Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Tue, Aug 18 1992 Date: Tue, 18 Aug 92 04:30:58 EDT Message-ID: 08-18 0000 BONUS: Boom in sport utility trucks USA TODAY Update Aug. 18, 1992 Source: USA TODAY:Gannett National Information Network Betsy Perry felt a little sheepish wheeling up to her welding-supply store every day in a Mercedes-Benz two-seater. It just didn't fit the image. Besides, the roadster didn't have enough room for her two dogs, and it was a real tussle trying to use it for deliveries. WHAT ARE THE AUTOMOTIVE ALTERNATIVES? "My daughter told me it was time for something sportier," says Perry, of Newport Beach, Calif. So she swapped the Mercedes for a $25,000 Eddie Bauer version of the Ford Explorer sport-utility truck a month ago. "I love it. You can kind of take over the freeway sitting up high," she says. ARE MANY DRIVERS MAKING SIMILAR CHANGES? Perry is the kind of buyer that has automakers scrambling to drive their sport-utility trucks to higher ground. They see well-heeled buyers clamoring for down-and-dirty, go-anywhere sport trucks - with luxury-car accessories and sticker prices to match. Buyers don't seem troubled by the irony of owning four-wheel-drive trucks equipped for the rudest roads, yet decked in such finery that it would be a shame to get them dirty. Sales of sport-utilties, revved up by fancy-pants models, are a whopping 21% ahead of last year's pace - in a car and truck market up just 4%. WHAT ARE THE TOP END AMERICAN MODELS? The Eddie Bauer Explorer, the priciest version, accounts for a strong 20% of Explorer sales. An even more-luxurious, $30,000 model is due early next year. Jeep, flush with success of its Grand Cherokee, launches a $30,000, Grand Wagoneer version for '93, trimmed in fake wood and furnished with pillowy leather. The $27,000 Grand Cherokee Limited - most expensive model prior to the Wagoneer - already accounts for a healthy 30% of Grand Cherokee sales. HOW ABOUT IMPORT COMPETITION? Toyota, adept at reading the U.S. market, sent its Land Cruiser to finishing school to justify a $30,000-plus price this fall. The 1993 model gets a smoother, 4.2-liter, six-cylinder engine, along with leather trim and other upscale goodies. There even was talk of selling it as a Lexus. Britain's Range Rover -the archetypical high-dollar sport truck - figures it needs something fancier than its top $45,000 County model. So the company - now called Land Rover - will launch a larger, more-deluxe Rover this fall, priced at $50,000 or higher. HOW EXTENSIVE IS THE MARKET? "The market for sport-utilities above $30,000 could be as high as 100,000 units a year," says auto marketing consultant Christopher Cedergren at AutoPacific Group. Automakers plan to sell at least 75,000 high-dollar sport-utilities in the '93 model year, which begins Oct. 1. Dealers also love the high profit margin. Trucks are less-complicated, and therefore cheaper to build than similarly priced cars. And demand is so strong that luxury trucks seldom need sales incentives.- Luxury cars, meanwhile, carry consumer rebates of $3,000 and more, plus secret dealer incentives nearly as large. WHAT ARE THE TRUCKS' UTILITARIAN LURE? In general, buyers like sport-utilities because they ride high, wide and handsome, giving a good view of traffic and a feeling of invulnerability. Most have four-wheel drive. That makes drivers feel secure, though few - about 5%, studies say - challenge terrain tough enough to need four-wheel drive. WHAT ARE THE FASHION VALUES OF THESE AUTOS? Sport-utility vehicles have a jaunty image. Drivers of sport-utes, as the industry calls them, think they appear less staid and boring than Lexuses or Cadillacs. They are also less ostentatious than like-priced luxury cars, and that fits the '90s notion of stealth wealth. In addition, sport utes have enough car-like features - fancy stereos, posh interiors, soft-riding suspensions, cup holders - that sport trucks have become agreeable for daily use. "They all started as thinly veiled versions of trucks. Now, they've progressed," says J.D. Power's Dukes. "The ride is more boulevard than buckboard." CAN THE MARKET HOLD NEW ENTRANTS? The rush by automakers to exploit the luxury-truck niche could become a problem. "I'm not sure there's room for all the new models," says Susan Jacobs, who runs an automotive forecasting and consulting firm. "Once you have a lot of models competing for the same buyers, there will start to be price competition." And there goes the neighborhood. If luxury trucks become another discounted automotive commodity, the cash cow dries up. DO THE UPSCALED SPORT UTES ALWAYS SELL? Already it is pretty clear that a high price is no guarantee of success. Isuzu introduced an overhauled version of its old reliable Trooper sport-utility early this year - adding $5,000 to the price to pay for the rounded new exterior, the comfortable new interior and the high-tech new engine. Sales have collapsed 61% this year from last year's pace. Mitsubishi likewise re-designed and re-priced its Montero sport-utility, and sales have fallen 36% this year. WHAT MAKES THE HIGH-PRICED UTE SELL? Buyers apparently can't swallow the notion that those Japanese models now start at close to $20,000 - about tops for previous models. The key seems to be equipment and image. "When we look at what should be on the vehicle, we look at BMW, Mercedes, Lexus - those kinds of features, oriented toward comfort," says Jeff Trimmer, manager of Chrysler's Jeep operations. CAN SALES PERKS KEEP SPORTS UTES ON TOP? Land Rover thinks the hot new approach - and the way to defend its turf from interlopers - will be to give buyers of expensive sport trucks even more attention than expensive car brands. Rover is encouraging its 80 dealers in the USA to convert their operations to Land Rover Centers - stand-alone dealerships that sell only Range Rover and Land Rover trucks. That worked for Japanese luxury brands Lexus and Infiniti, partly because dealers hustle harder to sell a brand when it is the only one paying the bills. The centers would cater to buyers by selling boutique items, clothing and high-adventure off-road driving vacations. WILL MAKERS EXPAND THE SPORT UTE MARKET? Now that makers are moving upscale, analysts see an opening for reasonably priced sport-utilities that offer more room than mini-trucks such as Geo Tracker. "The real potential is down market," says Cedergren. Jeep noticed. It whittled prices on its regular Cherokee - the veteran mid-size model that pre-dates the Grand Cherokee - so that a decently equipped model runs about $16,000. Sales of what was supposed to be an out-of-fashion model are up 26% this year as a result. Says Cedergren: "I think the down-market strategy will be so successful that Jeep will keep the Cherokee. I have it in my forecast through the end of the decade." Bonus Editor: Martin Baucom. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM