PIN: Midsize SUVs Show Weakness

June 22, 2006

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WESTLAKE VILLAGE, Calif. (June 22, 2006) -- The midsize SUV segment has increasingly shown signs of weakness since the beginning of the year, according to Power Information Network. More specifically, PIN reports that the midsize SUV segment currently has the second highest days-to-turn rate among the 26 segments tracked by J.D. Power and Associates and PIN. Vehicles in the midsize SUV segment were generally on dealers' lots an average of 73 days prior to selling in May. This is up from a median of 67 days turn rate at the beginning of the year. While some models in the category are turning quicker than others, including the Honda Pilot at 46 days, the Toyota 4Runner at 56 days and the Jeep Commander at 56 days, other models are not fairing so well, including the Mitsubishi Endeavor at 140 days, the Dodge Durango at 118 days and the Kia Sorento at 105 days. "In addition to midsize utility vehicles sitting longer on dealer lots, we're also seeing declining segment loyalty, or fewer owners returning to the segment when they purchase their next vehicle," explained Tom Libby, senior director of industry analysis at PIN. "The percentage of midsize utility owners who trade for another midsize utility has declined from 29.2 percent in January to 24.5 percent in May." As for the large utility vehicles, PIN executives said the number of owners who are trading up to this segment has declined as well, dropping from 10.5 percent in January to 7.4 percent in May. On the other hand, the percentage of midsize SUV owners trading to midsize conventional sedans jumped from 7.1 percent in January to 10.7 percent in May. Moreover, the percentages of SUV owners switching to other segments from the midsize class climbed since the first of the year. For example, PIN said the percentage of midsize utility vehicles owners who went to midsize conventional sedans jumped from 7.1 percent in January to 10.7 percent in May. Furthermore, midsize SUV owners switching to other segments also grew since the first of the year. Owners who elected to switch to compact basic cars went from 0.2 percent to 0.6 percent. As for owners who turned to compact conventional cars, it went from 5.6 percent to 8.5 percent. Finally, those midsize SUV owners who switched to crossover utility vehicles went from 7.8 percent in early 2006 to 9.2 percent, according to PIN. As for full-size vans, PIN executives said many of these units were on dealers' lots an average of 80 days before being sold for the month. Meanwhile, vehicles in the compact basic car segment posted one of the quickest average days-to-turn rates in May, coming in at just 35 days on dealers' lots, executives pointed out. "Concern about the midsize utility segment has been rising for some time, due in no small measure to skyrocketing gasoline prices," said Bob Schnorbus, chief economist of global forecasting at J.D. Power. "However, the segment also has been buffeted by a pull back in incentives and a flood of new models in other segments. As gasoline prices remain high, with a little offset from incentives, consumers can be expected to adjust their buying preferences." Schnorbus also pointed out that other factors are influencing new vehicle decisions, such as income, family size and lifestyle. These factors also help mitigate the potential negative impact of gas prices on sales, he concluded.

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