There are more SUV models than ever, and additional versions on the horizon, but sales of big, truck-based SUVs-Detroit's moneymakers for years-are sliding dramatically from a proliferation of products, aging models, higher gas prices and loss of their cool factor.
Total SUV sales in the U.S. still managed to rise by 2.6% in the first four months of 2005 vs. the same period a year ago, but big SUVs, accounting for 46% of all sport-utility vehicles, slumped by 13.1% in the period, according to Automotive News. Unit sales of behemoths like GM's Chevrolet Suburban and Ford's Expedition slid by 29.4% and 25.1%, respectively, in the period (see chart).
Not even heftier incentives could help.The average incentive per big SUV in April was $4,352 vs. $3,737 in April 2004, says Jesse Toprak, senior analyst at Edmunds.com, an independent auto information site. "The segment used to be hip and fashionable, but now crossovers are capturing attention," he says. Crossovers are car-based SUVs or wagons.
CROSSOVERS KEY SUV FORTUNES
Ford Division's SUV growth is from the crossover Freestyle sport wagon and the small Escape SUV, expanded this year as a hybrid model, says Chris Feuell, SUV group marketing manager. Industry sales in the small SUV segment rose by 10% last year vs. 2003, with more entries on the way, she says, noting industry crossover sales also are up 30% this year through April.
The midsize SUVs are "getting squeezed" more than large ones because there are more offerings in the segment. Mr. Toprak notes midsize SUVs dropped from a 12.6% share of the auto industry in April 2004 to 10.9% in April 2005.
That's been bad news for Ford's popular midsize Explorer, which suffered from a slide of 22.5% to 86,366 units sold in the first four months of 2005 vs. the same period a year ago. Ford Division even backed Explorer with hefty incentives of $5,107 per unit in May, down a bit from its peak of $5,530 last September, notes Edmunds. As SUV sales have slipped, marketers of the 10 best-selling midsize and big SUVs have invested more heavily in advertising, as a group up 4.8% in 17 measured media to $762.1 million in 2004. However, media spending fell for half of those (see chart).
Doug Scott, industry analyst at NOP World Automotive, notes the defection of motorists from truck-based, midsize to large SUVs also is an economics issue. His research shows consumers are deferring large purchases, with only 19% of Americans saying now is a good time to buy. "That, along with the psychology of gas prices, is affecting SUVs," he says.