Death of the SUV

As energy prices soar, Frustrated owners try to unload their guzzlers.


Americans are turning away from the boxy, four-wheel-drive vehicles that have for years dominated the nation's highways. Sport utility vehicles and pickup trucks - symbols of Americans' obsession with horsepower, size, and status - are falling out of favor as consumers rich and poor encounter sticker shock at the pump, paying upward of $80 to fill gas tanks.

The sale of new SUVs and pickup trucks has dropped precipitously in recent months amid soaring gas prices and a weakening economy: SUV sales for the month of April alone fell 32.3 percent from a year earlier and small car sales rose 18.6 percent. This fundamental shift comes against a backdrop of relentless gas increases, and growing concerns over the environment and US oil consumption, according to auto analysts and car dealers.

"The SUV craze was a bubble and now it is bursting," said George Hoffer, an economics professor at Virginia Commonwealth University whose research focuses on the automotive industry. "It's an irrational vehicle. It'll never come back."

With stocks of unwanted new SUVs and pickups piling up at dealerships across the country, automakers are offering unprecedented promotions. Incentives for large SUVs, including cash rebates, topped $4,000 in March, or more than double those offered in March 2002, according to Edmunds.com, which monitors the motor industry.

Herb Chambers, who owns more than 40 dealerships across Massachusetts and Rhode Island, said the incentives offered on new SUVs are pushing down the value of the used vehicles, and increasingly, he is taking a loss on SUV trade-ins at his various dealerships, which include everything from Chevrolet to Jeep to Mini.

"The incentives have never been higher than they are today for the large SUVs and small pickup trucks," Chambers said. "I don't know how factories can make any money for these cars." "Having SUVs as an everyday commuter car is largely going away," Chambers said.

Jon McHugh, of Swampscott, is celebrating the last payment on his 2003 Acura MDX by putting the SUV up for sale. "I don't need this much space," McHugh said of his SUV. "It just seems ridiculous."
Good Riddance

CNNMoney is reporting Goodbye SUV, hello small cars.

Sales of large SUVs plummeted 28% in the first quarter this year, while subcompact sales rose 32%, according to Autodata Corp. Thriftier four-cylinder engines, once despised by Americans for their perceived lack of power, are selling in record numbers.

April sales results to be released on May 1 are likely to show an even more pronounced shift, predicted Jesse Toprak, chief industry analyst for the auto information site Edmunds.com. "That's simply a function of the dramatic increase in oil prices that we've seen in the last few weeks."

The trend away from SUVs started well before gas prices began climbing in 2005, in part because of the introduction of "crossover" vehicles - those with SUV styling but built on the more nimble and fuel-efficient car chassis. SUV sales peaked at 3 million in 2003; they're expected to fall to half that number this year, and the change caught Detroit unprepared.

"It happened too rapidly for the American automakers to take sufficient action," said Aaron Bragman, an auto analyst for the Waltham, Mass.-based consulting firm Global Insight. For example, 74% of the vehicles Chrysler sold in the U.S. last year were trucks and SUVs, compared to 42% at Toyota Motor Corp.

My Comment: Any change will catch GM or Ford off guard as both companies are always behind the curve and slow to adjust to trend changes even though this was easy to spot years ago.

Now owners of SUVs and other gas guzzlers who've seen the price of a fill-up climb sharply are getting a second shock when they try to trade in their behemoths. Used car dealers don't want the big vehicles on their lots anymore because hardly anyone is buying them. Some won't take them at any price.
My Comment: SUVs are headed for the scrap heap of history and the scrap heap at the junk yard where they belong.


Demographics also play a role. Baby boomers are trading in larger vehicles as their nests empty, and their children are now of car-buying age. Half of the next generation will pick small cars for their first set of wheels, said George Pipas, Ford's top sales analyst.

"Gas prices are important because they've accelerated these shifts, but the shifts were going to happen anyway," Pipas said. "SUVs were not going to roam the Earth in this decade as they did in the 90s."


My Comment: "Shifts were going to happen anyway." Exactly. Nonetheless this was too hard for GM to figure out even one month ago.


Menicocci, a resident of the upscale Miami suburb of Palmetto Bay, recently placed his 2003 Chevrolet Tahoe with leather seats and 39,000 miles for sale on Craigslist for $16,000 -- roughly $2,000 less than what his research determined was the Kelley Blue Book value.

He bought a 2003 Kia Spectra for $5,000 because he was tired of paying so much for gas with his heavy Tahoe. "I was wasting $30 a day compared to $10 a day," he said.

"Everybody is like, `What is that? Is that the maid's car?"' said Menicocci, who sells marble and granite for a living. "But I don't care. At this point, I'm way past looks and appearances."
My Comment: "I'm way past looks and appearances" says it all. Attitudes have changed dramatically.

Flashback April 2, 2008
GM says still expects second-half U.S. recovery

March Auto Roundup And Retail Sales Forecast

General Motors Corp still expects the U.S. economy to recover in the second half of 2008, pulling industry-wide auto sales higher, an executive said on Tuesday.
GM sales analyst Mike DiGiovanni, speaking to reporters and analysts on a conference call, said he saw "early signs" that the U.S. market was steadying.

My Comment: Is this some kind of April Fool's Joke?

Separately, GM North American sales chief Mark LaNeve said GM's inventory of full-size pickup trucks was "more than adequate" despite a five-week-old strike at supplier American Axle & Manufacturing Holdings Inc that has idled 30 GM plants.

