GM scales back outlook for big SUVs

[Variance]

Link: http://www.detnews.com/2005/autosinsider/0.../E04-298488.htm

GM scales back outlook for big SUVs

Company says gas prices, changing tastes will reduce demand for such vehicles.

By Christine Tierney / The Detroit News


General Motors Corp. tamped down expectations for its next-generation large sport utility vehicles coming out early next year, saying high gas prices and changing tastes were eroding demand for vehicles in that segment.

"We're not anticipating that the market will reach or exceed its prior peak," Paul Ballew, GM's executive director for industry analysis, told analysts Tuesday. "Given all the alternatives out there, given the uncertainty on gas prices, given some image factors, we think it's appropriate to plan in a more conservative manner and to assess the market potential for us in volume levels that don't take us to our prior peak."

But he said GM would continue to dominate the large SUV segment and benefit from sustained demand for large luxury SUVs, such as its Cadillac Escalade.

Despite high gas prices, demand has held up for full-size pickups, which account for more than two-thirds of GM's large SUV and pickup volumes. New competitors are crowding the field, but growing sales of four-door pickups have bolstered prices, Ballew said.

GM has portrayed the new SUVs and pickups as central to its turnaround effort in North America, where the automaker has lost $2.5 billion in the first half of the year.

CEO Rick Wagoner said the company is making progress turning around its money-losing North American operations and some key new cars are selling well.

GM officials attributed weakening demand for large SUVs to the fact that its own models, such as the Chevrolet Suburban, were aging and about to be replaced.

"It's a concession to reality by Paul Ballew that this sector has seen its peak," said auto analyst David Healy at Burnham Securities. "Ford has been talking about this for some time, but GM has been in denial on the subject up until now."

GM says the typical large SUV buyer can afford the increase in gas prices. But some customers may be less comfortable with gas guzzlers.

GM's large SUV sales peaked at 505,000 units in 2001 and 2002, but have slipped to around 435,000 on an annual basis this year. Its large pickup sales have risen steadily from about 845,000 in 1999 and are on track this year to top 1.1 million.

You can reach Christine Tierney at (313) 222-1463 or [email protected].

[daves87rs]

If you can get some with v6s, that would help. And every(almost) v8 has DOD.. this wll help keep the sales up.. Unless gas hit 4 bucks a gallon... :(

[BlkHhr104]

probaly will, its 3.49 by me.

[sciguy_0504]

probaly will, its 3.49 by me.

[post="7290"]<{POST_SNAPBACK}>[/post]

For regular unleaded? That's rediculous...price gouging after Katrina reduced the U.S.' output of oil from the Gulf of Mexico to only about 2%.

[Robert Hall]

Gas is $2.89 here today and will probably be at $3 by the weekend (Denver). I expect it will be above $3 and stay there for sometime..

[Matt276]

Yep, this is the end of full-sized SUVs, I see a lot of demand for the HHR though :)

[Northstar]

As has been said before, if you can afford a big SUV that costs $35-45k, you can afford to pay for the gas. I do expect sales to suffer somewhat, but I don't see why the GMT900s won't just take sales away from the SUVs that are currently out and will be way outclassed by the 900s. I can definetly see the 900s taking full size SUV market share from other makes. Whether that means increased sales, I don't know.

[Robert Hall]

As has been said before, if you can afford a big SUV that costs $35-45k, you can afford to pay for the gas.

I theory, yes...but I suspect a lot of people that lease these obsese beasts really can't afford them.....

[Flybrian]

I theory, yes...but I suspect a lot of people that lease these obsese beasts really can't afford them.....

[post="7354"]<{POST_SNAPBACK}>[/post]

Too bad, so sad. That's why people my age with Bimmers and Lexus don't impress me; I know they can't really afford them.

[Newbiewar]

As has been said before, if you can afford a big SUV that costs $35-45k, you can afford to pay for the gas.

I do expect sales to suffer somewhat, but I don't see why the GMT900s won't just take sales away from the SUVs that are currently out and will be way outclassed by the 900s. I can definetly see the 900s taking full size SUV market share from other makes. Whether that means increased sales, I don't know.

[post="7350"]<{POST_SNAPBACK}>[/post]

heh let me tell you some people cant afford those things... people love them...

but yea hopefully more fuel ecconomy will come... and they will remain popular

[bobo]

GM is probably just trying to downplay expectations. I still expect them to be a huge hit. A lot of people are waiting to trade in their early GMT-800's for one. A mid-size SUV at 18 mpg instead of a full-size SUV at 16 mpg doesn't make a whole lot of difference.

[Satty]

The 900's are supposed to shoot GM back to the top, profit wise. Wont happen with gas prices going up with no end in sight. The 900's will sell to those who really want/need them but I think a lot of people who get them for the image will find out that they would be much better off in a 5er wagon.

[frogger]

Its kind of enjoyable hearing people who commute with gas guzzlers complain about the gas pricing though!

[Robert Hall]

Its kind of enjoyable hearing people who commute with gas guzzlers complain about the gas pricing though!

[post="7761"]<{POST_SNAPBACK}>[/post]

Yeah...it's laughable...I'm afraid a lot of people make dumb vehicle choices...who really needs an obese, 5000-6000lb SUV or truck as a daily driver? Very few people do, yet they keep buying them.... Edited September 1, 2005 by moltar

[regfootball]

at day care this morning, another mom i know said that when they bought their bravada, gas was 1.08 a gallon, they could afford the 15mpg. But now, its getting spendy for them. I think the low prices years ago set us all up for this.

[FUTURE_OF_GM]

Gas is $3.49 and up here and there are only 2-3 stations in town that haven't ran out. Oh, and my family is some of those "laughable" people. We have an F-150 (Dad's job requires it) and a Silverado. But then again, we need the Silverado as we do a lot of towing between our camper, projects and horses.

[balthazar]

"It's a concession to reality by Paul Ballew that this sector has seen its peak," said auto analyst David Healy at Burnham Securities. "Ford has been talking about this for some time, but GM has been in denial on the subject up until now."

GM's large SUV sales peaked at 505,000 units in 2001 and 2002, but have slipped to around 435,000 on an annual basis this year. Its large pickup sales have risen steadily from about 845,000 in 1999 and are on track this year to top 1.1 million.

185,000 unit net increase.
Don't you feel stupid, Dave Healey.