Saturday, June 02, 2007

Americans turn away from SUVs

Americans turn away from SUVs
By Bernard Simon in Toronto
Copyright The Financial Times Limited 2007
Published: June 1 2007 22:32 | Last updated: June 1 2007 22:32

Americans are turning away from gas-guzzling sport-utility vehicles, luxury cars and pick-up trucks in favour of smaller, more fuel-efficient models, judging by May sales figures.

The trend has given a boost to Toyota, which reported record sales last month, up 14 per cent from a year earlier.

General Motors’ light vehicle sales rose by almost 10 per cent. But Ford Motor reported a 7 per cent decline, due mainly to a sharp cutback in low-margin sales to car-rental companies. Ford’s retail sales were 3 per cent lower, with demand weakening in the final week of the month.

Chrysler gained 4.3 per cent, reflecting strong demand for its Jeep brand, which has introduced several new models. There was one more selling day last month than in May 2006.

GM cut its estimate of total 2007 car and light truck sales from 16.7m to 16.5m. In addition, said Paul Ballew, GM’s sales analyst, the industry is “wrestling with the mix shift that goes along with the run-up in gas prices”. Mr Ballew projected improved sales in 2008.

Last month’s sales were helped by an increase in discounts and other incentives, especially by Japanese manufacturers.

According to, an online car-buying service, Honda’s incentives reached a record of $1,399 per vehicle last month, up 52 per cent from a year earlier. Honda’s sales grew 2.5 per cent last month from May 2006.

“Some of their vehicles are a bit long in the tooth, and a handful compete in segments where generous incentives are essentially demanded,” said Michelle Krebs, an analyst.

The shift to smaller, fuel-efficient vehicles resulted in cars and crossovers making up 52 per cent of Ford’s retail sales in May, compared with 30 per cent three years ago. Crossovers look like SUVs but are built like cars, giving them better fuel consumption., a car-shopping website, reported that three hybrid models – the Toyota Camry hybrid, Ford Escape hybrid and Toyota Prius – recorded big increases in searches last month, with jumps of 52-60 per cent. Prius sales almost trebled in May to a new record.

Mr Ballew said that the housing slump was hurting luxury vehicle sales in California and Florida. Lexus, Toyota’s luxury brand, saw a 1.7 per cent decline in SUVs, while Cadillac was 6.1 per cent lower.


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