news.yahoo.com/s/afp/20050911/bs_afp/usweatherauto
Sun Sep 11, 6:52 PM ET DETROIT, United States (AFP) - Even before Hurricane Katrina tore through the southern United States, hampering a big chunk of the US oil industr y, consumers were having second thoughts about gas-guzzling sport utilit y vehicles.
Katrina could now hasten the demise of the SUV, at least in its current g uise, after years in which it has ruled the roost over the world's bigge st auto market, analysts believe.
"Potentially, Katrina could signal the death knell of the SUV in as much as consumers are going to find themselves once burned, twice shy to buy such vehicles," Wachovia economist Jason Schenker said. "High gas prices and the perceived fragility of the US energy sector are all likely to weigh on consumers' choices for years," he said. Sales of big SUVs dropped dramatically in August, hurting both American a nd Japanese manufacturers, which have been trying to edge into the segme nt over the past five years. The decrease came despite a fierce price war among the Detroit Big Three -- General Motors, Ford and Chrysler -- which have offered customers the same price on autos that their own employees pay. "In response to that, consumers were beginning to look at other vehicles outside of large SUVs. The whole se gment has thinned out into several different segments," he said. GM reported that despite its elite credentials, the Chevrolet Suburban sa w sales drop 28 percent during August. Ford said sales of the full-size Ford Expedition plunged 40 percent. Toyota Motor said sales of its heavily promoted Sequoia dropped 32 percen t in August. Nissan reported sales of the Armada, which is built in a po rtion of Mississippi spared by Hurricane Katrina, fell seven percent. Reviewing the August sales figures, analysts at Merrill Lynch said that K atrina could accelerate "consumers' natural migration away from large SU Vs". Ford plans to halt p roduction of the giant Ford Excursion at the end of September. "There is no question that the demand for traditional sport utility vehic les has been affected by rising gas prices," Steve Lyons, group vice pre sident in charge of Ford sales and marketing in North America, said rece ntly. Consumers instead are now moving to both smaller SUVs and lighter, "cross over" vehicles that put the body of an SUV on to the more fuel-efficient chassis of a passenger car. Paul Ballew, GM executive director of global market and industry analysis , said demand for big SUVs has leveled off as more consumers look for al ternatives that get better mileage. Government fuel efficiency and emissions standards are set to get tougher in the coming years, which could contribute to the drift away from SUVs . Chung said: "You're seeing more consumer interest in alternative fuels li ke natural gas and diesel. And a lot of automakers are jumping on the hybrid bandwagon." Some believe that hybrid cars, which are powered by a combination of gaso line and battery-generated electricity, could be the next big thing afte r the SUV craze. "But hybrids are more likely to be a stop-gap for something further down the road like fuel-cell technology, which is at least 10 years away," Ch ung said.
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