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Booming crossover SUV sales trigger car discounts

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By TOM KRISHER and DEE-ANN DURBIN
AP Auto Writers

DETROIT (AP) - The seismic shift in American car-buying toward trucks and crossover SUVs is creating great deals on compact and midsize cars.

The shift, which has been going on for more than a year, is hurting car sales so much that automakers are offering bigger discounts to keep moving metal.

The change became even more pronounced in August, with companies such as General Motors and Chrysler reporting that truck sales, including crossover SUVS, were up while car sales fell.

The increasing SUV and truck popularity, and discount-fueled sales of some midsize cars, helped U.S. auto industry to its best August in 11 years last month, with sales rising 5.4 percent from a year ago to 1.58 million, according to Ward's Automotive. While prices remain high for trucks and SUVs, they're either falling or rising only slightly on cars, and that means good deals for consumers.

"It's definitely a good time to buy a midsize car," says Jessica Caldwell, senior analyst at the Edmunds.com automotive website. Every midsize sedan is comfortable, looks good and performs well, so price is nearly the only differentiator, she says.

Automakers spent an average of $1,841 per car to discount compacts last month, up 7 percent from a year ago, while prices fell 1.2 percent, according to estimates from Edmunds. On midsize cars, companies spent an average of $2,344 on discounts, up 4 percent. Average sales price rose slightly as buyers added features.

Yet for some brands, deals brought out car buyers. Honda reported record sales of its Accord midsize car in August, up 33 percent to more than 51,000. Nissan reported an August record for its Altima midsize car, with sales up 4 percent. And Ford's Fusion also did well, with sales up nearly 20 percent. Accord sales were so high that it again unseated Toyota's midsize Camry as the top-selling car in the U.S. for the month. Camry sales fell 1.5 percent to just over 44,000.

Caldwell theorized that Accord, Fusion and Altima sales were aided by discounts that brought owners with older versions of the cars off the sidelines. "All of those vehicles have pretty large customer bases," she said. "They see some of the deals that are out there."

Edmunds estimates that Honda spent $2,013 per car on discounts for the Accord in August, more than three times what it spent a year ago. Altima discounts were $2,293, up 5 percent, while Ford discounted the Fusion by $2,774, up 42 percent.

Crossovers, which are built on car underpinnings, making them more efficient and maneuverable than the old truck-based SUV. They also get gas mileage that's similar to cars. Buyers, especially empty-nest baby boomers who are downsizing, like the storage space and utility, said Erich Merkle, Ford's top sales analyst.

Small crossovers such as Honda's CR-V accounted for 17.3 percent of the market last month, two points higher than a year ago. But small-cars were just under 22 percent of the market in August, down from just over 22 percent last year. Midsize car market share fell 0.2 percentage points to 16 percent, Merkle said.

The shift, he predicted, will continue for the foreseeable future, although it may slow next year.

Jeff Schuster, executive vice president of forecasting for LMC Automotive, expects the shift to continue beyond next year, but he says eventually crossover SUV buyers will find the deals on cars too good to pass up.

Of all major automakers, only General Motors and Volkswagen reported sales declines last month. GM was down 1.2 percent, and struggling VW was off nearly 13 percent. Truck sales at GM were up 18 percent.

Chrysler and Nissan led the sales gains with Chrysler rising 20 percent and Nissan up nearly 12 percent. Toyota sales rose 6 percent, while Ford and Honda each eked out a 0.4 percent gain.

Sales last month ran at an annual rate of 17.5 million, the highest annual rate since January of 2006.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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