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SUV sales weather hits
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June 21, 2001: 3:43 p.m. ET
Rollover concerns, high gas prices can't derail American's love of SUVs
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - Neil Brady and Nancy Lembo didn't need Consumer Reports to tell them of the rollover risk of a Mitsubishi Montero.
Lembo lost control of her 1998 Montero when the sport/utility vehicle hit a patch of ice on Interstate 89 on Dec. 30, outside of Concord, N.H. While the cars around it skidded but stayed on the road, the Montero flipped over and rolled on its roof three times, according to the Massachusetts couple.
"I figured this was it," said Lembo. "I remember Neil saying, 'We're going to die.'"
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A video of the Consumer Reports test of the Mitsubishi Montero Limited that it said shows the vehicle to be "unsafe." Mitsubishi defends the vehicle's safety record. | |
The Montero ended up skidding across the oncoming lanes of the highway before hitting a tree. But because the roof did not cave in, and both Brady and Lembo were buckled in, the couple walked away with only minor injuries.
The 2001 Montero Limited was given a rare "not acceptable" rating by Consumer Reports Wednesday, as the publication said its tests showed the SUV was prone to tipping up on two wheels in accident avoidance maneuvers. Mitsubishi Motors issued a statement saying that it is confident of the vehicle's safety, and that it was unaware of any rollover accidents involving the tested vehicle.
That claim is correct, given that the Montero was redesigned between the 1998 model and the 2001 model that was tested by Consumer Reports. Still, the reports about the Montero failing the test brought back memories for Brady of a horrifying accident.
"I guess the positive spin is it held up well to an insane accident," said Brady, who emerged with only a dislocated shoulder caused by the seatbelt holding him in place. "If I was in a sedan that flipped over three times, I think I would have suffered a lot more injuries."
Still driving SUVs despite rollover risk
The accident also wasn't enough to make either Brady or Lembo swear off SUVs in the future. Brady still drives a 1993 Jeep Grand Cherokee with almost 100,000 miles on it, while Lembo replaced the totaled Montero with a Toyota 4Runner.
"[With] my lifestyle, between mountain biking and skiing, I need an SUV," said Lembo, who said she did much more investigation into vehicle safety this time than she had done in the past.
"We both like to haul things around. I think the benefits outweigh the negatives," said Brady. "Maybe we're just stubborn."
If it is stubbornness that is keeping the couple in SUVs, it's a stubbornness that's common to Americans. SUVs remain popular, despite a series of events that could have put a dent in sales.
Even before the Consumer Reports criticism of the Montero, federal safety regulators released ratings for the first time that showed even the best SUVs are more at risk of a rollover than the least stable sedan.
SUV drivers have seen gas prices decline somewhat, but remain well above 1999 levels.
And the segment's best-selling vehicle by far, Ford Explorer, has been linked to the deaths of more than 200 Americans, mostly in accidents involving Firestone tires.
Still, America's love affair with the SUV does not appear to be going away. But it may be cooling to some degree. A number of industry experts talk of the segment as having reached a plateau, rather than being in decline.
"They're not going away, but they've had their day as far as being a hot vehicle," said Mike Flynn, director of the office for study of automotive transportation at the University of Michigan.
More SUV models to choose from
Flynn and others say a strength of the segment is also a problem for the manufacturers trying to sell SUVs – new models as well as new designs that blur the lines between SUV and cars or minivans.
Small SUVs introduced in the last year like the Ford Escape, or vehicles that might not even be recognized as an SUV, such as Chrysler's PT Cruiser or the Buick Rendezvous, might attract some traditional car or minivan buyers into the SUV segment. But they also may be wooing away traditional SUV buyers.
Vehicle sales tracker Autodata has created a new category it calls sport wagons to track the new quasi-SUVs, and that is the part of the sport vehicle market showing the greatest growth.
In fact, for the first five months of this year, Autodata's stats found the sport wagon segment more than doubled its sales to 392,925 from 148,888 a year ago, while sales of traditional SUVs slipped 9.5 percent to 1.1 million from 1.3 million.
But that still gave the combined segment an 8.8 percent increase in year-to-date sales, at a time when total U.S. vehicle sales fell to 7.1 million, off 5.6 percent from a record-setting pace at the beginning of last year.
"There's just too much product coming into the segment to slow the train down," said George Pipas, Ford's spokesman for sales analysis.
He said in May there were 57 models that their manufacturers called SUVs, compared to only 45 a year ago. And Pipas said the new vehicles pose a greater threat to traditional passenger cars than to traditional SUV models. For example, he said 60 percent of people trading in a vehicle to buy a Ford Escape are trading in a car, not an SUV.
"The new SUVs have features which kind of break down one of the last barriers to entry into the segment," he said. "I think that sport/utility vehicles will outperform all other classes of vehicles for several years to come, despite reports that seem to want to put them to sleep."
And Pipas said that even safety-conscious buyers are looking at SUVs, realizing that its occupants are safer in the more common front or side-impact accident, even if there is a greater risk of rolling over than in a sedan.
New competition lowers profits
The new competition has meant new pricing pressures, and there are incentives today on SUVs that did not have to carry incentives a year ago. That competition for market share in the increasingly competitive segment will reduce the margins for the segment that has produced far more than its share of profits for the industry, according to analysts.
"It's still a very profitable segment," said David Healy, analyst with Burnham Securities. "That's why everyone is getting into it. But you will definitely see more incentives."
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The Ford Escape, one of the new, smaller SUVs in the market. | |
Officials with Mitsubishi Motors did not return calls seeking a comment on its sales outlook given the Consumer Reports rating, or comment on the accident involving Lembo's Montero.
Healy and other experts believe the report on the Montero will damage Mitsubishi's SUV sales, but have little if any overall impact on the segment.
"I think people decide on the segment, then as far as they're concerned about safety, they use safety information to decide upon a choice within the segment," said Flynn. "The Montero could be in serious trouble without it dragging down overall sales in the segment."
Pipas said he's sure Explorer sales have been affected by the news reports of the dispute with Bridgestone/Firestone, which have included recent accusations by the tiremaker's executives that Ford is not addressing a design flaw in the Explorer that causes rollover.
Click here for a look at auto stocks
But while Explorer has seen sales decline, Pipas said it still is the only product in its part of the SUV market to set a sales record last year.
"It certainly couldn't be positive, the publicity surrounding tire recall one and tire recall two," he said. "I know people find this hard to believe, but even since last August, the Explorer has actually performed better than the competition." 
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Consumer Reports says Mitsubushi is unsafe - June 20, 2001
Camry, Crown Victoria get top rating - Feb. 13, 2001
Honda Accord gets best rating in study - Jan. 9, 2001
No winners in Consumer Reports’ Isuzu trial - May 5, 2000
Consumer group knocks Trooper, SLX - Aug. 20, 1996
Special Reports: Firestone-Ford recall
High gas prices - May 9, 2001
SOS for SUVs? - Sept. 26, 2000
SUV inventories growing - Feb. 16, 2000
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SUVS WEATHER BAD NEWS
