Demand for SUVs Weaken

August 24, 2004
Filed under Trailer News

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Consumer demand for SUVs is weakening, according to recent transaction
data from the Power Information Network (PIN), LLC. The data show that
the number of days SUVs sit on dealer lots before selling has increased
substantially over 2003. SUV prices have also declined while average
new-vehicle prices have increased. Incentives increased more on SUVs
from June to July than they did on any other type of new vehicle.

The number of days SUVs are on dealer lots (days to turn)
increased from 60 days in July 2003 to 73 days in July 2004 — a 22
percent increase. Days to turn for luxury SUVs increased by 47 percent,
more than double the industry rate, as these vehicles sat on dealer lots
for 50 days in July 2004 versus 34 days a year ago.

Further suggesting a weakening in the SUV sector, the average SUV
transaction price dropped 2 percent (or $620) in July versus a year ago,
while overall new-vehicle prices edged up slightly. Luxury SUVs
exhibited the most weakness, as the average price slid almost 5 percent.

To spur consumer demand, new-vehicle manufacturers increased SUV
incentives in July. The average total incentive expenditure per SUV in
July was $3,440 — up nearly 12 percent from June. This increase was
almost twice the overall industry average increase.

“The data clearly suggest the SUV segment is under exceptional
pressure,” said Tom Libby, senior director of industry analysis at PIN.
“Higher gas prices and a renewed emphasis on cars by some of the OEMs
have both likely played a role in this trend.”

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