SUV's losing its "cool"??
#1
Speaks French in Russian
Thread Starter
SUV's losing its "cool"??
Trading the Hummer for a Honda
By MICHELINE MAYNARD
Published: March 18, 2006
http://www.nytimes.com/2006/03/18/bu...3E&oref=slogin
By MICHELINE MAYNARD
Published: March 18, 2006
DETROIT, March 17 — For Janna Jensen, it was the dirty looks and nasty gestures from other drivers that finally persuaded her to give up the family's $55,000 Hummer H2. Her husband, Michael, meanwhile, was tired of the $300 monthly gasoline cost and the quality problems that began soon after they bought it.
So the Jensens of Reno, Nev., dumped the sport utility vehicle this year for a more modest Honda Element, still an S.U.V. but one with better gasoline mileage and a lower profile than the H2. And they are not alone.
Luxury sport utilities are becoming decidedly less cool than just three years ago, when they were the hottest things on wheels and dealers had long waiting lists for the most popular models.
On top of the sales drop that has hurt all sport utilities, fewer than half the people who bought luxury S.U.V.'s are going back for another one. Incentives for the vehicles are at record levels and for the first time, luxury automakers are paying out more for rebates and lease deals to entice consumers to buy luxury S.U.V.'s than to buy cars.
The higher cost of gasoline plays a big role, as it has for the last year of high oil prices. But wealthy buyers, who used to shrug off the expense, are shifting gears, as excessive energy consumption is becoming socially embarrassing.
David Katz, who owns an interior design firm in Seattle, traded in his 1999 Ford Explorer last year to help buy a Lexus 400H, the hybrid-electric version of the RX sport utility. "I was sitting at my desk, ruminating about the crisis in the Middle East and what I could do personally to use less fuel," Mr. Katz said.
Dub magazine, a specialty publication aimed at car enthusiasts, remains packed each month with images of customized cars, including celebrities' wheels. But now, its editors are seeing that trend setters, especially those who have families, are trying to appear as if they are environmentally aware.
"Everyone is concerned with giving back," said Myles Kovacs, the magazine's editor.
In February, average incentives on luxury sport utility vehicles hit $4,046, or nearly $1,500 a vehicle more than what automakers doled out on luxury cars, according to Autodata Inc., a Woodcliff, N.J., company that tracks industry statistics. That is also more than four times what automakers paid as incentives on luxury S.U.V.'s in 2003.
Moreover, about 53 percent of luxury S.U.V. owners who have traded in their models in the months since November did not purchase another luxury S.U.V., according to the Power Information Network, a branch of the consumer-marketing company J. D. Power & Associates.
Of that group, two-fifths went back to cars, while others bought smaller or less-expensive S.U.V.'s and some purchased pickup trucks. Ron Pinelli, the president of Autodata, said, "Cool has a short shelf life."
To be sure, luxury sport utilities are not going away, and Cadillac, Lincoln and Mercedes-Benz all have new high-ticket models coming out the next few months. But the waiting lists that many dealers came to expect for the industry's plushest vehicles — which typically start at $35,000 — have largely evaporated, along with their buzz.
Auto companies have always had to pile on the rebates to persuade customers to drive away stale car models, while the fresh models with unique features typically sell briskly with few if any incentives. Now the same thing is happening with luxury S.U.V.'s.
A case in point is the Cadillac Escalade. General Motors is offering thousands of dollars in incentives to clear out 2006 models. At the same time, dealers are beginning to get deliveries of the 2007 Escalade, part of a new family of S.U.V.'s that G.M. is counting on to reverse its market share slide.
On Wednesday, G.M. said that it was stepping up production of its new line because of a strong early response for the vehicle.
The new vehicles are a welcome sight for Tom Westwood, the general manager of Tustin Cadillac in Southern California. Mr. Westwood had to discount his 2006 Escalades by an average $11,000 to entice customers to take them.
The newest versions, however, are selling close to their $60,000 retail price, he said, and selling them is like "shooting fish in a barrel."
Mr. Westwood continued: "We don't have an opportunity to make money in the car business very often, but this is one of them. And I know it probably won't last all that long."
