a trend,'' says Nerad.

So what's the math on driving a used SUV versus a more fuel-efficient sedan?

Suppose you're looking at a 2002 Ford Expedition XLT two-wheel-drive, with a 4.6-liter V8. It's rated by the federal government at 17 miles per gallon in a combination of city and highway driving.

Driving 15,000 miles a year, and paying $2.80 per gallon for regular -- the price point that analysts think may reappear by next summer -- it will cost about $2,400 in fuel, annually, to drive the Expedition; or $200 a month.