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5/30/2004

Public buying SUVs

By Pam Mellskog
The Daily Times-Call

LONGMONT — Logic would dictate that as gas prices continue to push the envelope, vehicles that guzzle fuel would be the first feel the pressures of the market.

But the American public, despite whining at $2-a-gallon gas, seems to be content on continuing its love affair with big vehicles.

Overall, sport utility vehicle sales dipped about 5 percent nationwide in April, according to Jeff Beddow, spokesman for the National Automobile Dealers Association in McLean, Va.

“But you can’t go on one month,” he said.

That is especially true given the big SUV sales picture — something as yet unchanged by sticker shock at the pump.

Year-over-year figures show overall vehicle sales up 2 percent, sales of pickup trucks — one of the most popular SUV market niches — up 10 percent and sales of small cars down 4 percent, said Eron Shosteck, spokesman for the Washington, D.C.-based Alliance for Automotive Manufacturers.

“Automakers currently offer 30 different models that get 30 miles per gallon or more,” he said. “But they still aren’t very good sellers.”

SUV gas mileage can range from 20 mpg up to 30 mpg in compact four-cylinder SUVs, to the upper teens in six-cylinder models and to between 12 mpg and 20 mpg in full-size SUVs, according to Edmunds.com, an online vehicle-buying guide.

Nevertheless, since 2001, SUV sales have rallied. They now represent 56 percent of all new-vehicle sales. SUV sales outpace passenger car sales in every state except New York, New Jersey, Connecticut and Rhode Island, according to Sosteck.

The media has clogged Sosteck’s voice-mail box with questions about how rising gas prices have caused SUV sales to slip — something he brushes off as conjecture.

Mileage ratings appear to be a minor factor for the public. Vehicle buyers surveyed by Oregon-based CNW Marketing Research in April reported fuel economy ranked 39th in priority out of 56 buyer preferences, including factors such as front and rear visibility, quality of parts and safety.

In fact, Sosteck said, “It’s behind cup holders.”

Calls to Detroit turned up similar reports.

“We take it very seriously and will be closely monitoring what’s happening in the marketplace with regard to gas prices,” General Motors Corp. spokeswoman Elaine Redd said. “But we’re seeing no direct relationship between gas prices and SUV sales.”

Yukon sales have jumped about 10 percent since last year, she said. And the Equinox, a small SUV that GMC launched two months ago, also has taken off.

According to Redd, this gas crunch differs greatly from the one that battered the U.S. automotive industry in 1981 and sent buyers running toward fuel-efficient Japanese imports.

Then, double digits plagued both interest and inflation rates, she explained, and Arab oil embargoes in the 1970s created unprecedented gas shortages. All culminated in a pinch at the pump that created enough hurt to change buyers’ behavior.

But this blip in gas prices — expected by some industry experts to vanish by summer’s end — is not big enough news to do the same, she said.

“What we’re finding is that consumers are being fairly rational in terms of gas prices,” Redd said. “They’re assessing the $2 a gallon as temporary.”

The exception would be in the so-called exotic SUV category — Hummers, in GM’s case.

There, sales have dropped 22 percent compared to last year, said Pete Ternes, director of Hummer Division communications. But the dropoff, he said, is unrelated to the gas hikes that hit in March.

In Colorado, only three dealerships — including Medved Hummer in Wheat Ridge — sell the GM icon.

Medved Hummer salesman Chris Harlan noted the slowing sales of the high-end SUV but, like Ternes, attributed it to reasons other than gas prices.

“I don’t see anyone turning away when I’ve told them the Hummer only gets 11 or 13 miles per gallon. Wants and needs are really different,” he said.

At Ford Motor Co., spokesman Jon Harmon called SUV sales “strong” without the aid of drastic incentive programs.

“We’ve got incentives on various products, depending on what’s competitive in the marketplace,” he said. “It just depends on what the other automakers are offering and what inventory of the vehicles is.”

In Los Angeles, at Toyota Motor Sales U.S. Inc., spokesman Sam Butto reported light-truck sales — SUVs, pickup trucks and minivans — up 22 percent over last year’s January-to-April numbers.

“SUVs have a higher price point,” he noted. “It just seems that folks who are willing to spend $40,000 to $50,000 on an SUV are not taken back much at $2-a-gallon gas prices. ... I think we’re all waiting to see what type of effect it will have. But so far, we haven’t seen anything.”

Local dealers confirm these manufacturer perspectives.

At Longmont’s Prestige Chrysler, Dodge, Suzuki, salesman Curt Willett said the dealership still sells 15 to 20 SUVs a month, with an average price of $29,000.

Hajek Chevrolet-Olds sales manager Tom Rudd said that with projected May figures, SUV sales are growing as they have since 2001.

“It’s early enough that we don’t have any long-term experience with the impact of gas prices. On the surface, it would be logical to assume that as gas prices rise, vehicle sales from SUVs would fall,” he said. “But if you’ve got a family of six and they ski, they need a Suburban or a Tahoe because they won’t fit into a Cavalier.”

Pam Mellskog can be reached at 303-776-2244, Ext. 224, or by e-mail at pmellskog@times-call.com.