SUV Sales Down 43%, Hybrid Sales Up

[Nbadan]

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. For the moment, though, big S.U.V.'s are bearing the brunt of consumer discontent. While sales have been diminishing all year long, September was particularly ugly.

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.

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Consumers are also snapping up as many hybrid electric vehicles as the industry produces, with sales of the Toyota Prius up 90 percent and the hybrid version of the Ford Escape having a record sales month.

NY Times (http://www.nytimes.com/2005/10/04/automobiles/04auto.html?ex=1286078400&en=904d72555f7a6b5a&ei=5088&partner=rssnyt&emc=rss)

And yet the big American automakers keep betting that bigger is better introducing newer lines of vehicles that are better fuel efficiency-wise than their predecessors, but still not anywhere near where they ought to be, especially with the recent introduction of SUV hybrids. Just another case where piss poor decisions made by golden parachute protected executives will be paid for by those who can least afford it - the workers.

[Vashner]

Yea I got a loaded explorer with everything dirt cheap recently. I work out of the home office so I only drive about 2-3 times a week.

[Extra Stout]

GM bet the farm on their new GMT9000 series of large SUV's to be introduced for 2007. They cancelled or pushed back other projects to speed up the release of redesigned Tahoes, Suburbans, and Escalades.

I'm thinking they'll be in Chapter 11 by 2008.

Ford at least has invested some in the CD3 platform, from which the Fusion/Milan/Zephyr and a couple of crossovers have sprung and will spring. But they too are heavily invested in the mammoths. And they made no plans to introduce the superlative European version of the Focus on the CD1 platform in North America.*

The Germans who run DaimlerChrysler have placed their bets on a new small-car platform that will underpin the Dodge Caliber hatchback and a couple of new Jeeps.

The Japanese are playing both sides of the equation -- simultaneously expanding their portfolio of trucks and SUV's with an eye towards better efficiency, their small-car offerings, and their hybrids. Thanks to a sustained run of good decisions and good sales, they have the development resources to attack all parts of the market at once.

Just when it appeared the engineering side of the U.S. auto industry was starting to turn the corner, the simian dolts in management once again showed a predisposition toward wishful thinking rather than realistic analysis of the market. Selling SUV's at a big markup made for easy business and easy profit, and they were unwilling to accept that things were changing and they had to adapt. So, now it's too late, and they're going to perish.

This is eerily similar to what happened to the British auto industry.

*The excellent CD1 architecture is available in the U.S. on the Mazda3 and the Volvo S40.

[Vashner]

I think Ford will survive.. it's got deeper pockets. GM better hurry..

Ford is going to need to retool a bit.

[Cant_Be_Faded]

Excursions, omg

those make tahoes look like ford escorts

the nerve!

[MannyIsGod]

Reaping what has been sown.

Nice post, ES. I don't know much about the car industry per say, but it is obvious that the Japanese companys are in much better position to exploit a market that demands fuel efficency. America didn't learn it's lesson during the oil embargos but they will this time. The fuel prices are never coming back down.

[Cant_Be_Faded]

Hopefully the American companies will have a tommorow to apply what they've learned from their mistakes.

[SpursWoman]

Excursions, omg

those make tahoes look like ford escorts

the nerve!


Those things *were* awful.

[Cant_Be_Faded]

The thing that disgusts me about oversized SUV's is the sheer nerve of someone making and buying a vehicle so big, is that if everyone went out and did as they did, there would be a drastic increase in wrecks, at least on crowded interstates like I35 in Austin (i have the construction narrowed parts of the Interstate in mind)

One time I was in the middle of two Excursions on I35, where the construction was, and I seriously feared for my life. That fucking road turns, slightly back and forth, its not just all straight.
Fucking excrusions.

[mookie2001]

no joke

[Extra Stout]

I never really minded the idea of an SUV per se. If people wanted to pay more for gas, so be it.

It just bugs me that they're exempt from most of the safety rules because "officially" they are "farm/work" vehicles. Yeah, right.

So now most cars need side airbags because the bumper of an SUV typically decapitates somebody riding in a car in a side collision.

Typical Detroit management -- they'd rather lobby Congress to keep us in the past than innovate to keep up with the future.

[SpursWoman]

The thing that disgusts me about oversized SUV's is the sheer nerve of someone making and buying a vehicle so big, is that if everyone went out and did as they did, there would be a drastic increase in wrecks, at least on crowded interstates like I35 in Austin (i have the construction narrowed parts of the Interstate in mind)

One time I was in the middle of two Excursions on I35, where the construction was, and I seriously feared for my life. That fucking road turns, slightly back and forth, its not just all straight.
Fucking excrusions.


I've actually only known one person who ever had one of those...and to be fair, he had 5 kids...all in sports. So he basically had that fucker filled up with kids and shin guards and basketballs and football gear all of the time.