As recently as 2003, auto companies routinely earned profits of $15,000 and more on each big luxury S.U.V., a lure that also drew automakers from Japan and Europe into the marketplace. Even brands that were better known for their cars, like Volvo, Saab and Porsche, introduced luxury sport utilities, all aiming for the big money.
"It was a whole different dynamic then," said George Pipas, the corporate sales analyst at Ford. "There were fewer competitors, and the demand in this category was rising faster than the category was."
But now, with buyers having second thoughts, it is taking longer to sell luxury S.U.V.'s, which spent an estimated 58 days on a dealer's lot from January through March, compared with 51 days during the first quarter of 2005, according to Power's statistics. All that reflects buyers' disdain for anything less than the next new thing, said Wesley Brown, a partner with Iceology, a Los Angeles firm that follows automotive trends.
Given that luxury S.U.V. buyers rarely use their vehicles off highways and city streets, "there's absolutely no reason to drive it except that it's cool to drive," Mr. Brown said.
"A lot of those people have had enough, so they're getting out of it."
To hang onto those customers, Mr. Brown said, auto companies must create something that makes buyers say "I have to have it."
Sales numbers for 2005 show the best sellers in the luxury S.U.V. category were for models introduced during the year.
One was the redesigned Mercedes M-Class. Because of the interest in the fresh model, which went on sale last April as a 2006 model, M-Class sales rose 15 percent during 2005.
With the newest M-Class, engineers aimed for the handling characteristics of Mercedes luxury cars, said Dave Larsen, the product manager in charge of the M-Class.
Previous M-class models, which first hit the market in 1998, had a ride that was decidedly trucklike, a common trait of the first crop of luxury S.U.V.'s, which were based on the underpinnings of pickup trucks. Mercedes customers, used to fewer jolts, insisted on something more comfortable.
"The feedback we were getting was that they wanted something more luxurious," Mr. Larsen said. Thus, Mercedes developed a vehicle with plenty of extras, like electronic seats, a multiposition steering wheel, and a new 3.5-liter engine with 260 horsepower. The new M-Class gets 10 percent better fuel economy than its predecessor and is 10 percent lighter.
Incentives, however, definitely are not lighter. In February, Mercedes' incentives were $4,278 for all its S.U.V.'s, more than the average for luxury S.U.V.'s. Those big incentives are a reason Mr. Larsen's development team vowed that "we needed to nail the price and nail the features, and then incentives take care of themselves," he said.
Mercedes' next luxury S.U.V. effort will be the G-Class, a full-size S.U.V. that will make its debut this spring. A few months later, Lincoln will come out with its latest version of the Navigator while Lexus is preparing a new version of its big LX sport utility.
Those vehicles might seem like risky bets, given the unfriendly atmosphere for luxury S.U.V.'s. But despite buyers' growing aversion and rising incentives, Mr. Pipas at Ford said he did not expect manufacturers to be discouraged, especially when vehicles like the M-Class prove customers can still be captured.
"My guess is that everyone who is in it will be in it," he said. "With the price that you charge for them, even with incentives, there's money to be made."
So the Jensens of Reno, Nev., dumped the sport utility vehicle this year for a more modest Honda Element, still an S.U.V. but one with better gasoline mileage and a lower profile than the H2. And they are not alone.
Luxury sport utilities are becoming decidedly less cool than just three years ago, when they were the hottest things on wheels and dealers had long waiting lists for the most popular models.
On top of the sales drop that has hurt all sport utilities, fewer than half the people who bought luxury S.U.V.'s are going back for another one. Incentives for the vehicles are at record levels and for the first time, luxury automakers are paying out more for rebates and lease deals to entice consumers to buy luxury S.U.V.'s than to buy cars.
The higher cost of gasoline plays a big role, as it has for the last year of high oil prices. But wealthy buyers, who used to shrug off the expense, are shifting gears, as excessive energy consumption is becoming socially embarrassing.
David Katz, who owns an interior design firm in Seattle, traded in his 1999 Ford Explorer last year to help buy a Lexus 400H, the hybrid-electric version of the RX sport utility. "I was sitting at my desk, ruminating about the crisis in the Middle East and what I could do personally to use less fuel," Mr. Katz said.
Dub magazine, a specialty publication aimed at car enthusiasts, remains packed each month with images of customized cars, including celebrities' wheels. But now, its editors are seeing that trend setters, especially those who have families, are trying to appear as if they are environmentally aware.
