Manufacturers caught in a midsize SUV conundrum

With midsize SUV sales down sharply so far this year, many automakers are left wondering what to do with the segment. Largely dominated by body-on-frame 4WD vehicles, the segment has morphed from pint-sized replicas of Blazers and Broncos into vehicles that are often only a few inches smaller and a few pounds lighter than full-sized SUVs. With little or no fuel-economy or price advantage, the buyers that need towing capabilities seem to be taking a step up in the market, while those that are looking mainly for people-hauling abilities are spreading their sales around other vehicles in the showroom, such as minivans, crossovers, and large sedans.

Those automakers that previously relied on strong sales in the segment to boost their bottom line are now faced with a difficult decision - dump billions of dollars into a segment that may be in a persistive vegetative state, or let those products wither on the vine with predictable results. Ford has coined a new term, stating that it won't "Crown Vic the Explorer" and will continue to refresh the former cash cow. The fate of GM's TrailBlazer is unclear, with the automaker dumping the ill-received long-wheelbase version (a truck that was substantially longer than the supposedly-larger Tahoe), trimming production capacity, and postponing or cancelling an upcoming redesign. The perilous financial positions of both companies means that they can ill-afford a mistake. Meanwhile, Chrysler is looking toward diesel power and the promise of improved fuel economy to pump up the sales of its Jeep Grand Cherokee, which are down 26% so far this year.

[Source: BusinessWeek]