As Car Sales Slump, What's Still Selling

As Car Sales Slump, What's Still Selling

formatting link
In an era of $4-a-gallon gasoline, it's no surprise that hybrids and subcompacts are selling well. But what about the Lexus LX, a giant sport-utility vehicle that averages 14 miles a gallon? Its sales for the first five months of the year have more than doubled.

The latest auto-sales data, released earlier this month, show a glum market -- sales of cars and light trucks were down 11% in May from a year earlier. But a few cars have bucked the downward trend. A number of them are small: Sales of the tiny Fit from Honda Motor Co., a four-door hatchback that gets about 34 miles per gallon on the highway, have risen

64% since the beginning of the year. The Toyota Motor Corp. Scion xB, another recently redesigned compact, is up 59%.

But there are also some surprising winners -- including a handful of gas guzzlers. Sales of the Toyota Sequoia, a large SUV, rose 29% to 14,100 in May from a year earlier, making it the only vehicle in the "large utility" segment for which sales have grown this year, according to J.D. Power & Associates. Sales of the Dodge Viper, a sports car with a fuel-swilling 10-cylinder engine, more than doubled to 515.

The reasons for the increases are varied. The Lexus LX 570 was redesigned for the 2008 model year, according to Lexus, Toyota's luxury division, and Chrysler Corp.'s Viper received mechanical and cosmetic updates. Such styling changes typically boost demand for a vehicle. The LX isn't a huge seller -- with 3,547 sold this year through May -- so an increase of a few thousand vehicles makes a big impression. Still, any boost in sales is surprising as consumers focus increasingly on fuel economy and car makers like General Motors Corp. and Ford Motor Co. scramble to adjust their mix of vehicles.

Karen Bean of Albany, N.Y., says she bought a Lexus LX 570 earlier this year because she likes how it looks, drives and accommodates her tall family. Having a comfortable, attractive interior and a vehicle that she enjoys driving is important enough that she is willing to accept the fuel expense. She can afford it, she says. Ms. Bean thinks that buyers of higher-end SUVs haven't altered their spending habits, despite a sluggish economy and high gas prices. "If you're buying an $80K+ car, you better be able to afford the gas that goes in it," she says.

Another big vehicle showing a hefty sales jump is the Toyota Tundra, a pickup truck that averages 15 mpg. Its sales have risen 8.5% to 66,278 since the beginning of the year, even as sales of large pickups have slumped 22% overall. Toyota said the Tundra's sales gains in part reflect low year-earlier sales, as production was just getting going in early 2007. Whatever the reason, the bright start to the year doesn't look sustainable. The truck's sales slumped in May, and Toyota has applied incentives of up to $3,000 cash back or 0% financing to lure buyers. Toyota also has slowed the assembly lines building the Tundra, as well as Sequoia.

Sales of the Daimler AG's Mercedes-Benz M-Class luxury SUV are up 20% for the year to date. Unlike some of the other sales winners, the car wasn't recently redesigned. But increased awareness of the diesel model might have helped, and the company attributes the uptick to subtle marketing changes. First, the company added sporty-looking 19-inch wheels, chrome trim and a different grille. Then it began running new ads for the M-Class, which is unusual for an older design. The ads reminded consumers of the vehicle's merits, says spokesman David Larsen, and "the appearance package made it look refreshed."

The market for large vehicles is being supported not only by high-income consumers but also by families. Many of these shoppers are turning to midsize "crossover" vehicles like the Ford Edge, driving the segment up

7.1%. Crossovers with three rows of seats, like the Mazda CX-9 and the GMC Acadia, have also sold well, appealing to people who want a big vehicle that's more efficient than a Chevy Suburban or other traditional large SUV. The Mazda5 is the only vehicle in the midsize-van segment whose sales are up this year, apparently because it is smaller and cooler-looking than other minivans -- and it has better fuel economy.

A few vehicles that were once considered strange -- such as those that combine elements of minivan and car -- are enjoying a sales renaissance. Examples of models that have suddenly surged in popularity include the van-like Mazda5, up 46%, and tall wagons like Hyundai Motor Co.'s Kia Rondo, which more than doubled, and the Toyota Matrix, up 56%.

Crossover vehicles seem to be stealing the type of customer who once gravitated to large, comfortable family cars like the Ford Taurus, Chevrolet Impala and Toyota Avalon. That is fueling the popularity of midsize crossovers such as the Ford Edge and the GMC Acadia.

"Realistically, who would want a large car when you can have a crossover," says Tom Libby, analyst with research company J.D. Power & Associates. "Midsize crossovers have emerged as the sweet spot of the industry. "

For many car buyers, however, gas mileage is the most important consideration. This spring, Daniel Naturale wanted to replace his aging Pontiac Bonneville with another large, powerful car. But with the price of gasoline seeming to increase daily, he wound up buying last year's Nissan Motor Co.'s Altima, a smaller sedan with a fuel-sipping four-cylinder engine. "It was a bargain and it cut my gas bill almost in half," says the Montclair, N.J., construction superintendent.

"I'm a muscle-car guy from way back, but the recent spike in gas prices finally got to me," he says.

Reply to
Jim Higgins
Loading thread data ...

It looks like the fuel price is only increasing the difference in sales of quality. After years of neglecting customers and quality GM is facing the music. It is pretty obvious that customers are voting with their feet. One customer at a time is choosing what each thinks is best for him. GM does not rank high in reliabilty in cutomers minds. Ads do not sell on their own if the product does not match. The small things that fail irritate customers and there are a hell of a lot of little items over the years that are mounting up to the downfall of GM. Each customer optimizes his own value of a car. It can not continue very long like this.

Jim Higgins skrev:

Reply to
Gosi

MotorsForum website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.