Despite increasing fuel costs, SUV sales holding up so far
DETROIT — Hurricane Katrina dealt Detroit automakers a mighty pounding. But they weren't blown away.
The natural disaster savaged oil refineries on the Gulf Coast, sending gasoline to unheard of prices above $3 a gallon across most of the nation. That has some customers backing off traditional SUVs — the most popular and profitable light trucks U.S. car companies produce.
The timing seems horrible. Ford Motor Co. and General Motors Corp. are struggling financially, and they've pinned much of their hopes on new SUVs hitting showrooms over the next year. A redesigned version of the best-selling SUV of all time, the Ford Explorer, is to hit dealerships this fall, and GM is to begin selling a new generation of full-size SUVs early next year.
Still, car companies and dealers aren't ready to concede that the SUVs that have kept them going for 15 years are doomed. While some SUV owners are downsizing to more fuel-efficient cars and trucks, the automakers say there's still a large market for mid size and full-size trucks like the Explorer, Chevrolet Trailblazer, Dodge Dakota and GMC Suburban.
"There's no question that demand for traditional sport-utility vehicles has been affected by rising gas prices," Steve Lyons, Ford group vice president for North America marketing, sales and service, said Thursday. "Still, the traditional SUV segment is large, and we have a strong reputation and share in this segment. The features and value in the new Explorer and Mountaineer will strengthen our position."
Dealers and car salesmen already are on the offensive, offering additional incentives — and advice — to steer customers back to the big trucks.
Last week, even before Katrina struck, Story Buick-Pontiac in Lansing, Mich., began wooing customers with $250 Speedway gas cards when they bought a new SUV. Dick Genthe Chevrolet in Southgate, Mich., gives customers $1,000 worth of Marathon gas cards when they buy any used car or truck, and $500 gas cards to entice them to buy new 2005- and 2006- model SUVs like Suburbans and Tahoes.
At Suburban Ford of Waterford, Mich., several customers who've been looking at traditional SUVs have been hesitant to go through with the purchase.
"I write a deal today and then gas goes up 50 cents and people want to back off of it," said Ed Merlo, the new-car sales manager. "People are just unsure of how high gas prices are going to go."
Customers certainly are doing the math. Even though he saw gas prices rising to what he considered uncomfortable levels, Brian Chupa , an Almont, Mich., resident who just recently bought a bigger home, resisted getting rid of his big pickup — until a few weeks ago when he found out his wife is pregnant.
"I was paying $60 every three or four days," said the 40-year-old who recently traded in his 2002 Ford F-150 pickup in favor of a Ford 500 sedan. "It was tough giving it up, but something had to give."
Virgil Ratliff, a Houston resident, this week decided to trade in her 1999 Lincoln Navigator — with just five more payments left on the luxury SUV — for a Chrysler 300. The reason? High gas prices.
"About two weeks ago, it really hit me when I spent almost $70 to fill up my tank," she said.
"I remember having a $100 bill and getting change back and saying, 'Oh, my God, I don't believe I just spent almost 100 bucks to fill up my car. I can't do this. This isn't rational."
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