Tuesday, October 04, 2005

The Last Excursion

An article in this morning's New York Times (registration required, but it's free) relates how SUV sales are dramatically down despite the employee-pricing incentives offered by the major American auto makers the last couple of months. It's also noted in there that Ford built the last of its Excursion SUVs; that was last Friday, just after lunch.

In September, industrywide sales of large S.U.V.'s were down 43 percent from a year earlier, according to Ward's AutoInfoBank. That is particularly bad news for General Motors and the Ford Motor Company, which are dependent on truck-based S.U.V.'s.

Last month, G.M.'s overall sales fell 24.2 percent and Ford's declined 20.3 percent, compared with the same month a year earlier.

In contrast, Japanese carmakers reported increases last month, propelled by passenger cars and smaller S.U.V.'s known as crossover vehicles. Toyota's sales rose 10.3 percent, Honda's increased 11.7 percent and Nissan's, 16.4 percent....

At Ford, sales of the Explorer, Expedition and Lincoln Navigator fell more than 50 percent compared with the same month a year earlier. The company also built its last Excursion in the month, ending production of its largest S.U.V.

At G.M., sales of the Chevrolet Suburban and Tahoe fell more than 50 percent, while the GMC Yukon was down 46 percent and the Cadillac Escalade fell nearly 23 percent, with the supersize Escalade ESV falling 40 percent. Sales of the Hummer H2, made by G.M., fell 32 percent.

The sharp declines come despite heavy spending on discounts. According to a new estimate from the auto tracking firm Edmunds, automakers are spending twice as much on discounts for each large S.U.V. they sell - $4,704 - than the $2,366 overall average vehicle incentive. That is partly mitigated by the fact that the vehicles tend to be more expensive, but only partly.

"Just three years ago, people ignored the fuel economy numbers on the sticker," said Jesse Toprak, an analyst at Edmunds. "Now it's one of the first things people ask about, especially the middle-income families."...

Not that the Japanese firms are immune:

Large models at Japanese automakers also suffered, with the Toyota Land Cruiser off more than 50 percent and the Nissan Armada down 21 percent. But the Japanese make more of the smaller and lighter sport utility vehicles that customers are shifting to, and have a stronger hold on the resurgent car market.

The big-picture thinking that underlies this ongoing decline in the Big Three's share of the U.S. auto market and the decline of Ford and GM to junk status persists:

G.M. has said the large S.U.V. market will perk up once it introduces its new generation of such vehicles at the beginning of next year.

But at a media briefing last week, Robert A. Lutz, G.M.'s vice chairman and product development chief, emphasized that his company would be hedging its bets. "I'm betting we're going to see regular under $2 a gallon again," he said, but added that "what we have is volatility and the volatility may continue.

Maybe high gas prices will cure obesity in our senior citizens!

In a September survey sponsored by AARP of 568 people over 50 years old, 47 percent said they were reducing travel and vacations and 39 percent said they were visiting family and friends less often. Thirteen percent of the respondents even said they were offsetting high gasoline prices by eating less. (emphasis mine)

I still need to go test drive an H2 Hummer to see what the fuss is all about. I rode by the dealership one day on the way home from REI and looked in the windows of a couple (it was a Sunday) and they don't look all that spacious inside. I want to see just how roomy they are and try driving one before GM folds the whole enterprise.

1 comment:

Anonymous said...

I've been saying that when gas hits $5/gallon, Hummers will make great apartments. Just take out the engine and put in a woodstove, with a few solar panels on the roof to power the coffee maker and toaster, you'd have a wheeled verison of an apartment that would rent for a few hundred a month in New York where I used to live.