"Everyone is concerned with giving back," said Myles Kovacs, the magazine's editor.
In February, average incentives on luxury sport utility vehicles hit $4,046, or nearly $1,500 a vehicle more than what automakers doled out on luxury cars, according to Autodata Inc., a Woodcliff, N.J., company that tracks industry statistics. That is also more than four times what automakers paid as incentives on luxury S.U.V.'s in 2003.
Moreover, about 53 percent of luxury S.U.V. owners who have traded in their models in the months since November did not purchase another luxury S.U.V., according to the Power Information Network, a branch of the consumer-marketing company J. D. Power & Associates.
Of that group, two-fifths went back to cars, while others bought smaller or less-expensive S.U.V.'s and some purchased pickup trucks. Ron Pinelli, the president of Autodata, said, "Cool has a short shelf life."
To be sure, luxury sport utilities are not going away, and Cadillac, Lincoln and Mercedes-Benz all have new high-ticket models coming out the next few months. But the waiting lists that many dealers came to expect for the industry's plushest vehicles — which typically start at $35,000 — have largely evaporated, along with their buzz.
Auto companies have always had to pile on the rebates to persuade customers to drive away stale car models, while the fresh models with unique features typically sell briskly with few if any incentives. Now the same thing is happening with luxury S.U.V.'s.
A case in point is the Cadillac Escalade. General Motors is offering thousands of dollars in incentives to clear out 2006 models. At the same time, dealers are beginning to get deliveries of the 2007 Escalade, part of a new family of S.U.V.'s that G.M. is counting on to reverse its market share slide.
On Wednesday, G.M. said that it was stepping up production of its new line because of a strong early response for the vehicle.
The new vehicles are a welcome sight for Tom Westwood, the general manager of Tustin Cadillac in Southern California. Mr. Westwood had to discount his 2006 Escalades by an average $11,000 to entice customers to take them.
The newest versions, however, are selling close to their $60,000 retail price, he said, and selling them is like "shooting fish in a barrel."
Mr. Westwood continued: "We don't have an opportunity to make money in the car business very often, but this is one of them. And I know it probably won't last all that long."
As recently as 2003, auto companies routinely earned profits of $15,000 and more on each big luxury S.U.V., a lure that also drew automakers from Japan and Europe into the marketplace. Even brands that were better known for their cars, like Volvo, Saab and Porsche, introduced luxury sport utilities, all aiming for the big money.
"It was a whole different dynamic then," said George Pipas, the corporate sales analyst at Ford. "There were fewer competitors, and the demand in this category was rising faster than the category was."
But now, with buyers having second thoughts, it is taking longer to sell luxury S.U.V.'s, which spent an estimated 58 days on a dealer's lot from January through March, compared with 51 days during the first quarter of 2005, according to Power's statistics. All that reflects buyers' disdain for anything less than the next new thing, said Wesley Brown, a partner with Iceology, a Los Angeles firm that follows automotive trends.
Given that luxury S.U.V. buyers rarely use their vehicles off highways and city streets, "there's absolutely no reason to drive it except that it's cool to drive," Mr. Brown said.
"A lot of those people have had enough, so they're getting out of it."
To hang onto those customers, Mr. Brown said, auto companies must create something that makes buyers say "I have to have it."
Sales numbers for 2005 show the best sellers in the luxury S.U.V. category were for models introduced during the year.
One was the redesigned Mercedes M-Class. Because of the interest in the fresh model, which went on sale last April as a 2006 model, M-Class sales rose 15 percent during 2005.
With the newest M-Class, engineers aimed for the handling characteristics of Mercedes luxury cars, said Dave Larsen, the product manager in charge of the M-Class.
Previous M-class models, which first hit the market in 1998, had a ride that was decidedly trucklike, a common trait of the first crop of luxury S.U.V.'s, which were based on the underpinnings of pickup trucks. Mercedes customers, used to fewer jolts, insisted on something more comfortable.
"The feedback we were getting was that they wanted something more luxurious," Mr. Larsen said. Thus, Mercedes developed a vehicle with plenty of extras, like electronic seats, a multiposition steering wheel, and a new 3.5-liter engine with 260 horsepower. The new M-Class gets 10 percent better fuel economy than its predecessor and is 10 percent lighter.
