Demand for Crossovers up - as SUV Sales Shrink along with High Gas Prices

[Ming]

U.S. auto market feels pinch of high gas prices
Sep 24, 2005
By Ben Klayman
http://in.today.reuters.com/



DETROIT (Reuters) - High U.S. gasoline prices have not yet dealt a death blow to demand for large sport-utility vehicles, but they are compelling some buyers to switch to smaller, more fuel-efficient cars and SUVs, industry executives and analysts said.

Many executives have long said buying habits would not change until gas hit $3 a gallon. However, with prices hovering near that point and expected to spike again after Hurricane Rita, SUV sales are down 7.3 percent this year.

"I don't view it as doomsday," Ford Motor Co. President and Chief Operating Officer Jim Padilla said at the Reuters Autos Summit this week. "Big SUVs are alive and well. All you have to do is go down to Texas and take a look."

Gasoline prices reached a high of $3.06 on Sept. 5 and were recently at $2.75, according to AAA.

"Every time gas prices go up another 20 cents, you know you see some people making a decision based on that," said Paul Taylor, chief economist for National Automobile Dealers Association.

General Motors Corp. in late August acknowledged it was worried about high gas prices, saying it was not expecting the same growth in the large SUV segment that the industry has seen in the past.

While SUV sales are down, demand this year for crossover vehicles that combine the cargo space and high seating of trucks with the smooth ride and better gas mileage of cars is up 20 percent, and large car sales are up 3 percent.

Some see that trend only picking up steam as Americans suffer from sticker shock at the gas pumps.



"The (large) SUV segment, I predict, will be 25 percent of what it once was in the next 24 months," said Peter DeLorenzo, publisher of the closely watched industry Web site autoextremist.com (http://www.autoextremist.com).

"People are going to abandon (large) SUVs in droves," he added. "We are a faddish nation, from hula hoops to pet rocks and absolutely (large) SUVs were fad and fashion."

Even worse, automakers, especially the U.S. Big 3, face large losses of $3,000 to $6,000 a vehicle as hundreds of thousands of large SUVs go on auction as their leases expire, DeLorenzo said. That could drastically force down prices in the used-car market and even affect what consumers pay for new models.

While Japanese automakers will probably benefit most from the changes in buying habits due to their ability to quickly switch output at plants to smaller vehicles, U.S. automakers have some smaller, fuel-efficient cars, including the Chevrolet HHR and Aveo and the Ford Fusion, he said.

Gas prices are already affecting how buyers think, however.

Michael Jackson, chief executive of car dealer AutoNation Inc., said fuel-efficiency now ranks among the top 10 attributes consumers weigh when buying a vehicle, up from about 16th six months ago.

"Right now a full-size SUV that gets ... 16 miles per gallon doesn't look very good," said David Cole, chairman of the Center for Automotive Research.

However, Auto Industry executives said gas would need to reach $6 a gallon to have the same psychological effect as the fuel shortages of the 1970s. They don't see the good times and high profits of big SUVs ending any time soon.

Full Article Here: http://in.today.reuters.com/news/new...archived=False

[chadbarb99]

Put diesels as an option in big SUV's, especially the Hummer H2 the Duramax would fit nicely

[plane]

Originally Posted by chadbarb99

Put diesels as an option in big SUV's, especially the Hummer H2 the Duramax would fit nicely

put diesels in Aveos and Cobalts too.
GM - Give us something compact that can compete on the basis of gas mileage.
Until you do that, you will be viewed as unfriendly toward the environment, no matter how far from the truth that might be.

[paul3230]

yeah, I think GM will do whatever it takes to keep people buying SUVs...I think they're going to stuff a diesel in the GMT-900's in two years. If they follow through, they can make a case for even better fuel economy

[56 Starchief]

Can we start making up news headlines that are positive? Like "Impala on path to outsell Camry, Accord"

[Mvortec24]

"Right now a full-size SUV that gets ... 16 miles per gallon doesn't look very good," said David Cole, chairman of the Center for Automotive Research.

wouldn't that be pretty good?

