Detroit automakers get needed muscle from crossover sales
September 29, 2005
BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER
In the 1990s, sales of hot new SUVs propelled metro Detroit into a sort of economic paradise -- a Golden Era when workers took home thousands of dollars in bonuses and drove around in Ford Explorers, Jeep Grand Cherokees and Chevy Suburbans to load up on the spoils of their success.
But with gas prices topping $3 a gallon recently, and big sport-utility vehicles increasingly out of vogue, the outlook for Detroit has seemed bleak. Production cuts, layoffs and belt-tightening have been the order of the day.
But Ford Motor Co. and crosstown rivals General Motors Corp. and DaimlerChrysler AG have quietly been cornering a new segment of the auto market that may soon bring better days to Detroit.
Detroit is now king of the crossover -- controlling 47.6% of the market -- and local automakers are well-poised to dominate the fast-growing market in the next few years with new vehicles such as the new Chevy HHR, Lincoln Aviator and Jeep Compass.
Crossover utility vehicles, or CUVs as they are sometimes called, look like SUVs and offer the same kind of cargo space in the back. But while SUVs are built like big trucks, the architecture of a CUV is more like that of a smaller car. That helps make crossovers more fuel-efficient, ride more smoothly and easier to get in and out of than an SUV.
Crossover sales are up 42.3% at Ford, 31.3% at GM and 26.8% at DaimlerChrysler through August, compared with the same period a year ago, according to Autodata Corp., a research firm in Woodcliff Lake, N.J. No other Asian or European automakers are making such impressive gains.
"This could very well be the segment that saves them," Art Spinella, president of CNW Marketing Research in Bandon, Ore., said of the crossover market's significance to Detroit-area automakers.
Mike Maroone, president of AutoNation Inc., the largest chain of car dealerships in the country, with 352 new-vehicle franchises, agreed.
"I think the domestics have a very big opportunity here," he said. "It's the next battleground."
The Ford Escape is the most popular CUV on the market. That market also includes vehicles like the Honda CR-V, Toyota Highlander, Chevrolet Equinox and Chrysler PT Cruiser.
Most consumers can't tell the difference between an SUV and CUV, but they are increasingly attracted to the special package of crossover attributes. The improved fuel efficiency, in particular, may be accelerating the popularity of the crossover, Spinella said.
Dallas Strawska, 70, of Madison Heights traded in his Ford Explorer SUV for a Ford Freestyle CUV within the past year and said he likes the cargo space, smooth handling, easy access in and out of the vehicle, and fuel economy.
"You can step in and step out very easy," he said. "You can still dress up and go out in it. It's not like a truck-truck thing."
Marlene Neme, 62, of Warren bought a Mercury Mariner CUV because she said she needed a slightly larger vehicle than her Ford Focus to haul around the cosmetics she sells. But fuel economy was important to her, and an SUV was too large.
"I didn't want anything that big," she said. "I just wanted to graduate slightly."
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