MONEY Autos

Americans Are Back in Love with SUVs. Is Cheap Gas the Reason?

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2015 Cadillac Escalade Richard Prince—GM

November was an exceptionally strong month for auto sales—especially for trucks and SUVs of all shapes, sizes, and degrees of luxury.

With the help of Black Friday promotions and the cheapest gas prices in years, the auto industry posted a brilliant November for sales. General Motors announced that sales were up 6% compared to a year ago, making for its best November in seven years. In fact, the Detroit Free Press reported that once all of the sales totals are in, last month could very well be the best November the auto industry has seen in 13 years, thanks especially to strong performances from GM and Chrysler (up 20%).

Ford sales in November were down 2% compared to a year, but even that is being considered a victory of sorts, because the results outperformed analysts’ expectations. (Experts anticipated a sales decline largely because Ford is in the process of producing a new aluminum-bodied F-150 truck—the country’s best-selling vehicle for more than three decades—and naturally sales are slumping while drivers await the updated model.)

What’s interesting is that while Ford had a less-than-stellar month overall, a few of its vehicles experienced a terrific November in terms of sales. Two SUVs, the Explorer and the crossover Escape, did great business, up 13% and 22% compared to a year ago. And those impressive gains pale in comparison to their higher-end sibling. Ford’s Lincoln brand was up 21% overall for the month, and sales of the Lincoln Navigator—a luxury SUV with a sticker price starting over $60,000—reached 1,433 for the month, a rise of 88% compared to a year ago.

Similarly, one of the Navigator’s luxury SUV competitors, the Cadillac Escalade (MSRP from $72,970), saw sales increase a whopping 75% in November, even as Cadillac as a whole experienced a 15% decline for the month. Several other GM trucks and SUVs, including the Chevrolet Silverado, GMC Sierra, and Buick Encore, also had booming Novembers, with sales up 24%, 57%, and 72%, respectively.

Yet another SUV-centric auto brand, Fiat Chrysler’s Jeep, had a brilliant November, with sales up 67% for the new Cherokee and up 27% overall. Meanwhile, Toyota, which beat expectations with a mild 3% sales increase in November, made a point of noting how well its trucks and SUVs did for the month. “Consumer demand for light trucks continues unabated and Toyota dealers set new November sales records for light trucks and SUVs,” Toyota division group vice president Bill Fay said in a press release.

What explains the surge in SUV sales? To some extent, the category’s performance is emblematic of the auto industry having a strong month overall. But decreasing gas prices are probably playing a role as well: Apparently the dip under under $3 per gallon seemed like a cue to some consumers that it was time to consider an SUV again. The fact that new trucks and SUVs are more fuel-efficient than their older counterparts helps the cause. On the other hand, only rapidly decreasing gas prices—and short memories on the behalf of consumers who griped not long ago about dropping $100 on fill-ups—can explain the reported increase in sales of gas-guzzling Hummers on used car lots recently.

Toward the end of November in particular, dealerships were offering especially aggressive promotions on SUVs of all shapes and sizes. Ford’s rivals were very aggressive with deals on light-weight pickups, likely with the idea of wooing buyers before they have the chance to purchase the new Ford F-150, soon to be widely available. Finally, the Black Friday shop-a-thon weekend seems to have instilled in consumers a mentality for splurging on high-priced automobiles, especially when it seemed like the deals were good.

“Arguably more than other Black Fridays, this one seemed to have been positioned as a big ticket Black Friday,” LMC Automotive’s Jeff Schuster said, according to Bloomberg News. “It’s the 65-inch TVs, big appliances or cars that consumers focused on.”

 

TIME Transportation

What Happened to the Car Industry’s Most Famous Flop?

A 1958 Edsel Convertible
A 1958 Edsel convertible made by Ford Underwood Archives / Getty Images

Market researched failed in a major way

Any crossword puzzler knows there’s a five-letter word for a Ford that flopped: Edsel.

At the heart of any big flop–like when Ford ended the Edsel 55 years ago, on Nov. 19, 1959–lies high expectations. The Edsel was named after Henry Ford’s son, no small honor, and it had its own division of the company devoted to its creation. As TIME reported in 1957 when the car debuted, the company had spent 10 years and $250 million on planning one of its first brand-new cars in decades. The Edsel came in 18 models but, in order to reach its sales goals, it would have to do wildly better than any other car in 1957 was expected to do. The September day that the car first went on the market, thousands of eager buyers showed up at dealers, but before the year was over monthly sales had fallen by about a third.

When Ford announced that they were pulling the plug on the program, here’s how TIME explained what had gone wrong:

As it turned out, the Edsel was a classic case of the wrong car for the wrong market at the wrong time. It was also a prime example of the limitations of market research, with its “depth interviews” and “motivational” mumbo-jumbo. On the research, Ford had an airtight case for a new medium-priced car to compete with Chrysler’s Dodge and DeSoto, General Motors’ Pontiac, Oldsmobile and Buick. Studies showed that by 1965 half of all U.S. families would be in the $5,000-and-up bracket, would be buying more cars in the medium-priced field, which already had 60% of the market. Edsel could sell up to 400,000 cars a year.

