Wednesday, May 03, 2006

More and More Americans Prefer Trucks, Not Cars - Industry Overview

Looking at last year's sales numbers, you might assume that cars have fallen out of favor with American consumers.

For the first time in U.S. auto sales history, shoppers took home more light trucks-pickups, sports utility vehicles (SUVs), vans, minivans and crossover utility vehicles (CUVs)-than they did sport coupes, station wagons and sedans.

According to final tallies by Automotive News, a Detroit-based industry trade journal, the nation's auto dealers sold 8.5 million light trucks, beating out car sales by more than 200,000 units. Put another way, trucks accounted for 50.6 percent of all new vehicles sold in the United States in 2002.

But all is not lost for car lovers. The evidence from the current run of auto shows in the United States and Canada is that cars are poised to make a comeback-or to at least make a fight of it in a North American market gone four-wheel-drive.

Even economy cars are ready to make a run. Witness the introduction of models such as the 2004 Chevrolet Aveo and Mitsubishi's Lancer Ralliart at the Chicago Auto Show, now in progress.

Inspired by the sales success of the smallest car sold in this country, the Mini Cooper, auto companies have reexamined the notion that small cars can't be sold profitably in a market still awash in cheap gasoline. So, the car makers plan to bring out more little rides with an edge.

But truck-driven companies, such as General Motors Corp., are covering their bets in this endeavor. To reduce financial risks, largely through cutting production costs, GM is teaming up with South Korean automaker Daewoo to bring forth the Aveo. It is going to be a sport-nosed little car, available as a five-door hatchback or four-door sedan. GM says the Aveo will compete directly against the Hyundai Accent and Kia Rio, which means its sticker prices should range from $9,500 to $12,000.

In addition to a small dose of snazzy styling, the Aveo promises to offer something approaching decent small-car muscle-105 horsepower derived from a 1.6-liter, 16-valve, inline four-cylinder engine. Fuel economy is expected to come in at about 38 miles per gallon. Chevrolet executives believe they can sell 70,000 Aveo hatchbacks and sedans annually. With the way things are going in the Middle East--and the threat to oil supplies sending gas prices sharply higher--they might be right.


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