Janesville84.7°

SUV sales still sliding

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JAMES P. LEUTE
January 4, 2008
— Sales of General Motors’ full-size sport utility vehicles fell again in 2007, and the trend won’t be reversed in 2008 unless consumers set aside rampant economic uncertainties.

While it’s selling fewer of the big trucks, GM is maintaining its share of a diminishing full-size SUV market.


GM employees at plants in Janesville, Arlington, Texas, and Silao, Mexico, build the vehicles that comprise the automaker’s slice of the full-size SUV market.


Workers in Janesville build Chevrolet Suburbans and Tahoes and GMC Yukon XLs and Yukons. Arlington employees produce those four and the Cadillac Escalade and Escalade ESV. Workers in Silao turn out the Suburban, Escalade EXT and its sibling, the Chevrolet Avalanche.


GM reported Thursday that it sold 338,600 Suburbans, Tahoes, Yukon XLs and Yukons last year, a drop of 4.7 percent from 2006.


The 2007 sales number extends a decline that dates back to at least 2002, when GM sold more than 500,000 of the trucks common to the Janesville, Arlington and Silao plants.


In the combined full-size SUV segment, GM delivered 455,201 vehicles last year, which is about 70 percent of the total full-size SUV market. Other players in the segment include the Ford Expedition and Navigator, Dodge Durango, Chrysler Aspen and Toyota Sequoia.


GM and other automakers are selling fewer and fewer full-size SUVs in a diminishing market that’s been hammered by high gas prices and other economic concerns.


“For many people, these are deferrable purchases,” said GM spokesman John McDonald, who noted that higher home equity loan rates are keeping some consumers out of the market, while falling housing starts have hurt the building industry.


Higher gas prices, he said, are only an issue when consumers can find an alternative smaller vehicle with higher mileage, such as a crossover.


Economic uncertainties have prompted automakers to back off on their production forecasts.


Late last year, GM said it would cut domestic production of cars by 13.7 percent and trucks by 8.7 percent in the first quarter of this year.


That production cut will be felt at the GM plant in Janesville, where the production line will be slowed in March from 52 jobs an hour to 44. The slowdown and an expected GM buyout plan are expected to decrease employment levels in Janesville, where 2,500 hourly and 200 salaried personnel now work.


Analysts and industry observers have said the production slowdown in Janesville is an indicator of the automaker’s sales expectations for the large SUV segment.


Temporary plant shutdowns are usually a short-term strategy to adjust bulging dealer inventories. Slowing the assembly line, however, is more indicative of sagging demand for the long term.


“The days of overproducing and incentivizing sales are gone,” David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., told The Janesville Gazette when the slowdown was announced in December.


“The automakers have to balance productivity with profitable sales.”


McDonald said GM’s lineup of new Escalades and Subrubans are selling well and have showed gains over their pervious models.


“When it comes to the large SUVs, we still dominate that market space,” he said. “But the market is shifting.


“We always say market share is nice to have, but for us to grow the business, we’re not going to flood the market with fleet vehicles and daily rentals just to address capacity issues.”



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