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SUV sales warming up

After plunging when gas prices topped $4 a gallon, interest in larger vehicles is inching up again

Wednesday, December 3, 2008 - 11:29 am

SAN FRANCISCO — The steep drop in gas prices might not be enough to save Detroit, but cheaper fuel undoubtedly has made it easier for dealers to unload the trucks and SUVs that have been gathering dust ever since oil's record price spike this past summer.

That's not to say automakers are actually selling more of these vehicles than they were last fall. They're not. Everything from Ford's industry benchmark F-Series pickup to Toyota's venerable Land Cruiser are still seeing big drops from a year ago.

But these days, that could be as much a function of the grim economy as anything else. Vehicle sales in general, including hot offerings such as the Prius hybrid and the perennial strong-seller Accord sedan, also have been hit hard. In fact, October marked the worst month for car sales in 25 years, with GM's 45 percent plunge leading huge declines for just about every manufacturer.

It's tough to discern trends in today's brutal environment, where some rules just don't apply. But with automakers offering major incentives and gas prices careening back toward $2 a gallon, there's evidence that these highly profitable beasts are regaining some traction.

“We saw this huge shift to smaller cars in May, but starting in June, there has been a gradual move back to the larger vehicles,” J.D. Power & Associates analyst Tom Libby said.

He offered as proof the percentage of motorists who stuck with SUVs when shopping for a replacement vehicle compared with those who fled to smaller cars as fuel prices hit all-time highs.

In May, with gas topping $3.70 a gallon, only 9 percent of midsize SUV owners who traded in their vehicles bought another from the same segment, J.D. Power data showed. That number barely budged as gas approached a record high of $4.11 a gallon in the middle of July, according to AAA.

But in August, when gas prices began their plunge, 20 percent of SUV owners went right back to their Highlanders, Explorers and Pilots. The same could be said for September, with that number leveling off a bit to 16.4 percent in October as gas closed in on $2.10 a gallon.

Libby said the market is unlikely to revive the heyday of big trucks or SUVs, but it also won't return to the stampede this spring into thrifty sedans and hybrids.

AutoTrader.com's monthly Trend Engine report, which tracks page views of specific models on its Web site, showed a spike in consumer interest last month in vehicles such as the Honda Pilot and Toyota Highlander.