Already struggling with a downturn tied to gasoline prices, auto makers have another headache to deal with — falling crossover-vehicle sales.
Crossover vehicles, car-based wagons designed to look and function like SUVs but with modestly better fuel economy, were booming coming into 2008. But sales have dropped off as consumers have flocked to less expensive and more efficient passenger cars.
This is forcing auto makers to further rethink a business model largely dependent on the sales and profits of large vehicles.
Despite a flood of new models in the segment, sales of crossovers were down 11% in July compared with July 2007, according to Autodata Corp., representing the third straight month of sharp declines amid a wider downturn in the overall market.
Even though the segment continues to outperform vehicle sales in general, and despite car companies' big hopes for crossovers, auto makers have been forced to scale back production plans as sales of crossovers have missed the mark.
Crossovers were supposed to be a cushion buffering auto makers against the sport-utility-vehicle decline that has been gradually picking up steam in recent years.
Designed to look like truck-based SUVs, these vehicles behave more like station wagons because they are built on lighter car chassis with the goal of being more fuel efficient.
Because of this, auto makers touted vehicles such as the Edge by Ford Motor Co. and General Motors Corp.'s Buick Enclave as the perfect bridge for consumers who wanted a way out of their gas guzzlers but didn't want to sacrifice size.
But instead of boosting crossover sales, demand has been crippled.