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Soaring Gas Prices Hurt SUV and Pickup Sales

March 10, 2005
The rising price of gasoline appears to be stifling sales of large U.S. SUVs and pickups. If the trend continues, automaker profits are certain to suffer. Full-sized SUV and large pickup sales were both down last month. The sale of fuel-efficient cars gained more than two percent.

Large SUVs and full-sized pickups account for close to 80 percent of North American automotive profits at Ford and General Motors.

The average price U.S. drivers pay for a gallon of regular gasoline barely exceeds $2, according to the AAA motor club. The price is expected to shoot to a record high of $2.15 a gallon this spring, according to the U.S. Energy Information Administration.

The higher prices already have hit GM's mix of vehicles in the market, punishing it by $1 a share due to fewer sales of large trucks and SUVs. Ford Motor has lost 15 cents a share due to a similar decline in the segment.

GM's U.S. sales of light trucks declined 9 percent last month, while Ford's sales in the same segment slipped 8 percent. Overall, both the automakers lost U.S. market share again in February.

While sales of GM and Ford Motor trucks slipped in February, Toyota and other Asian automakers reported increased sales in the segment.

U.S. sales of the full-sized Toyota Tundra pickup, which has a V-8 engine, rose nearly 49 percent last month, while Nissan reported a similar rise in sales of its Titan pickup.

In addition to higher cash discounts, Ford extended its offer of interest-free financing for terms of as long as 60 months on the Explorer SUV, which suffered a sales decline of 19.1 percent, and the Expedition SUV, which dropped 13.8 percent last month.

GM, meanwhile, says it will offer extended warranties on its 2006 model Hummer SUVs, which on average have a fuel economy in the teens and whose sales have declined 8.3 percent this year.

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