A Lot Is Riding on New SUVs
As Ford Motor Co. this week carries out the crucial launch of its 2002 Explorer, the country’s best-selling sport-utility vehicle but target of much bad publicity, General Motors Corp. is unleashing its own stable of redesigned Explorer-fighters.
The Chevrolet TrailBlazer, GMC Envoy and Oldsmobile Bravada--also coming out as 2002 models--are aimed not only at the Explorer, but also at the kind of customer GM wants most: affluent, younger buyers.
Both Ford and GM, as well as a host of other auto makers, are counting on Americans’ continued love affair with SUVs to support this keenly competitive--and profitable--market segment.
Industry executives and analysts agree that although the overall U.S. market for vehicles will shrink somewhat this year, SUVs will remain hot sellers. But with increasing competition from imports, the rivalry to win new customers will be intense.
“GM has under-performed in the very important sport-utility industry,” acknowledged Paul Ballew, GM’s head of market and industry analysis. “Ford has handily beaten us with the Explorer, and Chrysler has outperformed with the [Jeep] Grand Cherokee and [Dodge] Durango.”
Although SUVs now account for about 20% of overall auto industry sales, GM has grabbed only about an 18% market share the last couple of years. GM commands about a 30% share of the overall truck market.
The launch of the new Explorer is a crucial one for Ford. The company is coming off a low point in public perception because of last year’s recall of Firestone tires, hundreds of which lost their treads and caused the Explorers on which they were mounted to spin out of control and roll over, resulting in hundreds of deaths and injuries.
For Ford to continue to rule the mid-size SUV segment, it will have to persuade buyers that the new Explorer is safer and more versatile. Among the 2002 model’s new design features: The center of gravity has been lowered, lessening the possibility of a rollover; the bumpers are lower to reduce damage to other cars in collisions; and there is an optional fold-down third row of seats.
Ford, however, does not plan to stress safety in its advertising. “We’ve emphasized safety since the day the Explorer was introduced” in 1990, said Doug Scott, Ford’s SUV group marketing manager.
“Eighty-five to 90% of owners said they would buy another Explorer without Firestone tires,” said Al Giombetti, Ford’s chief marketer for SUVs and trucks.
In response to the Firestone tire problems, Ford now offers Explorer buyers a choice of Michelin, Goodyear or Firestone tires. But Rebecca Lindland, an auto industry analyst with Standard & Poor’s, doesn’t share Ford’s optimism. “Ford is tainted with the ‘unsafe’ mark, while GM is seen as dealing more with quality questions,” she said. “Ford has a longer row to hoe in the public perception.”
The new Explorer is also crucial to Ford because of a series of recalls and delays in launching the smaller Ford Escape SUV and its sister, the Mazda Tribute.
Nevertheless, Ford sold more than 445,000 Explorers last year, a record, compared with about 336,000 for the Chevy Blazer, GMC Jimmy (as they were known until this year) and Olds Bravada.
GM will attempt to win customers by emphasizing the larger dimensions of this new generation of light trucks and the brute power of the lineup: the standard inline-6 engine in the new SUVs puts out 270 horsepower, considerably more than the Explorer’s standard 210-hp V-6 and even more than the Explorer’s optional 240-hp V-8.
“So we get the power of a V-8 with the fuel economy of a 6-cylinder,” said Brian Fjeldsted, deputy brand manager for the Envoy, which will start at about $28,800.
Chevy TrailBlazer prices begin at $25,755 and the Olds Bravada at $32,235. Prices for the new Explorer range widely, depending on options, from $24,620 to 32,690.
Overall, SUVs are expected to show hefty sales growth this year despite the slowing economy and uncertain consumer confidence.
The sport-utility market segment, about 3.4 million vehicles, or about 20% of the overall U.S. market last year, is expected to expand to 4 million vehicles by 2006, or 24.5% of the market. That will make it easily the biggest market segment, according to industry consultant J.D. Power & Associates.
Luxury SUVs also are expected to proliferate, with the market burgeoning from 254,000 units sold in 1998 to more than 600,000 in 2004, said Susan Docherty, brand manager for the Cadillac Escalade SUV. BMW, Cadillac, Infiniti, Lincoln, Mercedes-Benz, Porsche, Saab and Volvo are all planning to introduce new luxury sport-utilities in the next few years.
Among lower-priced SUVs, Isuzu, Saturn and Volkswagen are planning new entries, and most other Japanese car makers are expected to bring new models to market as well. Toyota especially, now with five SUVs, is making a big push.
Ford will market the Explorer through a direct-mail campaign targeting owners of the 3.8 million Explorers that have already been sold. It is planning to host a series of outdoor events to introduce people to rock climbing, mountain biking and off-road driving.
The Fox television network will also run a staged, unscripted show in the fall called “No Boundaries”--Ford’s SUV advertising tag line--featuring 15 people competing in events such as mountain biking and snowboarding and who use Ford SUVs, including the new Explorer, to get around.
For GM, the TrailBlazer marketing will play off Chevy’s “Like a Rock” theme, emphasizing the truck’s raw power. The more upscale GMC Envoy will appear at home and garden shows with marketing emphasizing comfort for the do-it-yourself crowd, and the Olds Bravada will emphasize performance and a cushier ride.
“The SUV market will be vibrant and continue to grow dramatically. There will continue to be people migrating from passenger cars to SUVs and first-time buyers coming to SUVs,” said Steven Sturm, Toyota’s vice president for marketing. “Someone’s going to take [market] share from somebody.”
Toyota forecasts sport-utility sales to grow industrywide by 1.5% this year but expects its own SUV sales to zoom by 53% on the back of the introductions of the full-size Sequoia, the car-based Highlander and the redesigned RAV4 small SUV.
As for Ford, Brad Cooper, a sales manager at Bob Wondries Ford in Alhambra, is delighted with the new Explorer.
“Once Ford starts advertising, it will raise sales across the board,” Cooper said. “The Explorer will help us sell everything from Tauruses to Excursions,” he said, referring to Ford’s mammoth full-size SUV.
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Mid-Size SUV Sales Cool Off
Ford Explorer is still the top-selling mid-size SUV ... The Ford Explorer quickly became the best-selling sport-utility vehicle in any category when it was introduced to the mid-size SUV market in 1990--and it still is.
Ford Explorer sales in 2000:
445,157
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Chevy Blazer/GMC Jimmy/Oldsmobile Bravada sales in 2000: 336,631
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... but sales in that category were down last year.
The mid-size SUV segment continued to grow until last year, when it contracted slightly amid a plethora of compact, full-size and luxury SUV offerings.
2000: 1.79 million
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U.S. sales figures for mid-size SUVs
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Sources: Autodata, Ford
