You might think that soaring gas prices would put a damper on SUV sales, but you’d only be half right. While sales of some of the big gas guzzlers are dropping, sales of other SUVs do not seem to have been affected at all, local San Fernando Valley dealers report. Some models are even seeing a sales boost. And dealers say that the downward sales shift, where it is occurring, has only begun recently, despite the fact that gas prices have been on the rise for well over a year now. “When you heard the $3 number is when we began to see a shift,” said Bert Boeckmann, owner and president of Galpin Motors, the Valley’s largest auto dealer. “We finally got up to where we were running 25 percent to 30 percent lower sales on those two (the Ford Explorer and the Ford Expedition), but it’s only been in the last few months that we began to see a perceivable difference.” Galpin’s sales mirror a national trend for the two SUV models, according to data compiled by the Power Information Network of J.D. Power & Associates. The research group found sales of the Expedition were down about 25 percent year to date and Explorer sales declined nearly 15 percent for the same period. But over at Galpin’s Lincoln/Mercury showroom, sales of the Lincoln Navigator, another full size SUV, were so strong over the Memorial Day weekend that the dealership had to make a quick purchase of 15 additional units from another dealer to keep the floor stocked. Navigator sales nationwide are only down by somewhat more than 7 percent year to date, the PIN data showed. What’s more, sales of the Jeep Grand Cherokee, another full size SUV with a V8 engine, spiked 20 percent in April alone, and are quickly catching up with the Explorer, which has been the market leader in that class, PIN research revealed. There’s little about the gas mileage of the different models to distinguish them. The Explorer, Expedition, Navigator and Grand Cherokee get 15 mpg, 14 mpg, 13 mpg and 16 mpg respectively in city driving. So what gives? Experts say that while gas prices have played some role in SUV sales, the cost of filling up may not be a major driver. Weakest performers Perhaps not coincidentally, the SUV models that are the weakest performers are also the vehicles that are closing in on the end of their sales cycles and are due for a redesign. “We believe there are three reasons (for the decline seen in some SUV sales),” said Tom Libby, senior director of industry analysis for the Power’s PIN division. “One is gas prices, two is the movement to crossovers and the third is that four of the eight full-size SUVs showing the greatest drop are at the end of their life cycle.” Libby noted that a lot of consumer interest has moved from the truck-based SUV model, the original version of the vehicles, to the newer “crossover” models that combine functional aspects of a truck with the comfort and ride of a car. The introduction of these newer models is typically accompanied by much advertising fanfare and corresponding incentives, and consumers have responded in large numbers. Another factor is that much of what drove consumers to these full-size SUVs in the first place three rows of seats to haul kids, their friends and cargo has become so essential to the suburban family that the benefits outweigh the added gas cost. More recently, some manufacturers have introduced the same seating features in mid-size SUVs, which, by the way, get better mileage. “We see a shift from full size SUVs into a mid-size and there has been a significant shift,” said Leonard Schrage, general manager of Universal City Nissan, where the new Pathfinder model has gotten far better sales traction in recent months than the company’s full size Armada. “Whether it’s due to the new Pathfinder, which is a seven-passenger vehicle with three rows, or whether it’s the oil issue, it’s kind of hard to tell.” Sustained prices Fuel prices in the Los Angeles area have remained above the $2 mark for most of the past two years, up from a range of $1.50 per gallon to $1.70 per gallon in 2003, according to data from the AAA. More recently, gas prices have averaged about $2.40 per gallon in the L.A. area, reaching a high in April of $2.62 per gallon, and up from an average of $2.36 a year ago. That consumers have been slow to react with their purchase decisions comes as a surprise to many dealers. “It’s amazing we just get used to prices going up,” said Chris Ashworth, general manager at Toyota of North Hollywood. “They all said $2 a gallon will change everything, but it did not. Now it’s close to $3 a gallon and still not really, so where is that magic number? I have no idea.” J.D. Power experts think there is a magic number, and it is at least $1 per gallon away. “We believe that for gas prices to have a major impact on new vehicle buying patterns, two conditions have to exist,” said Libby. “Gas has to go up way over $3 and close to $4 and gas prices have to stay at that elevated level for at least a year.” Gas may be costing consumers more, but vehicles have become much more fuel efficient, Libby said, and consumers are not feeling the full effect of the price hikes as a result. The other element impacting consumer attitudes is that gas prices have been relatively volatile for some time now. “Gas prices have gone up before, but they’ve always come back down, so consumers are conditioned that it will come back down,” Libby added. “The only way to change that mindset is if they stay up for at least a year.” Then too, L.A.’s car culture may be stronger than its bottom line mentality. As Boeckmann put it, “I would want a car that does what I need it to do, then look at the mileage and see what the real cost is. For $100 more a year, I’d rather have the car I’d like to have.”
