DETROIT -- Sales of big sport-utility vehicles peaked about three years ago and high U.S. gasoline prices are contributing to their industry wide decline, a senior Ford Motor Co. official said on Wednesday.
"There is a shift down from the larger sport-utilities, what we would call the medium and ... the large and heavy sport-utilities, down toward the small and the crossover categories," said Earl Hesterberg, Ford's head of North American marketing and sales.
"There are two reasons for that. One is fuel prices," he said. "The second one is there is an increasing number of new entries in the small and crossover segment."
Crossovers, unlike traditional truck-based SUVs designed for offroading or hauling large trailers, are built off the same basic underpinnings as cars and tend to be more fuel efficient.
Hesterberg, who spoke at a Morgan Stanley automotive conference in New York, said SUVs were still an important part of the U.S. auto market, accounting for about 28 percent of light vehicle sales last year.
But he added that sales of medium and large SUVs peaked at about 14 percent of the market in 2002 and would come in at about 11 percent this year, as more and more buyers trade into crossovers or smaller vehicles.
"This is another big challenge in the market," Hesterberg said. He was referring to the fact that Ford and GM, which issued a dramatic profit warning last week, both generate much of their automotive profits from big SUVs and pickup trucks.
"The longer these fuel prices stay up above $2 a gallon, the more people think about it. It may not be one of the top reasons for purchase or cost considerations, but it's not insignificant. And you're just seeing more and more people hitting the market underneath those (large and medium SUV) segments," Hesterberg said.
Ford and GM has both been losing market share to foreign rivals like Toyota Motor Corp., and Hesterberg said the drop in full-size SUV sales was a leading factor behind a 10 to 15 percent drop in the profits of Ford's U.S. dealerships last year. Dealer profits were also down about 15 percent in January, he said.
"Not only are the trucks important to our profits, the truck sales are very important to the dealer profits."
He added that the big SUV segment was still significant, however, and said Ford hoped to boost its market share through sales of a redesigned Ford Explorer SUV due out next fall.
The Explorer, last redesigned in 2001, is America's best-selling SUV. But sales of the vehicle have fallen by about 30 percent so far this year. The new model will get better fuel economy, even though it will also pack more horsepower, Hesterberg said.
"It's still a big country with big people who haul big boats and horse trailers, so I don't think that the big SUV market is going to become insignificant," Hesterberg said.
But I don't expect it to get back where it was."