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Fresno Bee (CA) (KRT) via NewsEdge :

Jun. 29–Pity the large SUV.

Once highly sought after for size and status, models like the Ford Expedition have seen sales drop 32% in the first five months of the year.

At some dealerships, the vehicles are relegated to the back of the lot, with smaller cars claiming the prime real estate. Other dealers are refusing SUVs as trade-ins because they are worth so little, and the SUVs that do sell go at dirt-cheap prices.

It appears high gas prices are here to stay, and experts say that means the way of the future lies in fuel-efficient cars and particularly the midsize “crossover” SUVs that are lighter and get better gas mileage, like the Saturn Outlook and the Ford Edge.

The decline in sales of new, large SUVs is drastic: Dealers sold 138,591 fewer of them nationwide during the first five months of the year than they did during the same period last year. Midsize SUV sales fell nearly 30%.

Gas prices have changed the way consumers shop, said Hamza Mustafa, general manager of Image Auto Sales at Blackstone Avenue and Saginaw Way.

“That is one of the first questions they ask: ‘How much does it take in gas?’ ” he said.

Seven years ago, the Ford Explorer once reigned as the No. 3 selling vehicle in America, outsold only by Chevrolet Silverado and Ford F Series trucks, said Tom Libby, senior director of industry analysis for the Power Information Network, a division of J.D. Power and Associates.

Today, the Ford Explorer ranks No. 63, he said.

“We are seeing a shift, no doubt,” said Mark Rapin, vice president of Freedom Ford Truck Center in Fresno. “People are not interested in full size [SUVs] as much.”

Granted, sales of all new vehicles are feeling the crunch, down 7.6% nationwide, with California sales falling 18.6%.

Compounding the problem is an economy in which people are hesitant to spend money and customers have credit marred by foreclosures and housing problems, all leading to slower sales, Mustafa said.

At the Fresno Auto Liquidation used car lot on Blackstone Avenue near Bullard Avenue, the SUVs are in the back, behind the building. A row of small cars with high gas mileage fronts Blackstone.

Some customers who shop for new vehicles are unable to get rid of their old SUVs, said general manager Hamid Dalia.

As demand for SUVs falls, so does the trade-in price.

In some cases, the value of the SUV has dropped so drastically that it is lower than the amount left on the customer’s loan, he said. Such a deal doesn’t benefit the dealer, which will refuse the trade-in, he said.

Rapin said more people today are “upside-down” on car loans stretching loans to five and six years.

New breed

SUVs will not disappear, experts said.

Instead, they are being replaced by the midsize “crossover” SUVs, sometimes called CUVs. These vehicles are built on car frames and often have smaller engines than typical SUVs and gas mileage about six or seven miles per gallon better than larger SUVs. They seat between five and eight people.

The Buick Enclave, the Ford Edge, GMC’s Acadia and the Lincoln MKZ are selling well in this new class, Libby said.

“The shocking thing is how rapidly the shift has taken place,” Rapin said. “Nobody expected it to go this quick.”

That has caused automakers to make major changes in the last two weeks alone, including General Motors Corp. slashing truck production by 170,000 and considering selling the Hummer brand. Ford announced it will cut truck manufacturing by 90,000, delay the introduction of its new F-150 pickup and begin laying off 15% of its salaried work force.

Deals to be made

Despite the shift, many local dealerships still are selling large SUVs.

“The good news is that it’s a good time to buy,” said Crystal Jack, spokeswoman for the California New Car Dealers Association.

Sales of SUVs are steady at Rancho Grande Auto Center on Abby Street south of Olive Avenue: It sold three in three days recently, said finance manager Gabe Martinez.

A 2003 Ford Explorer that last year sold for about $16,000 or $17,000 is now priced at $9,999, he said.

“You’re getting a bargain,” Martinez said. “It’s like houses. It’s a good time to buy.”

Many used-car dealers buy their large vehicles cheap at auctions and from banks and can pass along the savings, said Mustafa of Image Auto Sales.

Even if Rancho Grande is only making $500 to $800 profit per sale, the company can make up for it by selling large quantities, Martinez said. The dealers who are suffering bought their SUVs months ago at high prices and are having trouble unloading them at a profitable price, he said.

And there’s still a market to serve.

Freedom’s Rapin said some still need an SUV to tow boats or trailers.

And many families find they need to buy a full-size SUV.

“You’ve got people with six kids,” said Dalia of Fresno Auto Liquidation. “They have no other choice.”

The reporter can be reached at bclough@fresnobee.comor (559) 441-6431.

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