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J.D. Power: Consumer Interest in Full-Size SUVs Waning

March 16, 2005

WESTLAKE VILLAGE, Calif.--Consumer interest in full-size SUVs has dropped substantially over the past year, according to new-vehicle retail transaction data from the Power Information Network. According to PIN's new-vehicle transaction data from the first two months of 2005, car and truck owners in 18 of the 20 vehicle segments are less likely to trade their current vehicle for a full-size SUV than they were during the same two months in 2004. These 18 segments represent more than 95 percent of the new-vehicle industry. Among the two remaining segments, owners of entry midsize cars are switching to full-size SUVs at the same rate as a year ago, and owners of full-size vans are moving to large SUVs at a slightly higher rate. The seven segments that have exhibited the greatest decline in purchase consideration for full-size SUVs include all four luxury car segments, the luxury SUV segment, the premium sports car segment and the midsize SUV segment. Full-size SUV owners are also less loyal to their segment than they were a year ago. Full-size SUV sales fell 21 percent in February after a 31 percent drop in January, when compared to the same month a year ago. "Rising gas prices are certainly a contributing factor to this trend," said Tom Libby, senior director of industry analysis at the Power Information Network. "We've had two dramatic increases in gasoline prices in the past year, and that begins to have an impact on consumers." Luxury car owners, who had been moving to large SUVs, are now increasingly trading for another car, and frequently a luxury car. According to actual trading data from the Power Information Network, these owners are moving at an increasing rate to premium midsize cars, entry luxury cars, mid-luxury cars and luxury SUVs. For the first two months in 2005, more than 43 percent of all luxury car owners have traded for another luxury car -- up from slightly less than 40 percent a year ago. This marked decline in interest in full-size SUVs is causing a backlog on dealer lots. In the first two months of 2005, these trucks sat on dealer lots an average of 84 days before being sold, the longest number of days on the lot of any light-truck category and substantially longer than the industry average of 66 days.
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