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post #1 of 1 (permalink) Old 08-12-2004, 05:39 PM Thread Starter
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U.S. consumers turn from SUVs, report says

U.S. consumers turn from SUVs, report says
Reuters / August 12, 2004
DETROIT -- U.S. consumers have been shying away from fuel-thirsty SUVs, an industry research firm said Thursday, in a report on what may become a worrisome trend for the Big 3.

Power Information Network, an affiliate of J.D. Power and Associates, cited rising gasoline prices and a renewed emphasis on cars by some manufacturers as factors contributing to recent evidence of flagging SUV demand.

The Power Information Network report said that unsold SUVS had sat on dealership lots for an average of 73 days as of last month, about 22 percent longer than the 60-day average in July last year.

The increase in the "days to turn" rate was even higher for luxury SUVs, jumping 47 percent, or more than double the industrywide rate for cars and trucks overall, the report said.

Further pointing to weakness in the SUV sector, the report said that average SUV transaction prices were down 2 percent, or $620, in July from the year-earlier period. Luxury SUV prices were nearly 5 percent lower, meanwhile.

Many Americans have long considered SUVs the kings of the road, making them their preferred choice of vehicle despite generally poor mileage and a high rollover risk compared with cars.

The Power Information Network suggested that huge discounts were further evidence of weakening SUV demand, however.

Consumer incentives on SUVs averaged $3,440 in July, the report said, up nearly 12 percent from June and nearly double the overall industry increase for new cars and trucks.

Tom Libby, the Power Information Network's senior director of industry analysis, told Reuters that car-based SUVs or crossovers were outperforming traditional body-on-frame SUVS. But both types of vehicles were included in Thursday's report.

General Motors, Ford Motor Co. and the Chrysler group all make a huge share of their automotive profits from sales of pickups and truck-based SUVs.

But Libby said it was too soon to say the automakers are in big trouble because America's long love affair with SUVs is on the rocks.

"It's definitely too soon to say that," Libby said.

"We would caution that, really, it's important to wait a little while before drawing any giant conclusions. You have to wait and see if indeed there is a major softening or if this is just sort of a blip."
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