Wednesday, April 05, 2006

Living Large

As long as there are jocks and soccer moms, rap stars and drug dealers, there will be a place in America's heart for the SUV.
Just as sure as gasoline prices will once again flirt with $3 a gallon, our love affair with massive motor vehicles continues.
The first guy I knew who bought a SUV was a neighbor who stopped by the house one day to show it off. It was a red Chevy Suburban, large enough for mom, dad, three kids, the dog and enough camping gear to disappear into the woods for months.
It also got 8 miles to the gallon, rode like a buckboard and handled like a tank.
I suspect he bought it as a manifestation of the "mine is bigger than yours" mentality, a favorite pastime of suburban yuppies. But he claimed it was for his family's safety. Good point. At the time, it was twice as big as any passenger vehicle on the road and would crush anything that got in its way. The fact that his wife could barely see over the steering wheel didn't seem to figure in the equation. And little did we know at the time that a sudden left turn could sent it tumbling like dice on a crap table.
We've come a ways since then. A new Cadillac Escalade ESV gets 13 miles to the gallon and is priced at $70,000. For that, you get more than 45 cubic space of cargo space which means you can stick your Honda in the back.
According the editors of the Kelly Blue Book, it's a "favorite among Hollywood celebrities, rap stars and professional athletes. If you want to park something in your driveway that will make your neighbor green with envy, an Escalade ESV with a set of twenty-two inch rims and a flat-panel TV in the back will do the job."
Actually, my neighbors would probably resent anything parked in my driveway that would block out the sun.
But truth be told, Americans are slowly getting the message on SUVs while manufacturers are looking up from their profit projections and noticing that the times they are a changing,
Sales of SUVs began to decline last summer then plummeted after Hurricane Katrina jacked up gas prices even further. Sales of the Ford Expedition dropped by 60 per cent while the Chevy Tahoe declined 56 per cent.
Sales of all large SUVs declined by 18 per cent as consumers moved to passenger cars and smaller SUVs.
To give them their due, some manufacturers are responding. Hybrids are hitting the market at an ever increasing rate, offering SUVs with better fuel economy.
There is no free lunch, of course, and the catch here is that the hybrids cost more, often offsetting the savings realized in increased fuel economy.
Indeed, Consumer Reports said in a study that "in our analysis, none of the six hybrids we have tested recovered its price premium in the first five years and 75,000 miles of ownership. Nor did any when the analysis was extended to 10 years and 150,000 miles. Rather, extra ownership costs over five years ranged from $3,700 to $13,300."
General Motors, which has pretty much missed the hybrid boat, is touting its committment to vehicles that run on E85, a fuel that is a blend of 85 per cent ethanol and 15 per cent gasoline.
E85 consumes less gas, runs cleaner and reduces dependence on foreign oil. The automaker offers 13 models that run on E85, and its goal is to sell 400,000 autos annually.
But E85 has a downside. Mileage falls off from 20 to 30 percent from that of regular gas. There are few, if any, outlets locally. And those pesky environmentalists point out that some third world countries are mowing down rain forests to plant crops that can be used in ethanol.
General Motors is being proactive on another front, however.
According to an article in the Wall Street Journal, dealers are receiving training to make sure that the new large SUVs being launched by the company this year succeed, despite lingering worries over gas prices. After all, SUVs are an important profile engine, bringing in about $10,000 per vehicle.
Show some reluctance in buying a Chevy Tahoe and you'll get a sales pitch that attempts to calm your fears about gas mileage, brag about their capabilities and safety features.
"We know it's not going to be easy and that's why we're going to fight for every sale," said Mark LaNeve, head of GM's marketing and sales.
Despite this seemingly hypocritical attitude on the part of General Motors, and the baggage attached to alternative fuel vehicles, there is some light at the end of this tunnel.
It would appear that most of the world's autmobile manufacturers are actually competing against one another to produce more fuel efficient vehicles, after years of benign indifference. Prodding by the government hasn't hurt and should continue.
And the American consumer appears to be becoming aware that cheap gas has gone the way of the nickle cup of coffee and that continued dependence of foreign oil has no upside. Their buying habits drive the marketplace.
Now, if we all can just decide that there's nothing cool about driving a car the size of an oil tanker...

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