Gas Prices Up, SUV and Recreational Truck Sales Down

DETROIT March 12, 2005; Poornima Gupta writing for Reuters reported that rising U.S. gasoline prices are hurting sales of large sport utility vehicles and pickup trucks, according to some industry analysts, a trend that could stall a major engine of profits for Detroit's automakers.

The gas-thirsty, full-sized SUV segment lost 1.2 percentage points of U.S. market share over the last two months and large pickups were down about 2 percentage points, according to, which tracks the industry.

Fuel-efficient compact cars, on the other hand, gained 2.2 percentage points of market share in the same period.

Large SUVs and full-sized pickup trucks account for close to 80 percent of North American automotive profits for Ford Motor Co. and General Motors Corp. , Deutsche Bank analyst Rod Lache said in a recent research note.

"The concern, of course, is that the slowdown in these categories may represent the beginnings of a structural change, perhaps sparked by consumers' concerns about higher oil or gasoline prices," Lache said.

The average price American drivers pay for a gallon of regular gasoline is currently just over $2, according to the AAA motor club, The price is expected to shoot to a record high of $2.15 a gallon this spring, according to the U.S. Energy Information Administration.

The higher prices have already hit GM's mix of vehicles in the market, punishing it by $1 per share due to fewer sales of large trucks and SUVs, Bank of America analyst Ron Tadross said in a recent research note.

Ford, he said, is also being penalized 15 cents per share due to a similar decline in the segment.


GM's U.S. sales of SUVs and pickup trucks declined 9 percent last month, while Ford's sales in the same segment slipped 8 percent. Overall, both the automakers lost U.S. market share again in February.

However, Joseph Barker, manager of North American sales analysis at CSM Worldwide, said it was too early to say if the fuel price spike was responsible for the lackluster SUV and truck sales.

"I wouldn't read too much into the first two month of this year," he said.

While sales of GM and Ford trucks slipped in February, Toyota Motor Corp. (Tokyo:7203.T - News) and other Asian automakers reported increased sales in the segment.

U.S. sales of the full-size Toyota Tundra pickup truck, which has a gas-guzzling V-8 engine, rose nearly 49 percent last month, while Nissan Motor Co. (Tokyo:7201.T - News) chalked up a similar rise in sales of its Titan pickup truck.

The Asian automakers' reputation for quality may have helped them buck the industry trend.

Hurt by weaker sales, both Ford and GM raised cash rebates this month on slow-selling models, including SUVs and pickup trucks, to cut inventories of unsold vehicles.

In addition to higher cash discounts, Ford extended its offer of interest-free financing for terms of up to 60 months on the Explorer and Expedition SUVs, which suffered a sales decline of 19.1 percent and 13.8 percent respectively last month.

GM, meanwhile, said it will offer extended warranties on its 2006 model-year Hummer SUVs, which on average have a fuel economy in the mid-teens and whose sales have declined 8.3 percent so far this year.

"Whenever the gas prices go up, we see larger incentive spending by the manufacturers on large SUVs," Jesse Toprak, director of pricing and market analysis at told Reuters.

The recent deterioration in the segment is also partly driven by growing popularity of car-based sport utilities, or "crossovers," and due to the fact that some of the Ford and GM SUVs are reaching the end of their life cycle, Toprak said.

"Unfortunately for GM and Ford, there are lot of exciting products right now out there in the marketplace," he said.

Home | Buyers Guides For Every Auto Make | New Car Buyers Guide | Used Car Super Search | Total New Car Costs | 2016-1993 Car Reviews Truck Reviews
1996-2016 Automotive News | TACH-TV | Media Library | Discount Auto Parts

Copyright © 1996-2016 The Auto Channel. Contact Information, Credits, and Terms of Use. These following titles and media identification are Trademarks owned by The Auto Channel, LLC and have been in continuous use since 1987 : The Auto Channel, Auto Channel and TACH all have been in continuous use world wide since 1987, in Print, TV, Radio, Home Video, Newsletters, On-line, and other interactive media; all rights are reserved and infringement will be acted upon with force.

Privacy Statement | Size Does Matter | Media Kit | XML SITE MAP | Affiliates

Send your questions, comments, and suggestions to

Submit Company releases or Product News stories to
Place copy in body of email, NO attachments please.

To report errors and other problems with this page, please use this form.

Link to this page: