Thursday, August 2, 2007

Suburban sales buck trend in tough July

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ROCKFORD — In a down month for the entire auto industry, there was very little good news to report from Wednesday’s release of July auto sales in the U.S.

But there were a few bright spots in our region. The Chevy Suburban, which is made by General Motors workers at plants in Janesville, Wis., and Texas, had sales 12.6 percent higher than July 2006. And the Jeep Compass, made exclusively by Chrysler workers at the Belvidere assembly plant, saw its sales jump 266 percent year over year.

The other five vehicles made in Belvidere and Janesville suffered large declines, and even the Compass’ numbers weren’t as positive upon further inspection.The auto industry as a whole took a beating thanks to continuing high gas prices and the credit crunch in the banking industry because of record high foreclosures in the housing market. In total, dealers sold 1.3 million new vehicles in July compared with 1.5 million last July.

Erich Merkle, vice president of forecasting for auto consulting company IRN Inc. in Grand Rapids, Mich., said consumers simply have less money to buy cars.

“You’ve got a consumer right now that’s really being stretched,” Merkle said. “In many cases debt levels are incredibly high to the point where you’re seeing a lot of foreclosures.”

Still, the declines in the sales of some of the local cars were somewhat shocking. Sales of the Belvidere-built Dodge Caliber tumbled to 5,305, less than half of what dealers sold in June and the second-lowest monthly total since it hit U.S. dealer lots in February 2006.

The Jeep Patriot, which just went into circulation this January, saw sales fall nearly 40 percent from June to 3,317. The Compass’ meteoric rise was a statistical anomaly. Dealers sold 2,591 of them in July compared with 707 last July, its first month in the marketplace. The July 2007 total was actually the third-lowest in the Compass’ 13 months of availability.

All three of the Belvidere-built vehicles are capable of getting 30 mpg under the right conditions and should thrive when gas prices soar. Still, Chrysler officials said they were happy with the results.

“The whole market was way off in July, and the customer has so many more choices now,” Darrell Jackson, Chrysler’s vice president of U.S. sales, said in a conference call. “Look at it versus last year, we have six different options (in the fuel-efficient market), and the (Dodge) Avenger is in there as well.”

More than 3,800 people work at Chrysler’s Belvidere assembly plant. It is the largest manufacturing operation in the Rock River Valley.

Of the Janesville-made products, the Suburban clearly had the best month with 8,243 of the full-size SUV sold this July compared with 5,546 sold in 2006.

“It’s still the best family-type SUV on the market, and with the flexible fuel E85 versions now the new models are capable of getting 20 to 22 miles per gallon,” said Joe Luy, commercial manager for Lou Bachrodt Auto Mall, which sells Chevrolet along with Jeep, Volkswagen and BMW.

“When gas got up to $3.50 a gallon, it was tough on the Suburban, but it’s always been a mainstay for us. People who own Suburbans stay with them.”

The 2007 Suburbans were redesigned with a more aerodynamic shape and less drag than previous models. For the year, GM dealers have sold 46,801 Suburbans compared with 41,572 through July of last year, a 12.6 increase for the vehicle that dates back to 1935.

Sales of the other big SUVs made in Janesville, the GMC Tahoe, Yukon and Yukon XL, didn’t fare nearly as well. Tahoe sales fell 11.6 percent, and the Yukon and Yukon XL were down 11.7 percent.

About 3,000 people work at GM’s Janesville assembly plant, which has been in operation since 1919 and is the company’s oldest.

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