Auto dealers meet in Vegas; SUV sales projected to grow

Jennifer Shubinski

Friday, Jan. 30, 2004 | 11:07 a.m.

Love 'em or hate 'em -- SUVs are here to stay.

The number of sport utility vehicles on the market and sold to consumers is expected to grow during the next five years, the chief executive of surveying firm J.D. Power and Associates said Thursday.

J.D. CEO Stephen Goodall spoke to about 500 automobile franchise owners who are in Las Vegas this week for the JD Power and Associates International Automotive Roundtable and this weekend's National Automobile Dealers Association convention, which is expected to draw 30,000 people.

"The fundamental product driving growth in the marketplace is SUVs," Goodall said.

The number of brands selling SUVs in 1998 was 59 percent. That number is expected to increase to 92 percent of all automobile brands by 2008, he said.

SUV sales will start to parallel car sales in the coming years, especially as manufacturers begin to roll out hybrid fuel-efficient models, Goodall said.

Hybrid trucks also will become available over the next 10 years as fuel economy becomes more of a concern.

Consumers are also willing to pay a premium for environmentally friendly products while still maintaining the SUV image. Hybrid technology can cost $4,000 to $5,000 extra, Goodall said.

SUVs also cater to different market segments -- entry, midsize, full size and luxury -- enabling the product to grow with its customers' spending power.

Manufacturers are also shortening products lifestyle, or offering significant redesigns, in shorter time spans than before.

That tactic keeps consumers interested and creates a sales and marketing buzz, but can also mean a greater investment of dollars by manufacturers and confusion at the retail level, Goodall said.

Some examples of product changes that will be seen are cars adapting truck characteristics, luxury pickups, retro styles, and SUV-mini van combinations, Goodall said.

"We are bullish on the overall outlook of the market," he said. Population growth and an improved economy have dealers expecting to sell 17.6 million cars in 2008, up from just more than 16.6 million in 2003.

Greg McGivney, director of strategic sales and business development for cars.com, attended the J.D. Power seminar and said the growth in the SUV market is very interesting.

"It definitely has some implications going forward," he said.

McGivney was also in Las Vegas for the NADA convention, which runs Saturday through Tuesday.

NADA, at the Las Vegas Convention Center, is a must-attend industry convention for franchised new-vehicle dealers and other industry professionals.

The convention, which is not open to the public and is not a showcase for new cars, is a place for dealers to learn how to improve their business and the way they do business.

More than 500 exhibitors, covering more than 327,000 square feet of convention space, include everything from the Filter Fresh Espresso Cafe that exhibitors hope dealers will install in dealerships, to financial services and high tech companies.

The convention is also drawing some big names, including Dieter Zetsche, chairman and chief executive of the Chrysler Group, and Gen. Tommy Franks, retired commander-in-chief, U.S. Central Command.

Big names are also expected at the J.D. Power and Associates International Automotive Roundtable, which wraps up today. Mark Rosenker, vice chairman of the National Transportation Safety Board, Gary Cowger, president of General Motors, North America, and Jim Press, executive vice president and chief operating officer of Toyota Motor Sales, U.S.A. Inc. are among today's speakers.