It’s a popular notion that the sport utility vehicle is the dinosaur of today’s auto industry. Others feel the behemoth SUV still rules the road and will for some time to come.
Which side has the correct answer? The jury is still out.
SUV sales have dropped from 2003, when 17.1 percent of vehicles exiting new car lots were traditional (truck-based) SUVs, according to statistics from J.D. Power and Associates. Today, the category makes up 9.5 percent of all new vehicles sold.
The current slump in the auto market also means that SUV makers are carving up a smaller piece of a smaller pie, says Jeff Schuster, executive director of forecasting for J.D. Power. “Not only is the share down, but the volume is down as well,” he says.
It’s no secret that auto sales, in general, are down. New vehicle sales for the first six months of 2009 are down 35.1 percent over the same period one year ago, according to WardsAuto.com. SUV sales are down 46.9 percent for that same period.
“The current decline in the SUV category is pretty much on par with the decline in vehicle sales overall,” says Charles Territo, a spokesman for the Alliance of Automobile Manufacturers. “They reflect the market.”
But some industry watchers say it goes beyond that. Changes in consumer preferences, roller-coaster gas prices, drivers getting more realistic about needs vs. wants, the credit crunch and a greening of the American consciousness are all likely contributing factors.
Sometimes it’s just a case of what’s popular. “Styles and people’s tastes change,” says Jack Nerad, executive editorial director of Kelley Blue Book.
Still, Nerad is confident in the continued demand for SUVs. “The large SUV is doing fairly well — I think better than some might expect,” Nerad says. Ditto the small and medium-sized models, “although the crossovers have kind of taken over,” he adds.
The rise of CUVs
There’s another major factor in that decreasing market share: the increasing popularity of crossovers — SUV-styled vehicles that run on car-based platforms, rather than the truck frames that define a “traditional” SUV.
“Currently, the SUV has been under a lot of pressure from other segments, particularly the crossover,” says Schuster. Sales of traditional SUVs, meanwhile, “peaked in 2003 and have been declining ever since,” he says.
|Make/Model||Units sold from Jan. 1 to June 30, 2009|
|1. Jeep Wrangler||48,890|
|2. Chevrolet Tahoe||32,215|
|3. Jeep Liberty||23,705|
|4. Jeep Grand Cherokee||23,090|
|5. Ford Explorer||17,670|
|6. Kia Sorento||15,736|
|7. Chevrolet Suburban||14,721|
|8. GMC Yukon||14,353|
|9. Toyota 4Runner||10,402|
|10. Ford Expedition||10,392|
Crossover utility vehicles, or CUVs, offer drivers the atmosphere, and some of the hauling and towing capacity associated with SUVS “with less of a truck feel,” says Schuster. “In addition, or maybe related to that, we’ve also seen vehicle manufacturers cancel SUVs in favor of CUVs.” So there are fewer choices in SUVs, he says.
Moreover, the line between the two kinds of vehicles continues to blur, says Nerad. With crossovers, he says, “You will see something that looks almost like a station wagon, to something that looks like a traditional SUV.”
As for SUVs, “I think the main trend is that they’re morphing into these crossovers, and they’re becoming the popular vehicles,” says Eric Evarts, associate autos editor for Consumer Reports. “I think we’re going to see nothing but expansion from the small crossover, small SUV segment.”
Are many SUV buyers simply switching to CUVs? It sure looks that way. Combined sales of SUVs and CUVs made up 26.8 percent of the market in 2003, and 27 percent in 2008, according to numbers from J.D. Power.
“I think there is clear replacement taking place,” says Bernard Swiecki, senior projects manager for the Center for Automotive Research, a nonprofit think tank.
And makers are beefing up CUV options. “In the past five years, manufacturers have introduced more CUVs than SUVs, and that will continue,” says Territo.
The traditional SUV “segment has been declining for years. (Sales) will be somewhat dependent on the types of vehicles manufacturers are offering and somewhat dependent on the price of gasoline and whatever consumers are demanding,” Territo says.
The fuel factor
Rising gas prices do tend to impact SUV sales, especially with larger SUVs, Schuster says. “There was a pretty substantial drop when gas prices rose last year,” he says. “It has recovered a little.”
Several industry watchers believe buyers don’t seem to worry as much about future gas prices. “What we have seen is a correlation between (SUV sales) and current gas prices,” Nerad says.
Not entirely, says John Schwegman, General Motors’ group manager for Chevy Trucks. One particular price spike — when gas went to $4 a gallon last year and stayed there for several months — left an imprint on vehicle buyers, he says. “Folks are really at that point where they’re a little more cautious,” Schwegman says. Before buying, he says, they’re asking themselves, “‘What do I need to carry?'”
|Make/Model||Units sold from Jan. 1 to June 30, 2009|
|1. Mercedes-Benz G-Class||297|
|2. Lincoln Navigator L||591|
|3. Hummer H2||801|
|4. Land Rover LR3||1,024|
|5. Toyota Land Cruiser||1,104|
|6. Mitsubishi Endeavor||1,471|
|7. Lexus LX-Series||1,742|
|8. Infiniti QX||2,319|
|9. Lincoln Navigator||2,503|
|10. Kia Borrego||2,597|
What’s more, it may be attention to the pocketbook, rather than the environment, that’s prompting buyers’ recent choices. “I think Americans’ like the concept of being green,” says Michael Caudill, an auto expert and spokesman for NADAguides.com. “But they like the idea of spending less at the gas pump even more. You will start to see more hybrid technology built into full-sized SUVs,” he says.
The introduction of hybrid SUVs, “has helped people who want to stay in the class but show some sensitivity to gas consumption,” says Philip Reed, consumer advice editor for Edmunds.com.
SUVs here to stay
So what’s the future look like for SUVs? While opinions differ, many watching the auto industry agree that there will continue to be a steady demand for traditional SUVs.
“People are reassessing their needs and a large number of people are returning to the class,” he says. “It will be a very interesting summer.”
Evarts believes that the smaller traditional SUVs “will be the heart of the market.” When it comes to larger models, “gas prices will still be volatile and people’s purchasing power is down,” he says.
Evarts and several others who study the industry forecast that traditional, truck-based SUVs will continue to be the vehicle-of-choice for people who live in rugged areas where they need off-road capabilities, along with those who have sizable needs for human capacity, towing or hauling.
But that is “a niche market,” says Evarts. “It’s not going to go away, but it will be concentrated among people who really need them, not just people who want to look good.”
J.D. Power’s Schuster agrees. The category is definitely not going the way of the dinosaur, he says. “We don’t believe they’ll disappear,” he says. “But the number of species will be much fewer than we have today, and the share of that vehicle type will continue to decline. It will be a much smaller market because people who were buying just because it’s popular, those buyers have exited the market.”