Obituary for SUVs may be premature
They sit on the front lawns of rural North America in increasing numbers, “For Sale” signs slapped on their windows like badges of shame.
It has come to this for the oncemighty sport-utility vehicle. Some auto dealers are refusing to take them as trade-ins. Those that do value them at a fraction of their previous worth. Gasoline at $4 US a gallon has turned the family hauler of choice only a decade ago into the unwanted animal of the motoring market.
But the obit for the full-sized SUV is still premature.
“Used vehicle prices of large utilities and large pickups have dropped dramatically,” said Tom Libby, senior director of industry analysis at J.D. Power & Associates. Libby acknowledged. “But remember, we’ve gone through this before. I remember after hurricane Katrina, I must have gotten at least 15 calls asking me if it was the death of the SUV. We’re not there yet.”
J.D. Power calculates that gasoline prices have to remain at current levels for at least one year before there is a permanent and pronounced shift in buyer preference away from the largest passenger vehicles.
Others, like Ford Motor Co., believe that permanency has arrived. The days of consumers buying big pickups and big SUVs if they don’t need them to transport goods or haul trailers is over, Ford sales analyst George Pipas said. “We don’t think those people are coming back.”
There is no shortage of evidence showing gasoline prices and a weak housing market are having an effect on consumer preferences, and by consequence, on automaker profits. Large pickup and large SUV sales as a percentage of total U.S. lightvehicle sales fell from 17.6 per cent of the market last year to 15.4 per cent during the first four months of 2008, according to Citigroup Global Markets. Ford, whose F-Series is the top-selling light truck in the United States and Canada, has delayed its goal of returning to profitability by 2009 as a result.
In Canada, the trend is the same but less pronounced: Sales of large SUVs and pickups are down 14.6 per cent and 3.5 per cent so far this year versus 2007. Anything small is generally selling.