Sunday, February 29, 2004

Crossover threatens market for trucks

By Ted Evanoff
The Indianapolis Star

DETROIT - One of the hottest vehicles on the road today is the crossover, a car that looks like a truck.

But the vehicle's growing appeal could threaten sales of full-size trucks, particularly if drivers become more concerned about fuel economy.

From a driver's standpoint, the crossover adds another question to the process of buying a new vehicle: Am I looking at a car or a truck?

In the case of crossovers, it's definitely a car.

This new breed has the car's mechanical underpinnings and is decked out to look like a tall sport wagon, sport-utility vehicle or pickup.

Car-based crossovers are now nearing the total sales volume of traditional truck-based sport-utes, a segment that includes the Ford Explorer, Jeep Grand Cherokee and Nissan Xterra.

Last year, sales of traditional compact and midmarket SUVs built on truck frames slipped 8.7 percent to 1.89 million vehicles from 2.07 million the year before.

"Clearly, crossovers have an impact on the market," said Gary Cowger, General Motors Corp.'s head of North American operations.

Outside of Detroit, few automakers have full-size cars capable of being stretched into crossover versions of big trucks. And so far, buyers of the big pickups and SUVs seem to prefer them as trucks. Their sheer size and off-road ability give the trucks a safe, rugged and fashionable image appealing to many.

"It depends on whether they're using them for towing and going off-road or just to haul groceries and get to work," said Tom Libby, automotive analyst for J.D. Power and Associates in Detroit.

If drivers realize they are using their big trucks primarily as commuter vehicles, he said, they might push for full-size crossovers, particularly if they want more fuel economy. Then, GM's plant in Oshawa, Ontario, home of the Chevrolet Impala full-size sedan, might be revamped for a sport utility version of the car.

That's when Indiana assembly lines could be at risk. Traditional full-size trucks produced in the state include the Chevrolet Silverado pickup, Hummer H2 sport utility, Toyota Tundra pickup and Toyota Sequoia SUV.

These assembly lines are set up to raise or lower output without resorting to mass hiring or layoffs. But diminished sales of the full-size trucks still could slow the Indiana industrial economy. Slow sales could displace workers in dozens of Indiana auto parts plants geared to supply the truck assembly lines with components.

"There will always be a demand for full-frame trucks for towing and hauling," said Wolfgang Bernhard, chief operating officer for Chrysler Group, whose models include Dodge and Jeep trucks. He noted that Chrysler has no plans to slow output in its four truck plants in Mexico, Michigan, Missouri and Ohio. "For these trucks, we don't have a problem."

One trade-in certainly will be the Taurus midsize sedan. Ford is cutting its Taurus production capacity in half. Ford's Atlanta plant will continue with Taurus, but Chicago will make the new Ford Freestyle and a sedan based on the same Volvo architecture, the Ford Five Hundred.

Amy Marentic, manager of Freestyle marketing, figures Freestyle buyers will tend to keep their full-size trucks. Ford marketers estimate 10 percent to 20 percent of Freestyle buyers will trade in minivans. Another 30 percent to 40 percent will come out of sport utilities, particularly the full-frame midsize models. And the remainder will trade in cars.

Auto executives and industry analysts agree: It's not the big trucks that will lose sales.

"While crossovers are increasing in number, and there's a tendency to think they'll take over the truck market, that's not the case right now," said J.D. Power's Libby. "There's still a strong market out there for people who want body on frame trucks."

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