[Black Rabbit]

Actually the old Tahoes get 18, the new ones get 20.. they're not too far from crossovers and minivans now.

20 mpg is a psychological breakpoint that should stem the switch to their minivan based cousins... Besides.. who likes driving a minivan with four doors, even if it is still called a crossover, everyone knows what it really is.

[rsinsel]

Well I doubt the 07 Tahoe will yield 20+ MPG combined highway/city. With no change in the drivetrain and only the addition of DOD that would require a 20% boost at each end. I seriously doubt that the 07 Tahoe will ever get into 4 cylinder mode long enough to get a 20% percent boost in city milage. I think that they know now that they did not do enough or otherwise you would not see them hurrying to get a diesel in there. From what I have read on DOD the actual results come in at between 8 & 12 percent anyway. No, the Gm execs flopped here.

[tgagneguam]

Originally Posted by 56 Starchief

Can we start making up news headlines that are positive? Like "Impala on path to outsell Camry, Accord"

Well, even GM's not predicting that; 300,000 per annum is the goal for the new Impala.

But one could put something more positive like "GM plans 14 new crossovers in the near future." See, then you won't have to even go to the land of "make pretend" to write that. Assuming they're as well executed as the Centiemme, then GM doesn't have too much to worry about.

[MelvinJ]

Originally Posted by tgagneguam

Well, even GM's not predicting that; 300,000 per annum is the goal for the new Impala.

But one could put something more positive like "GM plans 14 new crossovers in the near future." See, then you won't have to even go to the land of "make pretend" to write that. Assuming they're as well executed as the Centiemme, then GM doesn't have too much to worry about.

Do you know if the 300,000 includes the Monte Carlo? That's always seemed like a fair way to compare since the Camry and Accord sales include the 2-doors.

[rsinsel]

Originally Posted by 56 Starchief

Can we start making up news headlines that are positive? Like "Impala on path to outsell Camry, Accord"

I do not think you would be making a thing up. I drove honda's for too long. I have had Impala's since 02 and 03. Even those cars exceeded what the honda could do. I have driven the new Imps and they are even better than those cars. 02 & 03. The toy and Honda people had better take notice...

[Ming]

This does not have to be a bad thing for GM. To assume that it is would be to buy in to the Media portrayal of GM as only making big truck-based SUVs. The bad news is that GM relies on these for so much of its profits - the good news is that, as tgagneguam pointed out, GM has a lot of "crossovers" on the way. Whether or not they will include significantly fuel efficient choices with 4-cylinder engines, BAS, and 6-speed transmissions (or not so much, like the CSV's) is up to GM.

I for one hope that GM's next crop of "crossovers" (on Lambda Lambda Lambda) are not big, gas drinking behemoths that ride on car-like frames but only get 3 or 4 more miles per gallon than a full-size GM SUV because GM aimed for a "bigger is better" philosophy, loaded them up to the gills with heavy equipment, all-wheel-drive, giant cushy seats and options galore, and tossed fuel economy out the window while doing it.

GM needs more vehicles like the HHR (in function, not looks), if you ask me. No need to surrender the fuel efficient wagon crossover segment to the Japanese and Euros. I still see plenty of 1980's A-body wagons on the road today, and think GM could sell more like them if it still offered them.

[Stéphane Dumas]

Originally Posted by paul3230

yeah, I think GM will do whatever it takes to keep people buying SUVs...I think they're going to stuff a diesel in the GMT-900's in two years. If they follow through, they can make a case for even better fuel economy

If they don't put diesel engines or flex-fuel system to allow E85 fuel (or even putting versions working with CNG/propane), GM will regret this move of keeping people buying SUV, looks like Chrysler might had read the writting in the wall when they arrived with the 300-Magnum-Charger and Ford to a latter extend with the 500 and Fusion.

Then Nissan and Toyota might follow the diesel path for their big Sequoia and Armada

[Tiger]

That article was as deep as a cupcake! A forecast at best.

No actual crossover numbers.

No actual large SUV numbers.

Pitiful filler.

[uujjj]

Whoa, $2.53/gal for plus? Where can I get some of that?