Consumer demand for sport utility vehicles is weakening, according to recent transaction data from the Power Information Network (PIN), a division of JD Power & Associates. 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. Even if SUV sales are slowing, manufacturers noted that sales of SUVs are still up 7 percent for the year--nearly three times the increase in the automotive market, which is up 2.4 percent for the year. 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.
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