Funny, before I got the car I have now I almost bought a Blazer...but when I drove it the interior was actually smaller than the inside of my car. The only difference was I could fit a full size ice chest in the back....and I can't fit one in my trunk now. :cuss :lol

[SWC Bonfire]

Selling SUV's at a big markup made for easy business and easy profit, and they were unwilling to accept that things were changing and they had to adapt.

In their defense, this rise in fuel prices has been very rapid and the profit margins on the SUV's were irresistable.

That said, GM did nothing to hedge their position other than expand Buick into China, and that was done for the quick buck rather than from any bit of foresight on their account.

[SWC Bonfire]

America didn't learn it's lesson during the oil embargos

Somewhat true.


The fuel prices are never coming back down

Pretty much reinforces the previous statement. Prices will come back down.

[SWC Bonfire]

GM just sold their shares of Fuji Heavy Industries (makers of Subaru among other things) to Toyota - this is going to get ugly.

[Extra Stout]

In their defense, this rise in fuel prices has been very rapidBut also very predictable.

The behavior of people close to the auto industry is really defensive. When you argue that gas prices are going to stay high, they get belligerent, say you don't know what you're talking about, and insist that prices will go back down very soon.

They're even more belligerent if you insinuate there's a correlation between SUV sales and gasoline prices. Then they insult your mother and claim that sales are off because people are waiting for the all-new redesigned models, or because the employee pricing promotions just ended.

They absolutely undeniably are sticking their heads in the sand because they don't want to deal with the tough decisions. A


And the profit margins on the SUV's were irresistable.

That said, GM did nothing to hedge their position other than expand Buick into China, and that was done for the quick buck rather than from any bit of foresight on their account.Everybody has been jumping into the SUV fray. Even with gas prices so high, there's still a market for SUV's and trucks. Toyota is still opening the Tundra plant in San Antonio. They understand that the market is shrinking, but still believe they can make inroads and a profit.

GM and Ford screwed up with their failure to "hedge their position," like you said, at least in North America. It's just like the foolish investors who put everything in tech stocks in the late '90s.

GM is fine in Europe and Australia. So is Ford. GM definitely screwed up in China, because their marketing was only to Communist Party members, who happened to like big plush Buicks. VW made a similar mistake Now that the public is buying cars, Hyundai and the upstart Chinese companies are blowing up.

[SWC Bonfire]

Hey, a Buick is actually a damn good car. And they get almost 30mpg for a vehicle that seats 5/6 people.

[MannyIsGod]

Ok, with a supply that is not growing and a demand that is, how exactly are gas prices going to come back down?

[SWC Bonfire]

Ok, with a supply that is not growing and a demand that is, how exactly are gas prices going to come back down?

Supply can be augmented, and demand can go down, especially with regards to people flooding as much oil as they can onto the markets in the next few years. You said "never", which may not be the case - even though oil prices are high, the huge increase recently is due to the capability to refine being diminished due to hurricanes. So it will regress some when that additional refining capacity comes back online.

If you are referring to 88 cent/gallon gasoline, maybe so. But we could defininately see $1.45 gasoline again sometime in the future. Remember, as recently as the late 1990's oil was at $14/bbl for sweet crude, and $7/bbl for sour crude. It is cyclical.

[MannyIsGod]

I'm not buying it. It will come down one day, but that is only when it is of little use to us.

[SWC Bonfire]

I'm not buying it. It will come down one day, but that is only when it is of little use to us.

Just like after the first Gulf War, when prices would not come back down, ever?

[MannyIsGod]

Just like after the first Gulf War, when prices would not come back down, ever? What drove the price hike then and what is driving it now? The market is not the same. Where are the new refineries going to come from? Now with China and India taking up so much of the supply, how are you going to augment it?

[Cant_Be_Faded]

yeah with india and china doing what theyre doing were all fucked

[SWC Bonfire]

yeah with india and china doing what theyre doing were all fucked

Yeah, and gas prices aren't going up there and they're not trying to reduce their own consumption.

[MannyIsGod]

Yeah, and gas prices aren't going up there and they're not trying to reduce their own consumption.
The consumption is rising in those countries. I'm just stating what is happening here. I think any conservation measures they take will simply be overridden by the amount of new consumers entering those markets. The sheer volume of consumers will overwhelm any conservation efforts. And I don't think those efforts would be very successful either way.

[gameFACE]

I see absolutely no reasons for large SUV’s except luxury and comfort. The issue of “safety” is so bogus. I’m speaking somewhat hypocritically since I have a small SUV (Liberty). But if they’re weened out I won’t complain. Innovation vs. comfort is more progressive. And if you’re the “keep up with the Jones’” type don’t worry. If hybrid or electrical vehicles become all the rage you can impress others with your larger battery and petroleum based upholstered seats.

It would be great for SA if the Toyota plant here is able to convert to current market trends in the future.