SUVs, CUVs, and STWs How and What Will Consumers Choose? Rebecca A. Lindland Associate Director North American Sales Detroit, 6 October 2005 EVOLVING CONSUMER PREFERENCES Challenging Opportunities
Introduction Sport utility vehicles have been the hottest products in the U.S. market for more than 15 years. Because of this, auto manufacturers have flooded the marketplace with every conceivable size and style of SUV. Even consumers are now bewildered with the variety of choices of SUV available to them. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 2
The SUV Legacy: A Brief History Chevy Suburban, arguably the first SUV Jeep introduces civilian version, first SUV with 4WD IHC Compact Scout Jeep unveils Wagoneer, the first modern SUV Ford introduces the compact Bronco Chevy rolls out fullsize Blazer Blazer & Bronco become young male Baby Boomer s ride of choice Jeep Cherokee 4-Door makes SUV family friendly First midsize SUV: Ford Explorer First entry CUV: Toyota RAV4 & Honda CR-V First volume Premium CUV: Lexus RX300 First volume Premium SUV: Lincoln Navigator First Entry STW: PT Cruiser First mid CUV: Toyota Highlander First mid-stw: Chrysler Pacifica First Large CUV: GMC Acadia 1935 1946 1961 1963 1966 1969 1978 1984 1990 1995 1998 1999 2001 2002 2004 2007 Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 3
Definitions Recognizing the wide variety of sport utility type vehicles on the market, Global Insight has divided the utility market into three primary segments: Sport Utility Vehicles (SUVs) Crossover Utility Vehicles (CUVs) Sport Touring Wagons (STWs) Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 4
SUV What Is It? An SUV is a Sport Utility Vehicle. Generally built using body on frame truck platforms. Heavy duty construction yields high curb weights. Most have low-gear ratios for off road performance. Rear-wheel-drive with 4x4 as an option. SUVs tend to have high towing capacity. Ride is firm and rugged. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 5
CUV What Is It? A CUV is a Crossover Utility Vehicle. To most consumers, CUVs and SUVs are the same thing. But, CUVs are built from car, rather than light truck platforms. CUVs trade off-road ruggedness for improved fuel economy, ride, handling, and ergonomics. CUVs are more truck-like in image than STWs. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 6
STW What Is It? The sport touring wagon (STW) is the modern interpretation of the classic station wagon. But, STWs differ from station wagons in several ways: Sportier image. Higher roofline for command seating position. Shorter rear overhang. Available AWD (in most cases). STWs are more car-like than CUVs. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 7
SUV Sales Forecast THOUSAND UNITS 3200 3000 2800 2600 2400 2200 2000 1800 1600 2001 2003 2005 2007 2009 2011 2013 2015 Between 2000 2015, SUV sales decline 23% as consumers shift to other vehicle concepts. Consumers will be hardpressed to give up the utility, driving position, and road presence to move back to sedans. But, towing capacity and need for 4x4 does support a foundation of sales for SUVs. The CUV and STW segments are likely to be the largest benefactors. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 8
Why Are SUVs Popular? SUVs are a nearly perfect fit with Baby Boomer me first values: Command seating position. Go anywhere, do anything capability. Get out of my way look in your rear view mirror. Bigger than you for safety. Because of this perfect fit, SUV sales will be more robust than some are forecasting, although they will decline. Generation X uses full size SUVs as family haulers: They purchase more SUVs per capita than any other group. They provide an alternative to embarrassing minivans. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 9
SUV Segment Shares 2005 2010 PREMIUM SUV, 9.5% ENTRY SUV, 15.8% PREMIUM SUV, 10.2% ENTRY SUV, 20.8% FULLSIZE SUV, 23.9% FULLSIZE SUV, 24.3% 2.387 million units MID SUV, 50.8% PREMIUM SUV, 11.6% 2015 ENTRY SUV, 22.1% MID SUV, 44.8% 2.171 million units FULLSIZE SUV, 24.3% 2.311 million units MID SUV, 42.0% Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 10
SUV Micro-Segments 50 45 40 35 30 25 20 15 10 5 0 NUMBER OF SUV SEGMENTS PER YEAR 46 41 42 42 41 40 40 40 39 35 31 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 The number of SUV micro-segments exhibited a steady growth, but peaks at 46 this year. After 2005, SUV microsegments began to decline as CUVs encroach and consumers buy due to need versus want. Also, there are very few models being added to this segment. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 11
CUV Sales THOUSAND UNITS 3000 2500 2000 1500 1000 500 Between 2000 2015, CUV sales are expected to bloom from less than 440,000 units to nearly 2.85 million units. Successful CUVs provide a near perfect combination of expressive, muscular design and AWD without the stiff ride and poor gas mileage of SUVs. New models and demographics drive the growth. 0 2000 2002 2004 2006 2008 2010 2012 2014 Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 12
