News--DowJones:"Auto Makers' Definition of SUVs Is Rapidly Changing"
NHTSA--National Highway Traffic Safety Administration
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"Office of Defects Investigation--Service Bulletins Database"
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>>>Auto Makers' Definition of SUVs Is Rapidly Changing
By Joseph B. White and Jeffrey Ball, Staff Reporters of The Wall Street Journal
Will the newly passed law promising tougher government scrutiny of sport-utility-vehicle safety risks stall the high-profit SUV fad? That depends on what your definition of SUV is, and the industry's definition is changing fast.
Despite the bad press that sport-utility vehicles have had in the past year, auto-industry executives say lots of consumers still want vehicles that offer a combination of all-weather driving capability, ample cargo room, high seating positions and aggressive styling. Sport-utility vehicles outsold pickup trucks in the just-ended 1999 model year for the first time, and are on track to become the No. 2 segment in the industry, just behind midsize cars, according to a General Motors Corp. sales analysis. GM predicts SUVs will be the best-selling class of vehicles by 2005.
"If the consumer wants an SUV, they're going to buy an SUV," says Matt Reynolds, director of vehicle compliance and safety affairs for DaimlerChrysler AG's U.S. unit, which makes Jeep and Dodge brand SUVs. Consumers don't appear to have been scared away from SUVs by rollover-warning stickers that the government has long required manufacturers to put on most SUVs, he says.
But industry executives also acknowledge that even before the crisis over Ford Motor Co.'s Explorer rollover accidents linked to defective Bridgestone/Firestone tires and the new safety regulations the Firestone debacle propelled into law, pressure was on to tame the harsher characteristics of 1990s SUVs. (Firestone is the U.S. unit of Japan's Bridgestone Corp.) With SUV competition intensifying, the Big Three face a fierce fight with Asian and European manufacturers to reap the profits from a new generation of SUVs that is fueling much of the segment's growth.
Although sales of traditional SUVs remain strong, there are signs the craze is reaching a peak. The likely resale values of some top-selling SUVs, including the Explorer, recently got marked down by the Automotive Lease Guide, which cites safety concerns and a glutted market.
The combination of new safety pressure and changes in consumer tastes could accelerate the move already under way in the SUV market, where the hottest new models, such as Bayerische Motoren Werke AG's X5, Toyota Motor Corp.'s Lexus RX 300 and the Ford Escape, are really beefed-up passenger cars.
"There's a lot of blurring in the market between midsize cars, midsize vans and midsize SUVs," says GM sales analyst Paul Ballew. Most current-generation SUVs, including the best-selling Explorer, are modified four-wheel-drive pickups with five-passenger bodies bolted on to stiff, rail frames. These vehicles made billions of dollars for Detroit's Big Three auto makers, but they aren't likely to fare well in the forthcoming government stability rankings.
The National Highway Traffic Safety Administration recently published proposed rollover scores that would give the 1991-98 Ford Explorer two stars out of a possible five. The mid-1990s Jeep Grand Cherokee also would have gotten two stars as would have the Chevrolet Blazer. Even the Chevy Suburban, with a good overall safety record, would have gotten just two.
Within two years, according to the legislation passed Wednesday by Congress, the federal government must come up with a new rollover-ranking system -- one based on an on-road test rather than a mathematical formula. That is likely to be a contentious process, but the goal is the same: to give consumers an easy scorecard for tippiness.
Whatever the method, in a market where auto makers boast about their five-star front crash ratings, two stars won't look good. "This is something that should give consumers pause, because consumers often think they're buying a car" when they purchase an SUV, says Adrian Lund, senior vice president for research at the Insurance Institute for Highway Safety, a group funded by insurers.
Auto-industry executives say SUVs are some of the safest vehicles on the road in terms of overall crash-worthiness. But they aren't betting their hugely profitable franchises that consumers will continue to ignore SUV safety issues, or forgive SUVs for uncomfortable rides and stiff handling. That is why Detroit's auto makers several years ago began developing so-called hybrid SUVs, such as Ford's new Escape and GM's new Pontiac Aztek.
Traditional SUVs will have to change to keep pace, industry officials say.
"We recognize that the sustained growth of SUVs depends on us addressing perceived environmental and safety disadvantages," says Richard Parry-Jones, Ford's group vice president for global product development and quality.
That is why Ford and its rivals are investing heavily in technologies such as stability control, which uses computers to sense when a vehicle is beginning to spin out of control and applies the brakes or, in some systems, cuts back the throttle, to bring it under control. These systems have become widely available on luxury cars in the past few years, where they cost $500 to $1,000 as an option. They are now are beginning to appear on SUVs.
But so far neither regulators nor auto makers have real-world data to back up their claims that the systems indeed improve safety. That hasn't stopped them from rolling them out aggressively on new models. Mercedes-Benz, a unit of DaimlerChrysler, offers the system on its M-Class SUVs and BMW has made it standard equipment on its X5. Toyota is offering it as an option on the new Sequoia large SUV, due out this fall. Ford has said it expects to offer the systems across its truck lineup in the next few years. GM will offer a system on its new Cadillac Escalade SUV.<<< |
