By Joseph Palumbo III
First quarter reports from GM and Ford this year show signs that many consumers are steering away from the once sought after large SUV. The obvious reason is rising gasoline prices.With roomier, more fuel efficient sedan models that carry extended warranties being made available to consumers, large SUVs are becoming a tough sell. Ford announced a 38.5 percent decline this first quarter mainly due to the fact that families today can take their pick from about 500 sedans and are even more interested in the fusion, mid-sized SUVs. While the newer sedans seem more expensive and the rebates on some large SUVs appear too tantalizing to walk away from, many families are now taking into account the fact that the future is very unpredictable, with layoffs, downsizing and consistently rising cost of living.The mid-sized market has also opened up greatly, according to GM, which announced a first quarter loss of $1.1 billion. Mid-sized vehicles seem to make more sense for the consumer. Also, new design structures allow for roomy interiors even if the vehicle doesn't look so from the outside.Sales of smaller SUVs, though, are still relatively consistent to a certain degree. For some it's the best of both worlds – a four-wheel-drive truck that costs as much as a car. Minivans and wagons have also become a better option for some families. Minivans may not have the look some of the large SUVs have, but they do have much sought after added legroom and storage without the gas guzzling costs. Some people have also told me that they limit and at times avoid using their large SUVs because they are becoming cost conscious.So how's business with regard to the SUV? I don't think the American consumer has forsaken the comfort of a large SUV by any means. I just think they're doing it in a more budget conscious frame of mind.Joseph J. Palumbo III is a managing partner for the Palco Group. The Palco Group deals in asset management, real estate, sales training and business consultation. Palumbo can be reached at 718-461-8317, or at palcogroup@aol.com.