Why Are CUVs Popular? Well-executed CUVs provide consumers with many of the benefits of an SUV, but minus the disadvantages: Better fuel economy. Better chassis dynamics. Better ergonomics. The most successful CUVs are indistinguishable visually from SUVs: Ford Escape. Chevrolet Equinox. Honda Pilot. Even Baby Boomers will make the switch to well-executed CUVs, thinking they are continuing to buy an SUV. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 13
CUV Segment Shares MID PREMIUM CUV, 17.7% 2005 LARGE PREMIUM CUV, 1.2% MID PREMIUM CUV, 13.9% 2010 LARGE PREMIUM CUV, 1.6% ENTRY PREMIUM CUV, 2.1% MID CUV, 24.9% 1.868 million units ENTRY CUV, 54.2% MID PREMIUM CUV, 14.8% 2015 ENTRY PREMIUM CUV, 8.3% LARGE CUV, 8.7% LARGE PREMIUM CUV, 1.4% MID CUV, 22.1% ENTRY CUV, 45.3% 2.724 million units ENTRY PREMIUM CUV, 8.4% ENTRY CUV, 46.1% LARGE CUV, 8.0% 2.852 million units MID CUV, 21.4% Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 14
CUV Micro-Segments 50 45 40 35 30 25 20 15 10 5 0 NUMBER OF CUV-SEGMENTS PER YEAR 47 42 42 44 35 28 21 18 14 9 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 The number of CUV microsegments exhibited a steady increase as more and more models are added. Currently there are 28 microsegments (up from just 7 in 2000) with a forecast of 47 by 2010. Micro-segments are added more judiciously here SUVs peaked at 46 in 2005 but CUVs don t exceed that mark until 2010. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 15
STW Sales Forecast 900 800 700 Between 2000 2015, sport touring wagons grow from under 90,000 units to nearly 800,000 units. THOUSAND UNITS 600 500 400 300 200 While the growth is impressive, it still is fairly limited for a truck sector. It s still a bit questionable whether this body style appeals to consumers Is it aggressive enough? 100 0 2000 2002 2004 2006 2008 2010 2012 2014 Is the seating position high enough? Is it sexy? Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 16
Why Are STWs Popular? STWs are the classic station wagon brought up to date. STWs provide the comfort, dynamics, and economy of cars, with some of the functionality and style of a CUV. Ultimately, the STW could become the mommy mobile of Generation Y: Generation Y will not want the minivans their parents used when they were kids. Properly executed, the STW can provide Generation Y with a kid hauler tailored to their unique values. Entry STWs like the Dodge Caliber appear poised to substitute for compact sedans for other generations as well. Consumers used to the versatility of SUVs and minivans will appreciate the enhanced usability of an STW vs. a small coupe or sedan. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 17
STW Segment Shares 2005 2010 PREMIUM STW, 5.5% PREMIUM STW, 8.2% MID STW, 49.0% ENTRY STW, 45.6% MID STW, 41.5% ENTRY STW, 50.3% 441,912 units PREMIUM STW, 9.0% 2015 754,913 units MID STW, 40.7% ENTRY STW, 50.3% 764,322 units Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 18
STW Micro-Segments 25 20 15 NUMBER OF STW SEGMENTS PER YEAR 23 23 22 21 21 18 15 The number of STW microsegments jumped from 9 to 15 in 2004, but the growth stabilizes at 23 by 2010, half of CUV micro-segments. 10 5 7 9 With a more limited potential market for this bodystyle, fewer micro-segments are required to reach the audience. 1 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 19
Sales of Cars and Trucks in North America U.S. Car U.S. Truck 48.9% 51.1% 54.8% 45.2% 57.0% 43.0% Can Car Can Truck 2000 2005 2010 In 2010, Canada reaches same car truck split as U.S. had in 2000 45.0% 55.0% 47.4% 52.6% 48.8% 51.2% Truck gain, but cars continue to dominate in Mexico throughout the forecast Mex Car Mex Truck 37.5% 38.8% 31.0% 69.0% 62.5% 61.2% Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 20
Share Evolution Light Truck Segments MID VANS, 12.1% 2005 FULL VANS, 3.2% CUV, 20.1% MID VANS, 10.1% 2010 FULL VANS, 3.1% CUV, 27.2% SUV, 21.7% SUV, 25.7% STW, 4.8% PICKUPS, 33.6% MID VANS, 10.1% 2015 FULL VANS, 3.0% CUV, 27.1% STW, 7.5% PICKUPS, 30.3% 9.274 million units 10.001 million units SUV, 22.0% 10.516 million units STW, 7.3% PICKUPS, 30.6% Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 21
Summary While the combined total of SUVs, CUVs, STWs, and vans will increase only slightly between now and 2015, the share of CUVs and STWs will increase, at the expense of vans and SUVs. Consumers will gravitate to these more efficient carbased vehicles as long as CUVs and STWs provide the right visual image. Gas prices fuel the fire for CUVs and STWs, but consumers started to show a preference for CUVs even before the current energy situation. Copyright 2005 Global Insight, Inc. 2005 GLOBAL AUTOMOTIVE CONFERENCE DETROIT 22
Rebecca A. Lindland Associate Director North American Sales E-mail: rebecca.lindland@globalinsight.com Tel: +1 781 301 9068