The further decline of the SUV

Discussion in 'General Discussion' started by Superion33, Jun 15, 2006.

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  1. Superion33

    Superion33 Banned

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    From Businessweek.com:

    In the 1990s, NASCAR dads and soccer moms ditched their minivans for hauling kids and groceries and flocked instead to mid-sized, truck-based sport utility vehicles such as the mega-selling Ford Explorer and Chevy Trailblazer. That was great for Ford (F) and General Motors (GM), who minted money to the tune of $6,000 to $10,000 of profit per vehicle depending on incentive

    But the cultural and financial tide has turned against these balky gas guzzlers much faster than any of the companies' forecasts had predicted a few years ago. Both GM and Ford until recently had two assembly plants apiece churning out the SUVs. They each have gone down to one, each able to produce 300,000 per year at peak. But they're not even bullish on that half-market.

    Ford is on track to sell fewer than 200,000 Explorers and nearly identical Mercury Mountaineers this year, with sales down 28% through May. Explorer sales peaked at 446,000 as recently as 2000. GM will strain to sell 260,000 Trailblazers and near-clone GMC Envoys, Buick Rainiers, and Saab 9-7s, down from last year's level of 380,000. How the mighty have fallen.

    BAD PRECEDENT. Inside GM, there is considerable debate about whether to invest between $500 million and $1 billion on a segment losing steam so fast. There's precedent for this, but it doesn't have a happy ending. When GM saw the minivan market flatten, it stopped investing money in its lineup for a full redesign. The results were the execrable Chevy Venture, Pontiac Montana, and Oldsmobile Silhouette.

    Then GM spent around $200 million-plus a few years ago to restyle the exteriors and interiors under product boss Robert A. Lutz's direction in an attempt to make the vans, sold at Buick and Saturn as well as Pontiac and Chevy, look more like SUVs. But the engineering platform went unchanged. The vans had no image.

    This year, GM is on track to sell 100,000 heavily discounted, money-losing minivans under four brands. Meantime, Toyota is on track to sell 165,000 highly regarded, well-reviewed Sienna minivans under one brand. If one accepts the theory that GM should know the needs and wants of the American family better than Toyota, how is it that Toyota developed the Camry and Sienna, and GM built the Malibu and the Uplander?

    THE ANTI-VAN. The problem with charting a future for the Trailblazer and GMC Envoy is that the new, big, Chevy Suburban and GMC Yukon SUVs would pretty much take care of the horse-trailer- and boat-pulling buyers who need big solid-rear axle SUVs for towing. And the new jumbos from GM actually get better fuel economy than the TrailBlazer and Envoy.

    This fall, GM unleashes a line of mid-sized crossover SUVs—the GMC Acadia, Buick Enclave, and Saturn Outlook. These 2008 models will not only all be built on the same platform and in the same factory in Delta Township, Miss., but also they will be comparable with the larger SUVs. And Lutz seems to think that those crossovers will do a good job of drawing the minivan-hating customer.

    That leaves TrailBlazer and Envoy in the precarious middle, with no place to go but down. The new crossovers have tested so well among consumers and journalists that GM is scrambling to get a Chevy version into production. Poor planning at GM led to its largest and most important sales division, Chevy, not getting a version of its own. Go figure.

    COSMETIC UPGRADE? Ford is in the same boat. And of course it has plenty of heavily discounted truck-based SUVs to pull that boat. Ford, arguably more cash-strapped than GM, is wringing its hands over whether to redesign the Explorer or nurse it along for several years with skin-deep upgrades. Like GM, it has plenty of experience in this, and none of it is too encouraging.

    Ford, too, saw the minivan segment flattening out, so they stopped investing in total remakes of its vans and opted instead for cosmetic improvements. The result at Ford is today's Ford Freestar, a cleaned-up version of the awful Windstar minivan. Ford is on track to sell a pathetic 67,000 Ford and Mercury minivans this year, and a huge percentage of those are to employees' "friends and family."

