Big 3 auto sales fall in April

Toyota outsells DaimlerChrysler

high gas prices hurt SUVs

May 03, 2006|By NEW YORK TIMES NEWS SERVICE

DETROIT -- Americans shied away from large sport utility vehicles and pickup trucks in April as gasoline prices approached $3 a gallon, and with a battery of new SUVs waiting in the wings, domestic automakers are now facing the very scenario they had hoped to avoid.

Despite gains at Toyota and Honda, declines at General Motors, Ford, DaimlerChrysler and Nissan pushed vehicle sales in the United States down 0.1 percent in April, according to Ward's AutoInfoBank. General Motors had the biggest drop, selling 7.3 percent fewer vehicles than it did in April 2005.

For the first time, Toyota became the nation's No. 3 car seller for the month, passing DaimlerChrysler. That marks a symbolic victory for Toyota, which occasionally outsells the Chrysler division but had never before outsold all of DaimlerChrysler in the United States.

The latest surge in gas prices poses a long-term problem for the domestic auto companies, which had been hoping that gasoline prices would moderate and make SUV sales easier. Now, analysts warn, it may be harder to get consumers to buy a gas-thirsty vehicle when the oil market remains so volatile.

"Last fall when we had this first spike, then people could write it off as a one-time deal," said Stephen J. Hoch, a professor of marketing at the Wharton School of the University of Pennsylvania. "The fact that it spikes twice means it can spike again. Now, this time people will say there's enough evidence that this is going to be a recurring if not frequent phenomenon."

Last month, big SUVs and pickup trucks were among the vehicles that had the sharpest sales drops.

The Ford Explorer was down 42 percent compared with April 2005. Sales of Ford's top-selling F-Series pickup fell about 9 percent last month, as did sales of the Nissan Titan.

Sales of the Jeep Grand Cherokee declined 41 percent. Chevrolet Colorado pickup sales fell almost 30 percent.

Gasoline prices aside, the decrease in sales of big SUVs may signal a realignment of the entire SUV segment. Analysts said that with more and more auto companies building SUVs of all sizes and consumer tastes shifting toward smaller vehicles, the heyday of the big truck is over.

"I think all truck-based SUVs are on a downward path," George Pipas, Ford's chief sales analyst, said yesterday. Noting the unabated decline of Ford's large SUVs, he said, "It's pretty eye-popping."

Since 2004, when the number of light truck sales, which include pickup trucks and SUVs, peaked at 55.7 percent of vehicle sales in the United States, the American love affair with large vehicles has cooled. Last year, light truck sales fell to 54.9 percent of the market, according to Autodata. For the first three months of this year, light truck sales tumbled to 53.8 percent of the market.

That complicates the fortunes of GM and Ford. Both companies have begun sweeping restructuring plans, which will eliminate a combined 60,000 jobs and close all or part of more than two dozen factories in North America.

But shutting plants and getting rid of employees will not ease all of their woes. So, the two companies are looking to their product portfolios to help accelerate their turnarounds. Especially at GM, large SUVs will play a huge role. Already this year, the company introduced new models of its Chevrolet Tahoe, Cadillac Escalade and GMC Yukon. Next month, the Chevrolet Suburban also goes on sale, and will be followed by several new large pickup trucks later this year.

Despite fuel economy improvements in GM's new SUVs and pickups, experts warn the vehicles will be a hard sell. "Frankly, the portfolios they have were designed for $1.50-a-gallon gasoline," said Walter S. McManus, a scientist with the Transportation Research Institute at the University of Michigan. "So they're going to have trouble. The longer prices stay high, the harder it will be to sell SUVs."

For now, GM's new SUVs are selling well. Last month, the company said sales of its Yukon and Tahoe were up more than 30 percent. Escalade sales jumped 127 percent. The success of the new SUVs helped offset sales declines among other GM SUVs and pickups, which in many cases fell by double digits. Overall, light truck sales at GM rose 1.5 percent. Car sales dropped 18.3 percent.

GM has the newest SUVs on the market, but later this year it will face more competition. Ford has new models of the Expedition and Lincoln Navigator coming out - direct competitors to the Escalade and Tahoe - while Chrysler has the Aspen, a new luxury midsize SUV.

"Things have changed," said Ron Pinelli, president of Autodata, the New Jersey-based auto sales tracking firm. "These companies are counting on their new SUVs as instrumental to their turnarounds, but it's ... not the slam dunk it would have been 10 years ago."

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