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 competition
in the SUV market 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 in the
segment.
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.
Sport Utility Evolution
Auto makers hope SUVs evolved from cars and minivans appease the
critics of current generation trucks.
| --TRADITIONAL-- | --NEW BREED-- | |||
| 2001 Ford Explorer 4-door | 2002 Cadillac Escalade | 2001 Ford Escape | Acura MDX | |
| Fuel economy (in mpg) | 15 city, 19 hwy (V6) 4x4 | 12 city, 16 hwy (4x4) | 18 city, 24 hwy (V6)(4x4) | 17 city, 23 hwy |
| Weight | 4045 lbs | 5809 lbs | 3133 lbs | 4328 lbs |
| Ground Clearance | 6.7 inches | 10.7 inches | 7.8 inches | 8.0 inches |
| Seating capacity | 5 | 5 to 8 | 5 | 7 |
--- TRADITIONAL ---
--- NEW BREED ---
2001 Ford
Explorer
4-door
2002
Cadillac
Escalade
2001 Ford
Escape
Acura MDX
Fuel
Economy
(in mpg)
15 city, 19
highway
(V6)(4x4)
12 city, 16
highway
(4x4)
18 city, 24
highway
(V6)(4x4)
17 city, 23
highway
Weight
4,045 lbs.
5,809 lbs.
3,133 lbs.
4,328 lbs.
Ground
clearance
6.7 inches
10.7
inches
7.8 inches
8.0 inches
Seating
capacity
5
5 to 8
5
7
Source: Companies
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. "The utility
segment of the business is going through this maturation process."
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 hulking 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. "If people
really do factor safety in, they're going to realize they may be getting
more safety in a comparable car or minivan" than in an SUV.
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
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.
Auto makers also are talking up technology to curtail SUV gas guzzling.
DaimlerChrysler's Chrysler Group said Thursday it is "prepared" to start
building a gasoline-electric powered version of its burly Dodge Durango
SUV that would get 18.6 miles to the gallon compared with 15.5 miles
per gallon for the conventional V-8 model. The company said, however,
that it would take enactment of a proposed $3,000 federal tax break to
make the gas-electric power plant cost-competitive. Ford has already
said it plans a gasoline-electric Escape by 2003.
The big question now is how big will the hybrid SUV market get, and
where will these new models take their sales -- from cars or older
SUVs?
"I don't see people moving away in droves from the Explorer and
Expedition," says Gurminder S. Bedi, Ford vice president in charge of
North American truck operations. "I see those continuing to evolve to
respond to issues of environment and safety. And I see a whole new
series of vehicles like the Escape."
-- Gregory L. White contributed to this article.
Write to Joseph B. White at joseph.white@wsj.com and Jeffrey Ball at
jeffrey.ball@wsj.com