Tossing that Hummer...

[motordavid]

A decent lil' read from Sat's NewYawkTimes...
For the HardCore, BeamER is not mentioned, but inferred in the ilk.
BR,md



March 18, 2006

Trading the Hummer for a Honda

By MICHELINE MAYNARD
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.
So the Jensens of Reno, Nev., dumped the sport utility vehicle this year for a more modest Honda Element, still an S.U.V. but one with better gasoline mileage and a lower profile than the H2. And they are not alone.
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 S.U.V.'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 S.U.V.'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.
David Katz, who owns an interior design firm in Seattle, traded in his 1999 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.
In February, average incentives on luxury sport utility vehicles hit $4,046, or nearly $1,500 a vehicle more than what automakers doled out on luxury cars, according to Autodata Inc., a Woodcliff, N.J., company that tracks industry statistics. That is also more than four times what automakers paid as incentives on luxury S.U.V.'s in 2003.
Moreover, about 53 percent of luxury S.U.V. owners who have traded in their models in the months since November did not purchase another luxury S.U.V., 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 S.U.V.'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. Now the same thing is happening with luxury S.U.V.'s.
A case in point is the Cadillac Escalade. 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 S.U.V.'s that G.M. is counting on to reverse its market share slide.
On Wednesday, G.M. 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. And I know it probably won't last all that long."
As recently as 2003, auto companies routinely earned profits of $15,000 and more on each big luxury S.U.V., a lure that also drew automakers from Japan and Europe into the marketplace. Even brands that were better known for their cars, like Volvo, Saab and Porsche, introduced luxury sport utilities, all aiming for the big money.
"It was a whole different dynamic then," said George Pipas, the corporate sales analyst at Ford. "There were fewer competitors, and the demand in this category was rising faster than the category was."
But now, with buyers having second thoughts, it is taking longer to sell luxury S.U.V.'s, which spent an estimated 58 days on a dealer's lot from January through March, compared with 51 days during the first quarter of 2005, according to Power's statistics. All that reflects buyers' disdain for anything less than the next new thing, said Wesley Brown, a partner with Iceology, a Los Angeles firm that follows automotive trends.
Given that luxury S.U.V. buyers rarely use their vehicles off highways and city streets, "there's absolutely no reason to drive it except that it's cool to drive," Mr. Brown said.
"A lot of those people have had enough, so they're getting out of it."
To hang onto those customers, Mr. Brown said, auto companies must create something that makes buyers say "I have to have it."
Sales numbers for 2005 show the best sellers in the luxury S.U.V. category were for models introduced during the year.
One was the redesigned Mercedes M-Class. Because of the interest in the fresh model, which went on sale last April as a 2006 model, M-Class sales rose 15 percent during 2005.
With the newest M-Class, engineers aimed for the handling characteristics of Mercedes luxury cars, said Dave Larsen, the product manager in charge of the M-Class.
Previous M-class models, which first hit the market in 1998, had a ride that was decidedly trucklike, a common trait of the first crop of luxury S.U.V.'s, which were based on the underpinnings of pickup trucks. Mercedes customers, used to fewer jolts, insisted on something more comfortable.
"The feedback we were getting was that they wanted something more luxurious," Mr. Larsen said. Thus, Mercedes developed a vehicle with plenty of extras, like electronic seats, a multiposition steering wheel, and a new 3.5-liter engine with 260 horsepower. The new M-Class gets 10 percent better fuel economy than its predecessor and is 10 percent lighter.
Incentives, however, definitely are not lighter. In February, Mercedes' incentives were $4,278 for all its S.U.V.'s, more than the average for luxury S.U.V.'s. Those big incentives are a reason Mr. Larsen's development team vowed that "we needed to nail the price and nail the features, and then incentives take care of themselves," he said.
Mercedes' next luxury S.U.V. effort will be the G-Class, a full-size S.U.V. that will make its debut this spring. A few months later, Lincoln will come out with its latest version of the Navigator while Lexus is preparing a new version of its big LX sport utility.
Those vehicles might seem like risky bets, given the unfriendly atmosphere for luxury S.U.V.'s. But despite buyers' growing aversion and rising incentives, Mr. Pipas at Ford said he did not expect manufacturers to be discouraged, especially when vehicles like the M-Class prove customers can still be captured.
"My guess is that everyone who is in it will be in it," he said. "With the price that you charge for them, even with incentives, there's money to be made."

[X5Jones]

"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."

And when they've finished alienating Hummer owners, who's next? X5's? ML's?

We've already got extremist anti-motoring groups pushing bans on SUV's of any kind in urban areas!

When dose it stop? when Freedom Of Choice is completely gone?

[YankeeBimmer]

I saw that article in the NYT today!

[Wagner]

My favorite is the guy talking about how he traded in his 99 Explorer for a new Hybrid Lexus SUV because he cared about the environment....

Yah it had nothing to do with a Ford vs a Lexus (not to mention a price jump of about 30K from a used 99 Explorer to a new Hybrid Lexus 400h) So full of sh*t.

[Thunder22]

I have to find the article in C/D about how long it takes to recoup the costs of buying a hybrid (extra cost vs gas savings) and how the automotive manufacturers have absolutely no idea what to do with the battery packs (i.e. how to recycle or dispose of them) when they reach end of life.

There was also an article in C/D about how it will cost billions to put the infrastructure in place to support hydrogen fuel cells.

The lefty's ruin everything.

[Juanted]

Interesting read... Thanks for sharing, David.

Now, I just hope BMW starts handing out some of those incentives... thay may talk me into the e70 a lot quicker...

Juan

[xx3]

Originally Posted by gresch

I have to find the article in C/D about how long it takes to recoup the costs of buying a hybrid (extra cost vs gas savings) and how the automotive manufacturers have absolutely no idea what to do with the battery packs (i.e. how to recycle or dispose of them) when they reach end of life.

Your absolutely right. It costs the environment more when people drive hybrids. Think of all the energy used recycling batteries that have to replaced every 6 years. Not only that, how are batteries going to make to recycling centers? Through inefficient polluting trucks, etc...

And say 1% of the batteries end up in a landfill, the environmental effect is a lot more detrimental then carbon dioxide.

Granted not everyone should drive SUV's many people are much better off with smaller cars. But people who drive hybrids in my opinion are full of s*#%!

[Wagner]

IMO:

If you want to help the environment, buy a E85 capable vehicle...otherwise, stop the non-sense with ultra-slow hybrid electric vehicles simply because it is "in". There are plenty of E85 vehicles on the market now and if consumers pushed for these vehicles more and more E85 fuel would be produced. But hey, why use your own mind when you can listen to the guy at Starbucks instead.


E85 cars: http://www.e85fuel.com/e85101/flexfuelvehicles.php