www.nytimes.com/2006/03/18/business/18trucks.html?_r=1&oref=slogin
MICHELINE MAYNARD Published: March 18, 2006 DETROIT, March 17 For Janna Jensen, it was the dirty looks and nasty gestures from other drivers that finally persuaded her to give up the family's $55,000 Hummer H2. Her husband, Michael, meanwhile, was tired of the $300 monthly gasoline cost and the quality problems that began soon after they bought it.
Skip to next paragraph Noah Berger for The New York Times Five-figure rebates on luxury sport utility vehicles, like this one on a 2006 Cadillac Escalade, are becoming more common.
Honda Element, still an SUV but one with better gasoline mileage and a lower profile than the H2. Luxury sport utilities are becoming decidedly less cool than just three years ago, when they were the hottest things on wheels and dealers had long waiting lists for the most popular models. On top of the sales drop that has hurt all sport utilities, fewer than half the people who bought luxury SUV's are going back for another one. Incentives for the vehicles are at record levels and for the first time, luxury automakers are paying out more for rebates and lease deals to entice consumers to buy luxury SUV's than to buy cars. The higher cost of gasoline plays a big role, as it has for the last year of high oil prices. But wealthy buyers, who used to shrug off the expense, are shifting gears, as excessive energy consumption is becoming socially embarrassing.
Ford Explorer last year to help buy a Lexus 400H, the hybrid-electric version of the RX sport utility. "I was sitting at my desk, ruminating about the crisis in the Middle East and what I could do personally to use less fuel," Mr Katz said. Dub magazine, a specialty publication aimed at car enthusiasts, remains packed each month with images of customized cars, including celebrities' wheels. But now, its editors are seeing that trend setters, especially those who have families, are trying to appear as if they are environmentally aware. "Everyone is concerned with giving back," said Myles Kovacs, the magazine's editor. That is also more than four times what automakers paid as incentives on luxury SUV's in 2003. Moreover, about 53 percent of luxury SUV owners who have traded in their models in the months since November did not purchase another luxury SUV, according to the Power Information Network, a branch of the consumer-marketing company J D Power & Associates. Of that group, two-fifths went back to cars, while others bought smaller or less-expensive SUV's and some purchased pickup trucks. Ron Pinelli, the president of Autodata, said, "Cool has a short shelf life." To be sure, luxury sport utilities are not going away, and Cadillac, Lincoln and Mercedes-Benz all have new high-ticket models coming out the next few months. But the waiting lists that many dealers came to expect for the industry's plushest vehicles which typically start at $35,000 have largely evaporated, along with their buzz. Auto companies have always had to pile on the rebates to persuade customers to drive away stale car models, while the fresh models with unique features typically sell briskly with few if any incentives.
General Motors is offering thousands of dollars in incentives to clear out 2006 models. At the same time, dealers are beginning to get deliveries of the 2007 Escalade, part of a new family of SUV's that GM is counting on to reverse its market share slide. On Wednesday, GM said that it was stepping up production of its new line because of a strong early response for the vehicle. The new vehicles are a welcome sight for Tom Westwood, the general manager of Tustin Cadillac in Southern California. Mr Westwood had to discount his 2006 Escalades by an average $11,000 to entice customers to take them. The newest versions, however, are selling close to their $60,000 retail price, he said, and selling them is like "shooting fish in a barrel." Mr Westwood continued: "We don't have an opportunity to make money in the car business very often, but this is one of them. As recently as 2003, auto companies routinely earned profits of $15,000 and more on each big luxury SUV, a lure that also drew automakers from Japan and Europe into the marketplace.
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