Love Affair With Midsized SUVs Ending in the USA

27 Jun 08

Across the United States, high fuel prices are starting to end a love affair with the mid-size four-wheel-drive sport utility vehicle that has lasted well over a decade. Figures out from the USA are showing a steep downturn in the market for mid-sized SUVs.

'They're dinosaurs. Put a fork in them,'' Erich Merkle, vice president of auto industry forecasting for the consulting company IRN Inc. in Grand Rapids, Michigan, said in an interview.

It's no secret that drivers are flocking to smaller, more fuel-efficient cars as the cost of fuel marches higher. While petrol prices are not nearly as high in the U.S. as in many other countries in the West, Americans are accustomed to low prices and rely heavily on their cars as mass transit options are few outside of a handful of major metropolitan centers.

Midsize SUVs are built on the same frames as trucks, which add extra weight and drink more fuel. So drivers who want a bigger ride are opting for newer crossover vehicles that look and perform like SUVs but are lighter because they're built on the same underpinnings as cars.

They're not well-equipped to go off-road, but analysts say few people were using that feature, anyway.

Midsize SUV sales were down 24 percent for the first five months of this year from the same period in 2007. The decline for May was an especially steep 38 percent, according to Autodata Corp.

People bought about 445,000 Explorers in 2000, at the height of the SUV market, but last year Ford only sold about one-third of that number. And 2008 looks even worse.

For large SUVs, such as the Chevrolet Suburban and for Ford Expedition, sales declines have also been huge. But automakers are betting they will survive -- in smaller numbers -- because of large families that need the space and people who tow boats and campers.

Ford will not say if the Explorer is headed for the scrap yard, but at the Detroit auto show earlier this year, the company showed off a version built on car underpinnings that it plans to roll out later.

General Motors Corp. and Chrysler will not concede the deaths of their midsize SUVs, either. But GM announced earlier this month it would close an Ohio factory that is the only maker of its TrailBlazer and GMC Envoy models.

Chrysler already had plans to close the plant that makes the Dodge Durango and Chrysler Aspen.

GM and Chrysler have been trying to fight the gas-guzzling image of SUVs with a sophisticated gas-electric hybrid that greatly improves the fuel efficiency.

Still, the shift from trucks to cars this year was so rapid that Ford and GM executives view it as permanent. Both GM and Ford recently announced huge production cuts and plans to crank out more cars even as U.S. automakers, and even Toyota Motor Corp., continue to see their sales drop.

The shift certainly will cause more red ink in Detroit, where automakers historically have relied on big-ticket trucks for the bulk of their profits.

The Detroit Three recognized the shift and have more fuel-efficient models in the works, but they saw it coming in years, not months. The change is the most rapid seen in over 30 years in the industry.

This rapid change in the global automobile market would suggest that the local Australian industry is making the right moves in rapidly shifting towards developing hybrid engines to fit into locally made cars.