SUV Backlash Could Revive Small Cars

U of Michigan study sees automakers becoming more adept at using the Internet to respond to demand for environmentally friendly "build-to-order" vehicles, which are expected to increase to about half of all sales by 2009.

Published: 02-Jan-2002

A University of Michigan researcher predicts a comeback for smaller more fuel-efficient vehicles during the rest of the decade.

Part of the reason is technology and part demographics, as the young generation-next of Americans reject the gas-guzzling behemoths their parents preferred for "greener" vehicles more friendly to the planet.

But this generation is not the starry-eyed "flower-children" of the 60s, who turned the original Volkswagen Beetle and VW Microbus into "hippy cars" and automotive icons. Thanks to the Internet, they're much more pragmatic and knowledgeable consumers.

"All companies are diligently working to develop alternative-fueled and alternative-powered vehicles, while maintaining their efforts to make the internal combustion engine more efficient and clean burning," said Bruce Belzowski, senior research associate at the university's Office for the Study of Automotive Transportation.

Belzowski says as automakers become more adept at using the Internet that demand for environmentally friendly "build-to-order" vehicles will increase to about half of all sales by 2009.

The number of consumers using the Web or online services to research new vehicles is expected jump to 75 percent over the next decade, from 25 percent today, but only about 25 percent of those information savvy buyers will actually close the purchase online, researchers say.

Purchasing a vehicle in the showroom -- or off a dealer's lot -- likely will remain the preferred method of car buying. The vast majority of new vehicles are currently sold from a dealer's inventory -- with only 15 percent ordered direct from the factory.

"The coming decade will bring a large, highly affluent group of buyers into the market, buyers who are highly informed, environmentally aware, and who may not want to drive what their parents do," Belzowski said. "The current success of large/luxury SUVs could cause a backlash of sorts among these young buyers."

In the short run, forecasts indicate automakers will continue to sell nearly as many light trucks as passenger cars -- with cars outselling sport-utility vehicles, pickups and minivans by less than 5 percentage points from 1999 through 2009.

U.S. automakers sold nearly as many SUVs, trucks and minivans as cars in 2000, 8.4 million to 8.7 million, and 2001 sales, spurred by nearly four months of low- and no-interest incentives, were expected to be the third highest in history.

The popularity of SUVs and trucks continued without missing beat Ford sold a record 760,090 sport-utes through mid-December 2001 -- including more than 400,000 Explorers -- the best-selling SUV since its introduction in 1990. Ford also sold 827,319 F-Series pickups through November, up 1.6 percent from last year. Full year sales figures will be released on Jan. 3.

Motor Trend magazine named the Chevrolet Avalanche, an SUV, its 2002 truck of the year. DaimlerChrysler is working on a hybrid-electric-powered version of its popular Jeep Liberty, called the Liberty HEV, to rival Toyota's Prius, the Corolla-sized gasoline-electric sedan introduced in Japan four years ago.

About 75,000 Priuses are on the road and Toyota plans to boost exports by 40 percent to the U.S., where the $20,000 hybrid was expected to make a small profit in 2001. Ford and Toyota have discussed joint development of a new electric-gasoline hybrid for the North American market.

Sales of Honda's Insight gas-electric hybrid coupe, a super ultra low emission vehicle that gets nearly 60 mpg, remained strong with 10,061 units sold through November. Honda will sell a five-seat Civic hybrid in the United States this spring.

In December, Chrysler demonstrated a pollution-free concept minivan called the Town & County Natrium at the Electric Transportation Industry Conference in Sacramento, Calif., that used a third-generation hydrogen fuel cell powered by borax, the active ingredient in some laundry soap. However, the Natrium van is years down the road, assuming the technological hurdles are met and engineers figure out how to recycle borax back into sodium borohydride.

"It may be that respondents anticipate increased regulation for emissions and fuel economy, or they may see the arrival of future powertrains that have the potential to revolutionize what most manufacturers consider their core technology," Belzowski said.

The trends are based on findings from the University of Michigan Delphi Forecast and Analysis of the North American Automobile Industry, a report based on responses from more than 200 auto industry experts conducted biennially for the last 20 years.

The three-volume survey found fuel economy, safety and vehicle technology will be as important to young buyers as performance, quality, styling and brand image. But pricing and dealer service will remain important factors for consumers.

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