    Will the declining Ford Explorer and Mercury Mountaineer get the same treatment? Spokesperson Sara Tatchio says "We will make appropriate investments in Explorer to keep the vehicle competitive. We still believe in this segment [truck-based mid-sized SUVs]."

    COP CAR.

    Will Ford give the Explorer the Crown Victoria treatment? Ford continues to sell the Ford Crown Vic and Mercury Marquis despite the fact the basic engineering of the car dates all the way back to the early 1970s.

    Sure, Ford has made many improvements over the years in terms of interior, suspension, safety, etc. But it has stayed in the market because of a hyper-loyal, but older, buyer base of Americans who want nothing else but a big body-on-frame rear-wheel-drive sedan just like their dads drove when Roosevelt, Truman, and Eisenhower were President. And then there's the police market for those cars. Cops love the durability and room of those old Ford Crown Vics. Without the cop market, there would be no retail Crown Vics and Marquises.

    Some Ford execs are understandably reluctant to starve the Explorer. Ford skipped a whole cycle redesigning the Ford Focus, too. Now that small cars are hot again, the image of the Focus is dowdy and out-of-date and it's selling for thousands less than the new Dodge Caliber and Toyota Yaris (see BusinessWeek.com, 6/14/06, "The Judgment of Yaris").

    GAME OF CHICKEN.

    One Ford insider says, "I think we are done letting products wither on the vine, so I don't think we will Crown Vic the Explorer." Hey, "Crown Vic" is now a verb at Ford. That's encouraging. But it doesn't make sense to redesign a mid-sized body-on-frame SUV unless they see GM exit the segment and figure they can soak up their buyers with the Explorer. Now, there's a game of chicken I might want to lose on purpose.

    Ford, like GM, is squeezing its own mid-sized SUV business. This fall it launches the Ford Edge, a promising car-based SUV with similar people-hauling capacity to the Explorer. It's based on the platform of the Mazda6 and Ford Fusion.

    In 2008, it will bring out a "people mover" dubbed the Fairlane that Ford says addresses the market for the minivan and the mid-sized SUV without looking like either one. That will be interesting to see, if Ford can position such a car given its less-than-stellar recent history of marketing launches.

    CREAKY BOOMERS.

    By the way, Ford and GM are not alone. Jeep Grand Cherokee is off 26% this year. The Jeep Commander SUV has been a big disappointment too. Toyota's Sequoia SUV is down 28%. Nissan Armada, a dreadful, huge SUV, is down 23%. Honda Pilot sales are up, and that's because of some fresh incentives and the fact the Pilot is the most car-like ride (it shares an engineering platform with the Odyssey minivan, not a truck) in the bunch.

    It's not just high gas prices that are hurting the sales of these vehicles. George Pipas, head of sales analysis at Ford, says that the baby boomers who drove the Explorer market to the point where Ford's accountants kissed off the whole minivan segment are getting older. They're less inclined to haul themselves in and out of high-off-the-ground SUVs. "It's a great vehicle, but aging and creaky baby boomers who drove this market are wearying of the climb in and out unless they absolutely need one to pull a trailer or boat."

    Now that may be an idea to sell these vehicles. Instead of adding an extra $1,000 rebate, how about a free fishing boat and trailer with every one sold?



    Interesting article. Why doesn’t Detroit just wise up and start investing in the future of automobiles? They can get ahead of the curve by going the way of the electric car right now. Invest in battery technology, build a car that can go 70 – 80 miles on a single charge. GM came out with the EV1 in 1999 that had a range similar to that. However, they mysteriously cancelled production of that car even though it was selling very well among niche owners and enviromentalists. Maybe it was their fixation on the fuel cell? Why don’t people realize that fuel cells are only a bandage (albeit a long term one)? Hydrogen will still have to be produced constantly (and that will come from hydrocarbons – ie oil and gas). If they put their money into electric cars right now, GM would be in command of the market and could mop up the competition. Us do-gooder, environmentalists would back them 100% on that.
     
