US consumers have recently been shying away from fuel-thirsty sport utility vehicles, an industry research firm reportedly said on Thursday in a report on what may become a worrisome trend for Detroit’s traditional Big Three automakers.
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According to Reuters, Power Information Network, an affiliate of JD Power and Associates, cited rising petrol prices and a renewed emphasis on cars by some manufacturers as factors contributing to recent evidence of flagging SUV demand.
The Power Information Network report said unsold SUVS had sat on dealership lots for an average of 73 days as of last month, about 22% longer than the 60-day average in July last year, the news agency noted.
The increase in the so-called “days to turn” rate was even higher for luxury SUVS, jumping 47%, or more than double the industry-wide rate for cars and trucks overall, the report said.
Further pointing to weakness in the SUV sector, the report said average SUV transaction prices were down 2%, or $620, in July from the year-earlier period. Luxury SUV prices were nearly 5% lower, Reuters added, noting that many Americans have long considered SUVs the kings of the road, making them their preferred choice of vehicle despite generally poor fuel economy and a high rollover risk compared to cars.
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By GlobalDataThe Power Information Network reportedly suggested that huge discounts were further evidence of weakening SUV demand, however.
Consumer incentives on SUVs averaged $3,440 in July, the report said, up nearly 12% from June and nearly double the overall industry increase for new cars and trucks.
Tom Libby, the Power Information Network’s senior director of industry analysis, told Reuters car-based sport utilities or so-called crossovers were outperforming traditional body-on-frame SUVS but both types of vehicles were included in Thursday’s report.
Detroit’s Big Three all make a major share of their automotive profits from sales of pickup trucks and truck-based sport utilities but Libby reportedly said it was too soon to say the automakers are in big trouble because America’s long love affair with SUVs is finally on the rocks.
“It’s definitely too soon to say that,” Libby told the news agency. “We would caution that, really, it’s important to wait a little while before drawing any giant conclusions. You have to wait and see if indeed there is a major softening or if this is just sort of a blip.”
Art Spinella of CNW Marketing Research told Reuters Detroit automakers were already very much in trouble, however, since most of their SUVs are truck-based or body-on-frame vehicles. That’s a segment consumers have been abandoning in increasing numbers, he said.
“People who have truck-based sport utilities, about 40% of them, when they trade them in are trading them in for something other than another truck-based sport utility,” Spinella reportedly said. “Five years ago that figure was only 8%. When you start seeing advertising for Tahoes and Suburbans in Los Angeles, for example, where the discount is $10,000 or $12,000 off of sticker, somebody’s in trouble.”
