Rising US petrol prices are hurting sales of large SUVs and pickups, some industry analysts told Reuters, a trend that could stall a major source of profits for Detroit’s vehicle makers.
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Citing Edmunds.com data, Reuters said the petrol-thirsty, full-sized SUV segment lost 1.2% of US market share over the last two months, and large pickups were down about 2%. Fuel-efficient compact cars, on the other hand, gained 2.2% of market share in the same period.
Deutsche Bank analyst Rod Lache reportedly said in a research note that large SUVs and full-sized pickups account for close to 80% of North American automotive profits for Ford and General Motors.
“The concern, of course, is that the slowdown in these categories may represent the beginnings of a structural change, perhaps sparked by consumers’ concerns about higher oil or gasoline prices,” Lache said, according to Reuters.
The news agency noted that the average price US drivers pay for a gallon of regular petrol barely exceeds $US2, according to the AAA motor club, though the price is expected to shoot to a record high of $2.15 a gallon this spring, according to the US Energy Information Administration.
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By GlobalDataBank of America analyst Ron Tadross reportedly said in a research note that the higher prices already have hit GM’s mix of vehicles in the market, punishing it by $1 a share due to fewer sales of large trucks and SUVs. Ford Motor, he said, also is being penalized 15 cents a share due to a similar decline in the segment.
Reuters said GM’s US sales of light trucks declined 9% last month, while Ford’s sales in the same segment slipped 8% and, overall, both automakers lost US market share again in February.
But Joseph Barker, manager of North American sales analysis at CSM Worldwide, told the news agency it was too early to say if the fuel price spike was responsible for the lacklustre light-truck sales.
“I wouldn’t read too much into the first two months of this year,” he told Reuters.
The report noted that, though sales of GM and Ford trucks slipped in February, Toyota and other Asian automakers reported increased sales in the segment – US sales of the full-sized Toyota Tundra pickup, which has a V8 engine, rose nearly 49% last month, while Nissan Motor chalked up a similar rise in sales of its Titan pickup.
Reuters said the Asian automakers’ reputation for quality may have helped them buck the industry trend.
The news agency noted that both Ford and GM raised incentives on slow-selling models including trucks and SUVs while GM extended warranties on 2006 model Hummer SUVs.
“Whenever the gas prices go up, we see larger incentive spending by the manufacturers on large SUVs,” Jesse Toprak, director of pricing and market analysis at Edmunds.com told Reuters.
The deterioration in the segment is also partly driven by growing popularity of car-based sport utilities, or crossovers, and due to the fact that some of the Ford Motor and GM SUVs are reaching the end of their life cycle, Toprak reportedly said.
“Unfortunately for GM and Ford, there are lot of exciting products right now out there in the marketplace,” he told Reuters.