My Comment: And it will be more than adequate if the strike lasts another 15 weeks. Who wants full sized pickups? GM ought to be thankful for that strike or they would be ramping up for a nonexistent second half recovery.
Some SUVs, especially the Hummer are so ugly I still cannot fathom anyone buying one. I guess at one point it was some sort of status symbol as in: "Hey look at me... I can drive a huge, ugly expensive car that looks like a big yellow box on wheels and costs a fortune to fill up." That's status alright.

Things have changed, abruptly and for the better. Status symbols are out. Cool to Be Frugal is in. A secular trend in downsizing is underway. Wall Street has still not caught on. Profits are not coming back.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
http://globaleconomicanalysis.blogspot.com/2008/05/death-of-suv.html

If anything is not sustainable, it will be discarded...America's ruins. I hope we will find healthy ways to recycle and reuse all this unusable stuff.

I simply can't believe anyone could be as ignorant as the car companies who actually accelerated the manufacture of new hummers and other enormous guzzlers even as war loomed and the oil crisis unfolded...in total denial of reality. Hubris (which they hoped would rub off on jittery consumers) or were they in cahoots somehow with the oil/energy industry? I think the oil companies have wanted to increase prices for oil for some time and under Cheney they have had their moment. And as the dollar sinks they compensate with higher prices. And I recall in 2000 how the auto companies were advertising that they would be rolling out their fuel cell cars by 2010 which seemed ridiculously far away and keeps receding into the distance.

Last time we saw gas prices shoot up ( remember the 'shortage'?), the Japanese car companies moved in and won a large share of the market and new customers. The U.S. companies did their best to prevent that this time, which increased profits for oil at least because we're being forced to buy inefficient guzzlers and go to war over oil.

I'm surprised and confused why Americans haven't protested these outrageous increases in oil prices considering that the last time this happened years ago, all hell broke loose due to a relatively minor increase. I honestly don't understand why the truckers, especially, don't just leave their vehicles where they sit and walk away in protest. Diesel is through the roof!

Even though the US manufacturers are now making perfectly nice small cars with decent mileage, all they are advertising and have done for a long time are the gas guzzling behemoths, filmed by a cockeyed camera so it will look like the perfectly flat road is at a 50 degree angle--something that would have most of them on their backs like dead roaches in real life.

US car companies are undoubtedly losing market share of the small car market to foreign competitors because they are too thick headed to bother to advertise their efficient cars.

I'm keeping my 6 cyl SUV and buying a trailer to tow behind it rather than getting even a small truck for my 1 acre home. I only need to haul nasty stuff several times a year, so this will work well for me and since I only drive around 5000 miles a year, I can't justify the 100 something barrels it takes to product a new car. It's better for my pocketbook AND the environment to keep what I've got until they really get a alternative vehicle on the road.

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I won't shed a tear for these gas-guzzling behemoths.

I like this section from the OP...

Demographics also play a role. Baby boomers are trading in larger vehicles as their nests empty, and their children are now of car-buying age. Half of the next generation will pick small cars for their first set of wheels, said George Pipas, Ford's top sales analyst.

"Gas prices are important because they've accelerated these shifts, but the shifts were going to happen anyway," Pipas said. "SUVs were not going to roam the Earth in this decade as they did in the 90s."

'by exempting SUVs as trucks from CAFE standards, we can meet higher MPG requirements, and still drive anything we want! YIPPEE!'

say hello to $4 gas, jerks, in case you forgot 'those awfull' mpg requirements were meant to prevent this disaster

enjoy your 'freedom' in your big SUV that you cant afford gas for anymore

i remember watching that with horror, knowing there these jerks were taking us

and here we are

totally forseeable

(too bad we didnt have someone like Al Gore in the administration back then)

My stepdad had an 87 CRX that got 48 mpg on the highway. I got 45 mpg in an 80's Civic. Since those days I remember every new model has been "Roomier, more powerful, more luxurious" than the last, and worse mileage.

I wish it were still legal to build an inexpensive efficient car like the CRX. All the new regulations since then - air bags, ABS, electronic stability control, etc, add a great deal to the sticker price, but they also add significantly to the weight of the vehicle and the necessary size of the engine.

I think it was because of SUV's that smaller cars had to increase weight to add more crash safety features like bigger/heavier side door beams, etc. The more weight you have, the less MPG you get.

It's too bad that no one makes a small car with crank windows, manual locks anymore, or a car with a 1.5L engine that only weighs 1,700 pounds & gets close to 50mpg.

1. deja vu all over again..
GM and Ford were harshly critcized for "not getting it" in the 70's when the price of gas zoomed, and the Big 3 car manufacturers sat stupidly by as Japan made a fortune importing cars.
As we see now, no learning curve.

2. My son buys his cars via used car auctions. Pays 300.00 or so,makes minor repairs, drives it for a or so, gets another one for 300.00, etc.
Except this year, he tells me, the cars are selling for much higher prices....to scrap dealers, who can make money crushing and selling them even after paying 500/600 per car.

Maybe those Hummers are worth more than we think.

Because I sometimes carry stuff for my mother I considered buying a cross-over, but I hated driving them. I ended up buying a Toyota Camry. Now that is a nice car! Roomy enough for the car pool I plan to form it seats four adults comfortably and is great on gas.