America's decades-long love affair with monstrously large vehicles may finally be coming to an end, US automakers have predicted in the wake of a sharp drop off in sales amid high fuel costs.
Large and midsized sport utility vehicles were down 42 and 38 percent respectively in May while pickup sales dropped 30 percent, according to Autodata.
And perhaps more telling: the Ford F-series pickup truck – which has been the top selling vehicle in the United States since 1991 – was dethroned by not one but four Japanese-made sedans.
Ford, which recently announced cuts to truck and SUV production, responded by offering deep discounts to move the trucks off its lots.
General Motors went even further: it announced plans Tuesday to close four truck and SUV plants in North America by 2010, cutting light truck production capacity by 700,000 units to 3.7 million vehicles a year.
“These moves are all in response to the rapid rise in oil prices and the resulting changes in the US, changes that we believe are more structural than cyclical,” said Rick Wagoner, GM chairman and chief executive.
“We at GM don't think this is a spike or temporary shift; we believe that it is, by and large, permanent,” Wagoner said at a news conference at GM's annual shareholder meeting in Wilmington, Delaware.
Sales of traditional truck-based sport utility vehicles have been falling steadily in response to the introduction of smaller, car-based crossovers SUVs which offer better handling and fuel economy.
Then a slowdown in the housing market stemmed demand for pickups from construction workers and a broad economic slowdown took a bite out of overall sales.
But the real killer has been gasoline prices.
Average prices at US pumps stayed under 1.25 a gallon for all but a few weeks during the 1990s and regularly dipped to a dollar or less.
They shot up to two and then three dollars a gallon in 2005 and currently average 4.07 dollars after three years of intense price volatility.
“May was a watershed month,” Jim Farley, Ford group vice president of marketing and communications, said in a conference call.
“We are as an industry catching up with the breathtaking choices customers are making.”
In “the most dramatic shift” the industry had seen in two or three months, small and midsize cars represented 47 percent of the US retail market in May, up from just 34 percent in February, Farley said.
“That 13 percent shift three months later represents 1.5 million vehicles,” he said. “That's probably six assembly plants for the industry.”
Ford now plans to have cars and crossover suvs make up some 57 percent of its 2008 production, with truck and large SUV production down about 10 percent compared with last year.
But Toyota, which has recently introduced a full-sized pickup truck and expanded its offerings to include larger SUVs, said strong demand remains for larger vehicles.
“One month doesn't mean a fundamental change for the entire industry,” Toyota Division general manager, Robert Carter, said in a conference call with analysts.
While Toyota has already announced plans to trim truck production, Carter said he is confident that sales will rebound because there is a core group of buyers – like construction workers – who will always need a truck.
“We probably will witness some segment shifts,” he said, adding that he expects SUV sales to rebound although it may be at a “reduced level for some time.”
Overall industry sales were down 10.7 percent in May, according to Autodata.
GM, Ford and Chrysler – which have been slow to match the more fuel-efficient car-based SUVs introduced by their Asian competitors – were again among the worst hit.
Honda managed to edge Chrysler out of the number four spot in the US market as its sales grew 15.6 percent to 167,997 vehicles in May with a market share of 12 percent.
Chrysler's sales fell 25 percent to 148,747 vehicles as its market share slipped to 10.6 percent.
GM reported a 28 percent drop in sales to and saw its top market share fall to 19.1 percent.
Toyota edged closer to the number one spot in the US with 18.4 percent of the market even as sales fell eight percent to 257,404 vehicles.
Ford's sales fell 16 percent to 217,998 vehicles and its market share slipped to 14.7 percent, according to Autodata.
