DETROIT – In the 1990s, sales of hot new SUVs propelled metro Detroit into a sort of economic paradise – a Golden Era when workers took home thousands of dollars in bonuses and drove around in big Ford Explorers, Jeep Grand Cherokees and Chevy Suburbans to load up on the spoils of their success.
But with gas prices topping $3 a gallon recently, and big sport-utility vehicles increasingly out of vogue, the outlook for Detroit has seemed bleak. Production cuts, layoffs and belt-tightening have been the order of the day.
But Ford Motor Co. and crosstown rivals General Motors Corp. and DaimlerChrysler AG have quietly been cornering a new segment of the auto market that may soon bring better days to Detroit.
Detroit is now king of the crossover – controlling 47.6 percent of the market – and local automakers are well-poised to dominate the fast-growing market in the next few years with new vehicles such as the new Chevy HHR, Lincoln Aviator and Jeep Compass.
Crossover utility vehicles, or CUVs as they are sometimes called, look like SUVs and offer the same kind of cargo space in the back. But while SUVs are built like big trucks, the architecture of a CUV is more like that of a smaller car. That helps make crossovers more fuel-efficient, ride more smoothly and easier to get in and out of than an SUV.
Crossover sales are up 42.3 percent at Ford, 31.3 percent at GM and 26.8 percent at DaimlerChrysler through August, compared with the same period a year ago, according to Autodata Corp., a research firm in Woodcliff Lake, N.J. No other Asian or European automakers are making such impressive gains.
“This could very well be the segment that saves them,” Art Spinella, president of CNW Marketing Research in Bandon, Ore., said of the crossover market’s significance to Detroit-area automakers.
Mike Maroone, president of AutoNation Inc., the largest chain of car dealerships in the country with 352 new vehicle franchises, agreed.
The Ford Escape is the most popular CUV on the market. That market also includes vehicles like the Honda CR-V, Toyota Highlander, Chevy Equinox and Chrysler PT Cruiser.
Most consumers can’t tell the difference between an SUV and CUV, but they are increasingly attracted to the special package of crossover attributes. The improved fuel efficiency, in particular, may be accelerating the popularity of the crossover, Spinella said.
“The CUV is the new SUV,” John Casesa, an auto analyst with the brokerage firm Merrill Lynch, declared earlier this year.
The top gainer in the crossover market is Ford. Sales of the Escape, Ford Freestyle and Mercury Mariner helped drive that automaker’s 42.3 percent gain in sales during the first eight months of the year.
The only downside to Detroit’s increasing dominance in the crossover market is that CUVs may never be as profitable as the SUVs.
they replace, Spinella said.
Automakers don’t release details on the profitability of their separate vehicle lines. But Spinella estimated that the profits on crossovers range from $6,500 to $8,000, while profits on the largest SUVs range from $10,000 to $15,000.
“There’s nothing as profitable as a large sport-utility. Those are really money trees,” he said.
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But if automakers sell enough crossovers, he said, they can still make the kind of profits that make Detroit hum.
“It takes a lot of crossovers,” Spinella said, adding, “There’s no doubt in my mind it will hit 2 million vehicles in the next few years.”
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There are 35 crossover vehicles sold in the United States today, and many more are expected. There is some debate about what constitutes a crossover, but Autodata Corp. of Woodcliff Lake, N.J., counts the following vehicles in the crossover category:
Acura MD X
BMW X3
BMW X5
Buick Rendezvous
Cadillac SRX
Chevrolet Equinox
Chevrolet HHR
Chrysler Pacifica
Chrysler PT Cruiser
Dodge Magnum
Ford Escape / Escape Hybrid
Ford Freestyle
Honda CR-V
Honda Element
Hyundai Santa Fe
Hyundai Tucson
Infiniti FX 35 / FX 45
Lexus RX 400h / 330 / 300
Mazda Tribute
Mazda5
Mercury Mariner
Mitsubishi Endeavor
Nissan Murano
Pontiac Aztek
Pontiac Torrent
Porsche Cayenne
Saturn VUE
Subaru B9 Tribeca
Subaru Baja
Subaru Forester
Toyota Highlander
Toyota RAV4 / EV
Volkswagen Touareg
Volvo V70XC
Volvo XC90
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ARCHIVE PHOTOS on KRT Direct (from KRT Photo Service, 202-383-6099): Chevrolet HHR, Ford Freestyle, Lexus RX, Mercury Mariner, Pontiac Torrent, Subaru B9 Tribeca, Subaru Forester, Toyota Highlander
AP-NY-11-11-05 0615EST
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