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Buying & Leasing a Car

So Cheap, Who Cares About Gas?

Fire-sale prices on SUVs make up for the pain at the pump.

Steve Musser, an Atlanta restaurant executive, wasn't planning to part with his 2001 SUV -- not when he and his wife pack three sons and two dogs, plus gear, into the SUV for frequent trips to a vacation home in Florida. But he couldn't resist incentives offered by Steve Rayman Chevrolet on a 2008 Suburban LTZ. "The sticker price was $53,800, and I paid $40,000," boasts Musser.

Deals abound on these hulking vehicles, which many view as gas-guzzling white elephants. Most experts say the markdowns will continue as automakers struggle with the slowest sales in a decade.

Manufacturers' incentives are flirting with record highs, says Jesse Toprak, of Edmunds.com. Add in dealership discounts and you could recently take an average $7,200 off the sticker price of a big SUV and $3,900 off a midsize model. But with gas at $4 a gallon, are even heavily discounted SUVs a bargain?

In many cases, the answer is yes. At the end of 2007, for instance, when gas was just over $3 a gallon, you'd have paid an average $33,053 for a 2008 Dodge Durango with a V8 engine, according to J.D. Power and Associates. You would have spent an average $2,424 in gas for a year (driving 12,000 miles). In June, the negotiated price for the same SUV was $30,749. That's enough of a price break to cover the $800 more a year you would spend on gas at slightly more than $4 a gallon for almost three years. (You can figure your own fuel costs at www.fueleconomy.gov.)

By Michael Ritter