Customers Choosing Fuel Efficiency

Customers are trading their SUVs for more fuel efficient crossover vehicles. According to the Power Information Network (PIN) division of J.D. Power and Associates, demand for sport utility vehicles (SUVs) has decreased dramatically in recent years, with many customers switching to more fuel efficient crossover utility vehicles (CUVs). Share of the total new vehicle market for the midsize non-premium utility segment, once among the most dominant segments in the industry, has dropped 43 percent since May 1997, while sales volume for the midsize SUV segment has dropped 18 percent since early 2006. The percentage of midsize utility owners trading their vehicles for another of the same type is also on the decline, from 29 percent in May 2004 to 17 percent in May 2007. Owners of these vehicles are increasingly switching to more fuel efficient vehicles. In fact, the percentage of owners trading for a midsize crossover vehicle more than doubled between May 2004 and May 2007, while the percentage trading for a compact crossover increased from 6 percent to 11 percent and the percentage trading for a compact conventional car climbed from 8 percent to 13 percent in the same time period. "We can see the decline in this segment by looking at specific models like the Ford Explorer, which was the third-most-popular model in 1995, 1996 and 1998 in the United States," said Tom Libby, PIN senior director of industry analysis. "But now, the Explorer ranks 46th through the first five months of this year and there are no midsize utility models among the top 20 most popular vehicles in the country." Vehicle manufacturers have taken notice of the decreased demand for midsize utility vehicles. While the number of models in the segment peaked at 22 in 2003, 2004 and 2005, only 16 models are present in the segment this year. "Clearly, consumers are responding to changing economic forces – from rising energy costs to growing concerns about the environment," said Jeff Schuster, J.D. Power and Associates executive director of automotive intelligence. "Manufacturers are responding by dramatically increasing the number of new products in the CUV segment to provide substitutes for midsize SUV models. This shift is far from over and will fundamentally change the mix of vehicles on the road in the years ahead."