General Motors has reduced expectations for its next-generation large sport utility vehicles coming out early next year, saying high petrol prices and changing tastes were eroding demand for vehicles in that segment, the Detroit News reported.
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“We’re not anticipating that the market will reach or exceed its prior peak,” Paul Ballew, GM’s executive director for industry analysis, reportedly told analysts. “Given all the alternatives out there, given the uncertainty on gas prices, given some image factors, we think it’s appropriate to plan in a more conservative manner and to assess the market potential for us in volume levels that don’t take us to our prior peak.”
However, the paper noted, he said GM would continue to dominate the large SUV segment and benefit from sustained demand for large luxury SUVs, such as the Cadillac Escalade.
The Detroit News said that, despite high fuel prices, demand has held up for full-size pickups, which account for more than two-thirds of GM’s large SUV and pickup volumes. New competitors are crowding the field, but growing sales of four-door pickups have bolstered prices, Ballew reportedly said.
The paper noted that GM has portrayed the new SUVs and pickups as central to its turnaround effort in North America, where it lost $US2.5 billion in the first half of the year.
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By GlobalDataGM officials reportedly attributed weakening demand for large SUVs to the fact that its own models, such as the Chevrolet Suburban, were ageing and about to be replaced.
“It’s a concession to reality by Paul Ballew that this sector has seen its peak,” auto analyst David Healy at Burnham Securities told the Detroit News, adding: “Ford has been talking about this for some time, but GM has been in denial on the subject up until now.”
According to the paper, GM says the typical large SUV buyer can afford the increase in fuel prices but some customers may be less comfortable with ‘gas guzzlers’.
The Detroit News said GM’s large SUV sales peaked at 505,000 units in 2001 and 2002, but have slipped to around 435,000 on an annual basis this year – while its large pickup sales have risen steadily from about 845,000 in 1999 and are on track this year to top 1.1 million.