Incentives, however, definitely are not lighter. In February, Mercedes' incentives were $4,278 for all its S.U.V.'s, more than the average for luxury S.U.V.'s. Those big incentives are a reason Mr. Larsen's development team vowed that "we needed to nail the price and nail the features, and then incentives take care of themselves," he said.
Mercedes' next luxury S.U.V. effort will be the G-Class, a full-size S.U.V. that will make its debut this spring. A few months later, Lincoln will come out with its latest version of the Navigator while Lexus is preparing a new version of its big LX sport utility.
Those vehicles might seem like risky bets, given the unfriendly atmosphere for luxury S.U.V.'s. But despite buyers' growing aversion and rising incentives, Mr. Pipas at Ford said he did not expect manufacturers to be discouraged, especially when vehicles like the M-Class prove customers can still be captured.
"My guess is that everyone who is in it will be in it," he said. "With the price that you charge for them, even with incentives, there's money to be made."
#2
Lexus Champion
Join Date: Feb 2005
Location: NYC Raised But ATL is where I stay.
Posts: 1,809
Likes: 0
Received 0 Likes
on
0 Posts
You ain't know!!
Some SUVs will alwys be cool i.e. Range Rover and Escalade. Beyond that S.U.V.s went out with Hammer and those silly shiny pants. It's all about this COUPE LIFE!!
#3
Good to hear! maybe now I can actually see something on the freeway when I drive in los angeles. AND maybe I can find parking spots now that there wont be SUV's parked across two spots... OR maybe i will stop getting rock chips from SUV's kicking up gravel....
#5
Lexus Champion
Originally Posted by 4TehNguyen
SUVs are a fad, rising gas costs will kill them, domestics are in huge trouble if they think SUVs will keep them alive
#7
Lexus Test Driver
iTrader: (1)
Join Date: Dec 2005
Location: California
Posts: 1,397
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by TheRupp
I had a discussion with a friend of mine earlier about this... domestic's seem to be more focused on who has the biggest, baddest SUV (*cough* GM *cough, cough*) instead of focusing on fuel efficiency or technology (not counting E85).
I go around LA, I have the only SUV with; marks, mud, scratches, and more mud.
LOL
Trending Topics
#9
Lexus Test Driver
iTrader: (1)
Join Date: Dec 2005
Location: California
Posts: 1,397
Likes: 0
Received 0 Likes
on
0 Posts
Originally Posted by whoster
yes they are losing its cool.
whoster is contemplating selling his land cruiser for a miata..of course it's losing it's cool.
whoster is contemplating selling his land cruiser for a miata..of course it's losing it's cool.
LOL
#11
Guest
Posts: n/a
I think SUVs are in a transitional phase. Lexus has shown you can now own a SUV and have good gas milegae. Ford somewhat the same.
The "Cool" image (that overcame the van mentaility) is slowly being replaced with "I don't give a **** about u or gas" and that may subconciously mess with owners. People now look at SUV owners and cringe more and more.
I cannot lie since driving the RX, I can see why these things are so popular. My stance changed a few years ago from anti-SUV to one of choice.
I think SUV makers need to give the buyers MORE CHOICE with hyrbids in SUVs.
No one really wants to give them up. Imagine SUVs got more fuel efficient, they couldn't stop making them.
Its time for a TRANSITION. Will only TOYOTA have a clue? I am sure they are readying more hybrid SUVs.
The "Cool" image (that overcame the van mentaility) is slowly being replaced with "I don't give a **** about u or gas" and that may subconciously mess with owners. People now look at SUV owners and cringe more and more.
I cannot lie since driving the RX, I can see why these things are so popular. My stance changed a few years ago from anti-SUV to one of choice.
I think SUV makers need to give the buyers MORE CHOICE with hyrbids in SUVs.
No one really wants to give them up. Imagine SUVs got more fuel efficient, they couldn't stop making them.
Its time for a TRANSITION. Will only TOYOTA have a clue? I am sure they are readying more hybrid SUVs.
Thread
Thread Starter
Forum
Replies
Last Post
Hoovey689
Car Chat
8
07-11-18 06:06 PM
bitkahuna
Car Chat
156
03-05-18 02:34 PM