SUVs Won’t Always Be Riding High
Last month, Ford, GM and Chrysler reported another round of record quarterly profits, crediting continued strong sales of sport utility vehicles. But there is a dark lining to Detroit’s silver-plated SUV cloud.
By the Big Three’s own calculations, almost all industry earnings today are delivered by high-riding “sport-utes” and light trucks. For American car makers, building passenger cars of ordinary dimension is rarely a profitable enterprise anymore.
So it’s only logical to ask what would happen if something extinguishes demand for SUVs, a possibility that the industry vehemently pooh-poohs but which is quite easily imagined. A careful look at the Big Three’s non-SUV lineups suggests that in the event of a rapid sea change, the industry would not be far from where it was in 1980, when the cumulative force of two energy crises in the 1970s rendered its land yachts unsalable, while demonstrating that American small cars weren’t up to snuff. Profits disappeared and thousands of jobs were lost for good.
In 1982, 80,000 SUVs were sold in the U.S.; this year, the industry expects to sell 2.8 million. For the first time, SUVs and light trucks constitute half of all new vehicles sold in America. The Big Three understandably have welcomed and nourished this trend, as they earn $10,000 profit and more on their full-sized SUVs and pickups. But it’s been a Faustian bargain.
American car makers blame recent slow sales of their passenger cars--Pontiac sales are off 20%, Saturn is down 15% and Chevrolet Lumina is down 30%--on huge demand for SUVs and consumer disinterest in small cars in this era of cheap gas. A better explanation is that as Detroit focuses ever more resources on SUVs and trucks, its cars have become less competitive.
How else to explain the Honda Civic, a small car that just enjoyed its best U.S. sales month ever? Or the company’s larger Accord and Toyota’s Camry, built by American workers in Ohio and Kentucky, respectively, and among America’s best-selling cars? Not only are these cars profitable to build, but they’re continually developed.
In the auto industry, diligence and investment often make cars better, but they always make them more profitable to build. American passenger cars too often have been starved of attention and needed development funds, time and monies that instead have been used to design new and larger SUVs, expand SUV/light truck production capacity and hatch ever more grandiose SUV marketing schemes.
The auto makers insist that SUV demand will continue indefinitely. They ignore several concerns, any one of which might at a moment’s notice turn their macho rough-riders into a new breed of dinosaur.
SUVs pollute more than cars. That’s because gross carbon dioxide emissions are at least partially a function of how much gasoline an automobile consumes, and SUVs consume a lot. Assuming engines that are otherwise equally clean, a 12-mile-per-gallon Lincoln Navigator emits twice as much carbon dioxide as a Ford Contour offering 24 miles per gallon. Which only matters if you believe that global warming is a serious issue. A preponderance of scientists and the overwhelming majority of governments around the world do. Detroit, for its part, says the proof is inconclusive.
Rising national fuel consumption attributable to burgeoning SUV ownership poses another set of worries. Increased U.S. dependence on foreign oil reserves carries with it all the risks, casts of heinous characters and strategic headaches that it has in the past. A sudden shift in the Mideast status quo, or the whim of the oil oligarchs, easily could impact gasoline supply and prices at the pump. Either of these developments could stop sport utility vehicles dead in their ample tracks.
Detroit feels it has been persecuted by consumer groups, the media and the insurance industry’s trade association, the National Institute for Highway Safety. Both have spoken out against the SUV and its dangers. In a rare moment of open disharmony with the automobile lobby, the insurance industry has been helping gadflies debunk the SUVs’ perceived safety advantages.
Whatever your heavyweight SUV’s advantage is in a head-on collision, for instance, you are more likely to die in a single-car accident in it than in an ordinary car, according to insurance industry statistics. Accidents involving SUVs and their high-riding bumpers also see greater property damage, human casualties and insurance claims. Utilizing this information, underwriters in some states have sought to impose insurance surcharges on sport-ute owners. Smart shoppers are heeding the news now.
Twenty years ago, when self-interest suddenly dictated it, Americans decided that they’d had it with Detroit family sedans that handled poorly and got only 12 mpg. No one wanted to drive a gas guzzler. Who’s to say it can’t happen again?
