It's a Saturday morning on San Leandro's Marina Boulevard auto row,
and the big SUVs have been sitting on the lots, waiting for someone to come in
and start that dealer dollar dance that ends up with the customer slightly
bewildered but paying a lot less for that vehicle than he thought he was going
Once in a while, there are takers, although the dealer has to discount
the SUV heavily just to get it moving.
Salvador Sotello, for example, recently paid F.H. Dailey Chevrolet in San
Leandro $41,000 for a new Chevy Tahoe LT (yes, with leather) SUV that had a
sticker price of $58,000. The sale was an anomaly in what is otherwise a
pretty dismal selling season. "It's been pretty quiet," saleswoman Crystal
Gonzalez said the other day. "Been pretty slow."
At Broadway Ford in Oakland, the grilles of the Mustangs, SUVs and the
lone Thunderbird smile at the passing traffic, but the showroom is empty, it
appears, of customers; several salesmen are in sight. Up at Albany Ford-Subaru,
salesman Myers Howard, sitting a few feet away from a big Ford pickup truck,
says things on the Ford side of the showroom "are slow." That might be the
understatement of the day.
Just this past week, General Motors Corp. and Ford Motor Co. underwent
the humiliation of seeing their credit ratings reduced by Standard & Poor's
Ratings Services to the status of junk. The reasons are becoming clear --
the two big companies can't sell much of what they produce.
The figures compiled by the auto industry research organizations are
pointing this year at what is quickly becoming the white elephant of the
industry -- that erstwhile favorite of the California shopping mall, the gas-
sucking SUV, a highly profitable vehicle that was the darling of the 1990s but
has now become the prime victim of $3-a-gallon gasoline.
Sales of SUVs for the first three months of this year fell by nearly 15
percent from last year at this time, according to Ward's Automotive, a
Michigan firm that studies the industry. Sales of Ford's Excursion and
Expedition SUVs fell about 28 percent. At GM, sales of the big Chevrolet
Suburban were down nearly 30 percent; the Tahoe, a slightly shorter Suburban,
had a 22 percent drop.
Cars of yesteryear
What's happening here? How did these two mighty industrial giants trip
and fall? General Motors, mega-mother of some of America's monster cars --
the Corvette, the Caddy convertible, the Pontiac GTO, the slick Oldsmobile and
Buick ragtops of the 1950s -- is in such bad shape that people in the car
industry joke openly that Toyota could buy GM with the cash it has in the bank.
"Why are they not selling cars?" asks Csaba Csere, editor-in-chief of Car
and Driver magazine. "It's an inability to create cars that people really want
to buy. Ultimately, it's a customer-driven market right now. Sales have been
strong, hovering around 17 million units (cars, SUVs and light trucks) a year.
The last five years were the best in history."
The car market, however, is saturated, Csere said, and "to connect (with
customers), you've got to be producing a vehicle they really want to buy."
Like the Toyota Prius.
One of the bright, shining lights of an otherwise dismal spring in the
world of car sales is a Toyota showroom, particularly the one on Shattuck
Avenue in Berkeley, where, on Saturday morning, the contrast with the
somnolent Ford showrooms couldn't have been more pronounced. Just outside the
showroom floor, Luba Ross, a Point Richmond woman who has just picked up her
new Prius, a Toyota hybrid that can get as much as 60 miles per gallon, is
sitting in the front seat while salesman Kiumars Maghsoodi explains the
intricacies of how this thing works.
"I wanted it for the environment," she says of her car, "and for the fuel
efficiency." Asked whether she had considered an SUV, she looks honestly
puzzled. "They're too big," she says. "People don't need cars that size."
Alan Shivers, the dealer's sales manager, says that of the roughly 105
cars he sells each month, 50 to 60 are Priuses. Nationally, Toyota has already
doubled the sale of Priuses in the first three months of this year over the
same period last year, according to Autodata Corp, as reported by the
The rest of the Berkeley Toyota dealer's sales, Shivers says, run the
gamut of Toyota's line, and like the big American carmakers, Toyota is
suffering when it comes to selling gas guzzlers. Shivers says that in the past
month, he's sold none of the big Sequoia and Land Cruiser SUVs and only "one
or two" 4Runners. Ahh, but it's time for another Prius. David Burrill, the
salesman who specializes in hybrids, is delivering another new car, this time
to Dave and Dale Young, an Oakland couple in their 60s. Thursday is Dale's
65th birthday, and she says this is her birthday present to herself and the
family. And it was a hard sell to get her husband to go along.
