SUV Sales Plunge; GM's Down 50%

Soaring Gasoline Costs Devastate Market

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DETROIT (AdAge.com) –- Sport-utility-vehicle drivers will spend $920 more this year for gas than they did in 2004, according to figures released today from the Alliance to Save Energy, disastrous news for automakers that saw SUV sales plunge 33% in September.

Sales of General Motors' SUVs dropped 50% in September.

GM SUV sales drop 50%
While total U.S. auto sales tumbled 7.9% last month compared to September 2004, according to Merrill Lynch, the steepest sales drop was registered by SUVs. At General Motors Corp. alone, SUV sales skidded 50% in September, the company reported, while overall vehicle sales fell 24% compared to the same period the prior year.

The slide came despite auto marketers loudly trumpeting employee discounts. Ford Motor Co. reported a 19% drop in its total September sales for Ford, Lincoln, Mercury, Jaguar, Volvo and Land Rover. The marketer's total truck sales dropped 27%, although cars sales rose 3%.

George Pipas, sales analyst at Ford, called last month "payback phenomena" for automakers who enticed consumers who normally buy in fall to move their purchases forward to summer with price deals.

"Many of the superlatives that were used to talk about summer sales turned to expletives in September," Mr. Pipas said, adding that sales declines in traditional SUVs will continue. "I expect to see pretty strong sales in October on car sales and crossover" vehicles, which are car-based SUVS and sport wagons.

Chrysler Durango sales down 11%
Chrysler Group was Detroit's only bright star in September. Germany's DaimlerChrysler arm said its total vehicle sales rose by 3%, marking its 18th-straight month of increases. Jeep posted an 11% increase last month and 43% for the third quarter. Jeep's Grand Cherokee SUV saw September sales jump 15% vs. a year ago and 43% for the quarter to 56,287. Although the automaker said its Dodge brand posted a 6% total September increase, sales of its Durango SUV dropped by 11% compared to September 2004.

Detroit's loss was Asian automakers' gain. Toyota Motor Sales USA, American Honda Motor Co., Nissan North America and Hyundai Motor America all posted sales increases in September.

Merrill Lynch auto analyst John Casesa said GM's plunging SUV sales doesn't bode well for crucial upcoming launches. "We are growing increasingly concerned about all the prospects of GM's new line of SUVs" due to arrive in early 2006, he said.

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