Sales of Full-Sized SUVs Once Again Outpace Sales of Small Cars in America

Sales of Full-Sized SUVs Once Again Outpace Sales of Small Cars in America

By Scott Doggett August 3, 2010

Despite all the attention automakers and politicians have been giving electric vehicles and low-emissions cars for quite some time, U.S. sales of full-sized SUVs outpaced small-car sales the first half of this year.

Moreover, not only did sales of full-sized SUVs jump 19 percent compared to a 14-percent increase in small-car sales for the same period, but the entire market jumped 17 percent during that time.

The full-sized SUV category includes not only traditional truck-style SUVs, but also car-based crossover SUVs such as the Ford Flex and Lincoln MKT as well as crossovers sold by Chevy, GMC and Buick.

Small cars still outsold big ones 974,000 to 121,000 from January through June, but with nationwide gasoline prices for regular hanging below $3 a gallon and auto loans easier to obtain, Americans are once again of the opinion that bigger is better, at least as relates to automobiles.

As a result, General Motors and Toyota have ramped up SUV production recently. Even Infiniti, Nissan's luxury unit, has boosted production of its lame-duck 2010 Infiniti QX56 full-sized SUV so dealers don't run out of them early.

Will sales of the full-sized SUVs likely continue as they are? Don't bet on it. The truck-style models typically get 15 or 16 miles per gallon in combined driving these days, while the crossovers are just 2 or 3 mpg better. Recent history has shown that $4 gasoline deflates sales of that segment as suddenly as a bayonet thrust to an inflatable raft.

And while hybrids and some small cars were selling at or near MSRP during the first half of this year - and most of the hybrids carried a technology premium - automakers were practically giving away those SUVs to clean out the cupboards. The first half of 2010 may ultimately prove to be the last hurrah for the full-sized, truck-based SUV.

Large SUV incentives are nowhere near the highs we saw when gas prices broke through the $4-per-gallon barrier, noted Edmunds.com Pricing and Industry Analysis Supervisor Ivan Drury. He said, however, that incentives for these vehicles have been creeping back up over the last few months.

"The record high was $5,923 while we're estimating true cost of incentives for July at $3,605," he said.

There are many low and zero-percent annual-percentage-rate loan offers in the market and many of them apply to the large SUVs. Zero-percent APR loans can save buyers between $6,000 and $9,000 on a Suburban. Nissan was offering 1.9 percent financing for its Armada, which would save most consumers between $4,000 and $5,000 on a purchase.

"Although we may be seeing consumers taking automakers up on their offers of high incentives towards full-size SUVs," Drury said, "the instant gas prices hit that $4-per-gallon barrier, we'll see the same reaction as two years ago - a heavy drop in sales for anything that even resembles a non car based product."

Scott Doggett, Contributing Editor

Scott Doggett:  is an AutoObserver.com Associate Editor.