Luxury SUVs may lift auto industry from dip

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Experts predict the U.S. auto industry will dip in 2001, but luxury sport utilities will pick up steam.

The industry is expected to top its 1999 sales' record of 16.9 million units with a total of some 17.4 million units this year, according to Jeff Schuster, senior manager of forecasting for consultancy J.D. Power & Associates. But with the slowing economy as the main driver, he predicted next year's industry sales will fall to roughly 16.7 million units, just below 1999's record level.

Even the luxury car segment will feel the pinch, with sales slipping next year to 1.24 million units from the expected 1.28 million this year, he said. But sales of luxury SUVs will grow to 306,000 units from 286,400 units in calendar 2000.

"We expect luxury SUVs to take more [market] share from other SUVs and the luxury car segment," said Mr. Schuster

Consider this: The best-selling model for the Lexus Division of Toyota Motor Sales USA is its RX300 SUV. The SUV quickly rose to Lexus' most popular vehicle after its 1998 debut in ads with the tag "Like no other vehicle on earth."

Meanwhile, all Lexus car lines, save the all-new IS300 sedan, have sold fewer vehicles this year through October vs. 1999, according to Automotive News.

National TV spots for the IS300 broke in late June. Team One, El Segundo, Calif.

The European makers, including DaimlerChrysler AG's Mercedes-Benz USA, BMW of North America, Volkswagen's Audi of America and Volvo Cars of North America, have brought in new buyers by offering more model types, such as wagons and two-seaters, said Susan Jacobs, president of a consultancy bearing her name.

The Japanese and domestic marketers haven't done that, although Lexus and General Motors Corp.'s Cadillac have two-seat roadsters in their futures. American Honda Motor Co.'s Acura Division and Nissan North America's Infiniti Division have become more competitive with their newly introduced vehicles, she said.

Wes Brown, an analyst with consultancy Nextrend, predicted Lexus will win the luxury sales crown this year, even though Mercedes-Benz led the pack through October in unit sales. Mercedes will be hurt by production constraints through year's end. "It's going to come down to inventory" between now and the end of the year, he said.

Demand for the Lexus IS300 isn't as strong outside the U.S., so the marketer can ship more cars here. The move to No. 1 luxury nameplate would come barely a decade after Lexus' 1989 debut.

Neither Mercedes nor Lexus executives were available for comment.

In recent years, the European and Japanese nameplates have had growth spurts while the domestics' market share has skidded.

The luxury sales crown has shifted every year since 1998, when Ford Motor Co.'s Lincoln brand overtook General Motors' Cadillac Division. Cadillac had the title for 49 consecutive years. Mercedes won the luxury sales' crown last year.

Cadillac and Lincoln are trying to make a comeback. But the experts said the two domestic brands are still at least a year or two away from that as they both await new products.

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