SUV's popularity stalling?
Here's a news artical from the Detroit Free Press. I wonder what this will do to the 9-7?
Quote:
SUV popularity stalling, report says
U.S. automakers claim demand strong
August 13, 2004
BY SARAH A. WEBSTER, FREE PRESS BUSINESS WRITER
SUVs, which have been berated in recent years as rollover-prone gas hogs, are losing appeal as they stay on dealer lots longer and automakers are forced to drop prices and add incentives as high as $5,000 to move them, a respected automotive research firm said on Thursday.
Automakers scoffed at the report, pointing to higher sales this year compared with 2003, and predict no drop in consumer demand.
Demand for sport-utility vehicles, such as the Ford Expedition, Jeep Grand Cherokee and Chevrolet Suburban, is softening, the Power Information Network LLC said in a report that quickly became controversial in Detroit. The research firm is an affiliate of J.D. Power and Associates of Westlake Village, Calif., which is known for its consumer quality surveys and sells its research within the auto industry.
"What we're seeing here is three measures all showing the same theme, and that theme is a weakening in that sector," said Tom Libby, senior director of industry analysis at Power Information.
If the report's findings hold true, that could take a bite out of one of automaker's most profitable vehicle segments and one of the few in which domestic manufacturers have had an advantage over foreign competitors.
But automakers and SUV supporters don't agree with Power Information's contention that demand for SUVs is waning.
Even if SUV sales are slowing, they noted, sales of the vehicles are still up 7 percent for the year -- nearly three times the increase in the automotive market, which is up 2.4 percent for the year.
In fact, sales of SUVs have been growing for more than a decade, from about 900,000 a year in the early 1990s to about 4.5 million last year. And automakers don't see demand cresting yet.
"I'm just laughing," Paul Ballew, executive director of global market and industry analysis at General Motors Corp., said of the findings. "The fastest growing category is the sport-utility category. Car sales are still declining this year. ... We, who live with the data each and every day, do not see this happening."
George Pipas, the top sales analyst at Ford Motor Co., said he was "not at all" concerned about the report's findings and believes the segment will remain strong.
Still, there are some signs that SUVs, while still popular, are losing momentum.
Power Information Network reported that the number of days SUVs sit on dealer lots before being sold increased to 73 in July -- a 22-percent increase from a year ago. By comparison, cars and trucks sat on dealer lots an average of 71 days -- a 9-percent increase from a year ago.
Incentives on SUVs, meanwhile, grew 4.7 percent since last year to an average of $3,440, Power Information reported. Industrywide, though, incentives during the same period fell 3.9 percent, to about $2,867 per vehicle.
Consequently, the average SUV transaction price dropped 2 percent, or $620, in July from a year ago, while overall new-vehicle prices edged up slightly.
Both Ford and GM challenged those signs as an indication of demand, saying they may have simply overproduced SUVs in recent months, which would drive up inventories and the need for incentives.
While it seems that any consumer movement away from SUVs would be bad news for Detroit automakers, the companies have been preparing for years for a shift away from traditional SUVs, which were originally built on pickup truck platforms, to crossovers, or car-based vehicles that closely resemble SUVs.
"We've been waiting for it. We're planning for it. It's been part of our business plan for many years," Pipas said. "Crossovers will propel the growth of this entire segment over the decade."
Crossovers are expected to continue to gain in popularity because they offer some benefits beyond traditional SUVs, especially improved handling and a lower center of gravity that may reduce rollovers and therefore be safer for drivers and their passengers. There is also a gas mileage benefit, although it may be slight or even nonexistent, depending on the vehicles being compared.
In its fuel economy report, Consumer Reports magazine said that the Honda Pilot EX, a car-based SUV, offers the best gas mileage in the mid-sized SUV segment, getting 13 m.p.g. in the city and 27 m.p.g. on the highway. Meanwhile the truck-based Chevrolet Trailblazer EXT LT offers the lowest fuel economy, getting 9 m.p.g. in the city and 20 m.p.g. on the highway.
Most often, reports on SUVs combine both the traditional truck-based SUVs and the car-based crossovers, because they have similar body types, offer the same type of utility and are virtually indistinguishable in the eyes of most consumers.
When analysts separate those types of vehicles, though, a definite movement away from SUVs to crossovers can be seen.
During the second quarter of the year, sales of truck-based SUVs declined 4.4 percent, or 34,413 vehicles, to 744,647 units. No other type of truck posted a sales decline that large in the April-June period. Meanwhile, no other category posted a bigger gain than the crossover SUV group, which jumped 11.8 percent, or 46,702 vehicles, to 441,013 units.
Tallied together, that translated into a 1-percent overall gain for SUVs during the quarter -- in line with the overall market.
The Power Information data released on Thursday also lumps truck-based and car-based SUVs into the same category. Libby said that traditional SUVs fared worse than crossovers in the findings, although he would not release model-specific data.
He attributed the softening demand for SUVs to several factors, especially higher gas prices, which averaged $1.86 a gallon nationwide on Thursday, and on renewed focus on interesting new cars, such as the Chrysler 300.
However, other factors may also play a role, such as the SUV segment's often-questioned safety record and years of public relations battles that may have taken a toll on their image. SUVs have been under attack for years -- in books, controversial ads and news debate programs.
Indeed, Power Information Network's report came days after the National Highway Traffic Safety Administration released reports showing SUVs are more likely to roll over than cars or minivans and that more people died in SUVs on U.S. highways last year, even though deaths in every other type of vehicle declined.
Ron Defore, spokesman for the SUV Owners of America organization, said he thinks environmental groups, the media and others are eager to see the demise of the SUV, which has become a divisive symbol between liberals and conservatives at war over energy policies and regulations.
The SUV Owners organization often finds itself up against the Detroit Project, a nonprofit group founded by columnist Arianna Huffington that promotes fuel-efficient vehicles to reduce dependence on foreign oil. Its message is decidedly anti-SUV.
Defore insists that SUVs and large cars are the safest vehicles on the road. He said more people died in SUVs last year only because there were more of them on the road, and he pointed to data from the Insurance Institute for Highway Safety as showing the vehicles were the safest overall.
"They have the lowest fatality rate," Defore said. "Bigger is better."
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26-08-04, 04:41 PM
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