  2. funkatron101

    funkatron101 TFW2005 Supporter

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    Where does the electricity come from to power these cars?
     
  3. Superion33

    Superion33 Banned

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    Solar and wind are two options that are renewable and free. Just build the collectors and then sit back and watch.
     
  4. flamepanther

    flamepanther Interested, but not really

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    I hope the SUV craze goes the way of the dodo as fast as possible.
     
  5. BigPrime3000

    BigPrime3000 Well-Known Member

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    What do I do when I need to drive a few 100 miles on a cloudy day?
     
  6. Kupp

    Kupp Ford Fanboy TFW2005 Supporter

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    Hope it is down hill most of the way?
     
  7. Superion33

    Superion33 Banned

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    Um, when I mean solar and wind, I meant that those would be the solutions to the energy sitution of production. You would have to store that production in batteries. I am not suggesting putting solar panels on a car (tho that is an option). If you had solar power plants, or wind power plants, or geo-thermal power plants, or hydro-electric power plants, or ocean tide power plants – then you could feed that into the power grid so that the cars could charge over night.

    A better battery would allow you to go farther on a single charge. Having a small gas engine could take care of any extra miles you would need to drive.

    The Plug In Hybrid Electric Vehicle (PHEV) is the stepping stone between gas vehicles and electric vehicles. This would allow customers to get accustomed to plugging in their vehicles while the battery technology improves.

    Here is a good site that gives a lot of good info:

    http://www.greencarcongress.com/batteries/index.html
     
  8. BigPrime3000

    BigPrime3000 Well-Known Member

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    The problem is that I'm greedy. I know how powerful and reliable cars are right now, so now one is going to be able to persuade me to switch to a power format that isn't as powerful or reliable as gas engines with the promise that this is just the first stepping stone.

    Lemme know when they perfect the technology, then maybe I'll consider adopting it.
     
  9. funkatron101

    funkatron101 TFW2005 Supporter

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    Alright, we had this discussion not too long ago, and it's heading back into the same thing, which will result in this thread being closed. So I'll just say this.

    Wind and solar power are being used at this point, but they are only supplemental. For economic and technology purposes oil is still the best option for now.

    Electronic cars are not the solution as long as oil continues to be the main resource of energy.

    The best option is to research and tap into all potential resources, which is what they are doing. Only it will take time to find the best combination economically and production wise so our country doesn't falter during the conversion of these new resources into our society.

    No one hear has the answer. No one hear is going to cover any new ground. It is a moot point.
     
  10. MegaMoonMan

    MegaMoonMan www.megamoonman.com TFW2005 Supporter

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    Not this again.

    What are you trying to accomplish by posting articles about how we need better fuel sources over and over again on a TF board? It borders on having a political agenda.

    We get it. You're right. Better fuel sources are needed, but your broad, generalizing "build solar panels, sit back and watch" approach is short sighted and uninformed.

    Go invent the next fuel source (or a better way to harness natural energies already present) instead of constantly complaining about the lack thereof.
     
  11. artiepants

    artiepants Just over here punching Unicron.

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    i just heard this week on the news that a local company is planning on going into production with a mid size Hybrid Pick-Up either next year or the one after, wish i'd caught the name of the company...
     
  12. funkatron101

    funkatron101 TFW2005 Supporter

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  13. Ops_was_a_truck

    Ops_was_a_truck JOOOLIE ANDREWWWWWS!!!!!!

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    Wake me up when Superion33 posts "ALL ENVIRONMENTAL PROBLEMS HAVE BEEN SOLVED BY ME" and it's fact.
     
  14. MegaMoonMan

    MegaMoonMan www.megamoonman.com TFW2005 Supporter

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    Prepare for a LOOOOOONG nap.
     
  15. Joe Moore

    Joe Moore Is Not Jim... Administrator

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    Closed for obvious reasons.
     
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