"I didn't believe in the car," said Dave Young. "She made an appointment
(to see it). Then, after driving it and going over the car, I couldn't wait to
give (Burrill) a check."
Taking it for a spin
On a 15-minute familiarization drive for the Youngs, up in the hills
behind UC Berkeley's football stadium, Burrill points out on the car's
information screen how it recharges its battery while coming downhill, going
from one-third full to full in about five minutes. For a good part of the
journey, the car purrs along on its electric motor.
Burrill says realistic mileage figures are in the area of 46 to 50 mpg,
and that the car can easily go more than 400 miles on a tank. A lot of what
has people flocking to the Prius and other hybrids these days is rising gas
But the problem of why GM and Ford are suffering so much is not just a
question of gas prices -- people who can afford SUVs and pickup trucks that
cost $40,000 or more can usually afford the nearly $3,000 annual hit at the
fuel pump (assuming 14 miles per gallon, driving 14,000 miles a year and
paying almost $3 a gallon for gas).
The real problem, experts say, is that the market is rapidly moving away
from the big SUVs, costs for the big companies are far outstripping revenues,
and these and other ills that bedevil the industry are all coming together at
the same time.
"The reality," says David Zoia, editor of Ward's Automotive, "is that
there is a trend away from traditional truck-based SUVs."
Those big SUVs crowding the car lots are essentially pickup trucks with
sumptuous SUV bodies bolted to the truck frames. They may be luxurious, but
they're still trucks, and they bounce like trucks and suck up gas like trucks.
"The growing market," Zoia says, "is for 'cross-utility vehicles,'
vehicles that are built on car platforms."
These CUVs, as they are called, have been out for a few years and are
clearly more popular than the old SUVs. Think Honda Pilot, Toyota Highlander
(soon to come out with a hybrid version), Lexus RX330, BMW X5 and, from the
domestic market, Ford Escape (already comes in a hybrid version), Chrysler
Pacifica, Saturn Vue and, at the luxury end of things, the Cadillac SRX.
While there will always be a "hardcore market" for the old-style SUVs,
Zoia says, "You're seeing the non-hardcore SUV audience moving more into these
car-based things. They offer a better ride, and they're getting the all-wheel-
drive they've grown used to in SUVs."
Then, of course, there's the subject of quality, how vehicles are built,
how long they stay glued together before they begin repetitive journeys to the
The J.D. Power and Associates initial quality survey, released a year ago,
shows Toyota, Honda and Korean manufacturer Hyundai at the top, but, as Zoia
says, "in terms of quality and durability, the gap (between the various
manufacturers) has definitely closed. Toyota and Honda are still at the top of
the pyramid, but GM, Ford and Chrysler are getting good. The difference is in
the things you can see and feel, the quality of the material, the way the
vehicle is designed."
At the San Leandro Hyundai and Kia dealership, used car manager T.C.
Cummings takes a visitor outside and points to the hood of a 2004 Chevrolet
Cavalier, a rather nondescript used sedan waiting for a buyer.
All-important cup holder
He points at the hood, whose nose is skewed about one-third of an inch to
the left. "That's sloppy," he says. He opens the driver's door and points out
the cup holder, which sits in front of the floor-mounted gearshift. In "Park,"
the gearshift obscures the cup holder.
"You come out of Starbucks with your big cup, and you can't put it in the
cup holder," he says. "It's the small things that add up. A cup holder becomes
a major thing to a customer. If he can't get to it, what good is it?"
Zoia agrees. "The import (firms) have had more money to spend. And in the
case of GM, they have had to cut corners. It shows when you get in the car.
Gee, it's nice, but not quite an Audi or Toyota or Honda."
He says the big American carmakers are under such huge financial pressure
-- one exception is DaimlerChrysler, whose Chrysler 300 sedan and Dodge
Magnum wagon are big successes -- that "the brands don't have marquee value.
GM is forced to sell on price."
Customers, he says, will typically ask, "What's the rebate? They're
buying this car because it's a good deal, not necessarily because it wowed
Then, of course, there's the thing that may wow them. Back in the Toyota
showroom in Berkeley, by Saturday evening, sales manager Shivers says that in
the six hours since Ross and the Youngs picked up their Priuses, the
dealership "sold three more, and we took orders for three more."
One other thing: there are no rebates or discounts on these cars. They
sell for the price on the window sticker: $23,841.
© Copyright 2005 San Francisco Chronicle