- Jan 7, 2002
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High gasoline prices and changing consumer tastes have stalled sales of big sport utility vehicles, a critical source of profits for Detroit automakers since the early 1990s.
Despite the dropoff, General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group are forging ahead with a parade of all-new and redesigned SUVs.
Over the next 18 months and beyond, showrooms will get more crowded with Jeep's first seven-passenger SUV, new versions of the full-size Ford Expedition and Lincoln Navigator, and more than a dozen redesigned midsize and full-size SUVs from GM. Bleeding cash in North America, GM said it's pulling ahead the introduction of its redesigned Chevrolet Suburbans, GMC Yukons and Cadillac Escalades to early next year to help reverse its fortunes.
Can SUVs pull the U.S. auto industry out of the ditch one more time?
It's the billion-dollar question in Detroit and on Wall Street.
In the first quarter, demand for full-size SUVs dropped 21.5 percent from a year ago, according to Autodata.
The sharp decline caught Ford and other automakers by surprise. With more competition from Toyota Motor Corp. and Nissan Motor Co., Detroit automakers have been reluctantly forced to dramatically raise discounts on big SUVs.
"From a profitability side, it's going to be tough" with the new models, said analyst Art Spinella of CNW Market Research. "They're not going to make the $15,000 (per unit) they're used to making."
No turning back
Despite the cloudy outlook for SUV sales, there's no turning back now because the new models represent billions of dollars in product development costs.
"There's still a lot of money being made in SUVs," said Jim Hossack of AutoPacific, a California-based consulting firm.
Still, SUV demand is expected to drop to 2.2 million units this year, marking the third straight year of decline and the lowest total since 1996, according to WardsAuto.com. SUV sales peaked at 2.98 million units in 2000.
Analysts blame fuel prices and the emergence of crossover utility vehicles . While they seat as many people as big SUVs, they consume less fuel.
Sales of crossovers, such as the Ford Freestyle, Honda Pilot and Chrysler Pacifica, rose 15.5 percent in the first quarter, according to WardsAuto.com.
Hoping to break even
"What (automakers) are hoping is that they can at least break even on the (SUVs and crossovers)," Spinella said. "They won't come out ahead."
http://www.detnews.com/2005/autosinsider/0505/02/A01-168587.htm
Despite the dropoff, General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group are forging ahead with a parade of all-new and redesigned SUVs.
Over the next 18 months and beyond, showrooms will get more crowded with Jeep's first seven-passenger SUV, new versions of the full-size Ford Expedition and Lincoln Navigator, and more than a dozen redesigned midsize and full-size SUVs from GM. Bleeding cash in North America, GM said it's pulling ahead the introduction of its redesigned Chevrolet Suburbans, GMC Yukons and Cadillac Escalades to early next year to help reverse its fortunes.
Can SUVs pull the U.S. auto industry out of the ditch one more time?
It's the billion-dollar question in Detroit and on Wall Street.
In the first quarter, demand for full-size SUVs dropped 21.5 percent from a year ago, according to Autodata.
The sharp decline caught Ford and other automakers by surprise. With more competition from Toyota Motor Corp. and Nissan Motor Co., Detroit automakers have been reluctantly forced to dramatically raise discounts on big SUVs.
"From a profitability side, it's going to be tough" with the new models, said analyst Art Spinella of CNW Market Research. "They're not going to make the $15,000 (per unit) they're used to making."
No turning back
Despite the cloudy outlook for SUV sales, there's no turning back now because the new models represent billions of dollars in product development costs.
"There's still a lot of money being made in SUVs," said Jim Hossack of AutoPacific, a California-based consulting firm.
Still, SUV demand is expected to drop to 2.2 million units this year, marking the third straight year of decline and the lowest total since 1996, according to WardsAuto.com. SUV sales peaked at 2.98 million units in 2000.
Analysts blame fuel prices and the emergence of crossover utility vehicles . While they seat as many people as big SUVs, they consume less fuel.
Sales of crossovers, such as the Ford Freestyle, Honda Pilot and Chrysler Pacifica, rose 15.5 percent in the first quarter, according to WardsAuto.com.
Hoping to break even
"What (automakers) are hoping is that they can at least break even on the (SUVs and crossovers)," Spinella said. "They won't come out ahead."
http://www.detnews.com/2005/autosinsider/0505/02/A01-168587.htm
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