||Americans Embrace SUVs Again
The sport-utility vehicle is making a comeback.
After being largely shunned during the recession, high-riding SUVs and workhorse pickups are regaining favor as U.S. consumers grow more confident and fuel prices remain below the $4 a gallon level that triggered a shift away from larger vehicles.
The rebound was clear last week as U.S. auto sales in November hit a 13.6 million annual pace, the strongest in more than two years, with sales of trucks and SUVs surpassing cars at many automakers. The results are boosting Detroit automakers that suffered when gas-guzzlers got the cold shoulder in 2008.
The demand is replenishing profits and restoring some of the market share losses suffered by the Detroit Three in recent decades. The average vehicle sold last month cost $30,317, up 4% from a year ago. Chrysler, the last of the big automakers to rebound, earlier this year turned its first profit since entering bankruptcy in April 2009.
The SUV and truck comeback has been building for the past two years, a reflection of the improving economy and greater consumer confidence. A preference for trucks and SUVs may have been suppressed during the downturn, but it never really went away.
Horace Dudley recently replaced his 2001 Ford Explorer, which had 250,000 miles on it and was starting to break down, with a new version of the same model. Mr. Dudley, who is six-foot-three-inches tall, said he still tries to conserve gas, but the extra space is worth the cost.
"A smaller car may have better fuel efficiency, but I want to be comfortable," said Mr. Dudley, of Warren, Mich. "I wouldn't fit very well in a Focus," he joked.
Results at General Motors Co., the largest U.S. auto maker, illustrate the strong lift from sport-utility vehicles and pickup trucks. Its SUV and truck sales climbed 10% while passenger cars rose 1%, both from a year ago.
"People like sitting up higher, (and) having seven or eight seats," said Alan Batey, head of marketing for Chevrolet. Better fuel efficiency in newer, large vehicles is helping demand, he said.
"I travel a lot with my kids and my kids' friends. I can put all my friends and family in here and haul them around but with reasonable fuel efficiency. I needed something big, something solid, something reliable," said Andrea Maggioni, a physician from Miami who recently bought a 2011 Honda Pilot. "I needed a car where I could envision myself and a bunch of kids driving around."
In part, last month's gain reflects end-of-year purchases by tradesmen who tend to favor bigger vehicles. But consumers are also embracing pickups and small SUVs such as Chevrolet's Equinox that can get up to 32 highway miles a gallon, one less than a Malibu sedan. Ford Motor Co.'s F-150 pickup boasts 23 highway miles using its turbocharged, six-cylinder engine.
"Our lifestyle is about the soccer family and the football family and camping and doing lots of activities, things that involve carrying lots of stuff around," said Joseph Phillippi, of Auto Trends Consulting. "You can't do that well in a (compact) Cruze or a Focus."
Overall, car and light-truck sales jumped 13.9% in November over a year ago to 994,721, according to market researcher Autodata Corp. That strong demand allowed Chrysler Group LLC, which has long sold more pickups than cars, to post a 45% unit gain. Nissan Motor Co.'s sales rose 19%, Ford's 13% and GM's nearly 7% over the same month a year ago.
At the end of 2009, SUVs and trucks made up 47.3% of the market, 50.2% in 2010, and through November this year, 50.8%. Automakers and others also say the overall gains reflect businesses and consumers updating vehicles after months or years of deferring purchases due to economic worries.
"I was holding off, but I had to get a new truck because I knew the repair bills were going to start adding up. I had to have something I could rely on," said Tom LaClear, 41, of Jackson, Mich., who traded in his six-year-old pickup for a Ram pickup truck from Extreme Dodge in Jackson, Mich., last month.
"Consumers who delayed car purchases during the summer months when supply was tight and prices were higher for many models are now coming back to market," said Lacey Plache, economist for automotive information Website Edmunds.com.
Ford said its truck and SUV sales rose nearly 26% to 118,543 last month while passenger car sales dropped nearly 9% from a year ago, to 48,322. Its overall sales rose 13% to 166,441 vehicles.
The Dearborn, Mich., auto maker said it expects more customers replacing aging vehicles will keep demand high into the next year. It plans a 3% increase in North American production for the first quarter of 2012 over a year ago. More than two-thirds of its production plan is for light trucks.
"We are going to see more and more of this pent-up demand realized," said Ford economist Jenny Lin.
Chrysler, whose brands including Jeep and Dodge have benefited most of the year from demand for its SUVs and pickups, said its car sales more than doubled to 28,694 from a year ago. Its cars have newly restyled interiors. Sales of its trucks and SUVs rose 29% to 78,478. Both increases come against a relatively weak showing by the Auburn Hills, Mich., company in the same month last year.
Its November results also include 1,600 Fiat vehicles through its majority owner Fiat SpA. Fiats weren't sold in the U.S. a year ago.
(Source: The Wall Street Journal, 12/02/11)
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