After the decision was made in 1955, Ford ran more studies to make sure the new car had precisely the right “personality.” Research showed that Mercury buyers were generally young and hot-rod-inclined, while Pontiac, Dodge and Buick appealed to middle-aged people. Edsel was to strike a happy medium. As one researcher said, it would be “the smart car for the younger executive or professional family on its way up.” To get this image across, Ford even went to the trouble of putting out a 60-page memo on the procedural steps in the selection of an advertising agency, turned down 19 applicants before choosing Manhattan’s Foote, Cone & Belding. Total cost of research, design, tooling, expansion of production facilities: $250 million.

A Taste of Lemon. The flaw in all the research was that by 1957, when Edsel appeared, the bloom was gone from the medium-priced field, and a new boom was starting in the compact field, an area the Edsel research had overlooked completely.

Even so, the Edsel wasn’t a complete loss for Ford: the company was able to use production facilities build for Edsel for their next new line of, you guessed it, compact cards.

Read the full report here, in the TIME Vault: The $250 Million Flop

TIME Autos

Ford Recalls 65,000 Fusion Vehicles

There are no known accidents caused by the issue

Ford has recalled 65,000 Fusion cars for noncompliance with a regulation on “theft protection and rollaway prevention.

The automaker announced Tuesday said that it is not aware of any accidents or injuries caused by the issue, but said that it would voluntarily fix the more than 56,000 affected vehicles in the United States, as well as 6,000 in Canada and 2,300 in Mexico.

The 65,000 vehicles recalled Tuesday is small in comparison to General Motors’ notorious recall this year, when more than 1 million vehicles worldwide were pulled over a faulty ignition switch that caused the deaths of at least 30 people.

MONEY Autos

New Lincoln MKC: Comfort With a Dash of Audacity

The entry-level luxury crossover SUV, which sits atop a Ford Escape chassis, dares to compete with foreign rivals. It's up to the challenge.

You’ve got to give Lincoln Motor a little credit just for the sheer audacity of its marketing posture for the MKC, its new entry-level luxury crossover SUV. No, I’m not talking about the endlessly parodied commercials featuring stud actor Matthew McConaughey. I’m talking about Lincoln inviting direct comparison with foreign rivals such as the Audi Q5, the BMW X3, the Mercedes GLK, and the Acura RDX — and basically saying, “Bring it on.”

What gives Lincoln this kind of chrome chops? In truth, a little desperation helps. When Alan Mulally reorganized Ford a couple of years ago, he sold off the company’s upscale badges — Jaguar, Range Rover, and Volvo — and junked its pointless Mercury brand. Lincoln lived because it could offer something unique: American luxury.

And if Lincoln wants to be relevant, it has to play ball in the upscale urban crossover sport utility vehicle (a.k.a. CUV) market. The MKC has got some game. At a base price of about $34,000, the MKC dares to be different in a very American way. Where the Germans offer Teutonic toughness, the MKC offers a comfy ride. You are, after all, driving the kids to soccer practice, not taking laps at Nürburgring. Do you really need to feel the road that much?

The revelation for me occurred in the first 10 seconds of my test drive: This ride feels nice. And that’s a good thing. Start with the chair. Every car evaluation has to begin here. The MKC’s is a beauty: a 10-way power, heated driver’s seat with lumbar controls. You will find your sweet spot; you will be sitting pretty. Then there’s the lack of road noise, courtesy of an active noise control system. You can also add continuously controlled damping ($650 extra) — all those sensors working to keep road vibrations from reaching you.

But don’t think this is an old-fashioned American couch drive. The MKC has electronic steering control, so it’s responsive enough. And thanks to its tunable suspension — with settings for comfort, normal, and sport — you can get a stiffer ride if you want one. Still, there’s no confusing the MKC for an Audi. You can decide if you like that or not.

There’s also a gimmick: a push-button gear selector located on the dash. How high-tech is that? Not very. It’s actually a throwback to the 1950s and 1960s. The indestructible, used, mid-60s vintage Plymouth station wagon (the original CUV) that my parents hauled their four offspring in had this very same feature, as did any number of models of the time. Lincoln has revived the push-button transmission for the MKC — only this time around it adds some unexpected elegance to the car and also frees up room in the center console.

There’s some real innovation at the back of the CUV: an optional motion sensor that lets you wave a foot underneath the wraparound tail gate to open it. Quite useful.

The MKC is offered in three flavors, Premiere ($34,000 to $36,000), Select ($37,225 to $40,860) and Reserve ($40,930 to $44,565). One of Lincoln’s selling points is that its competitors start at around $40,000 for a very basic model, and the price moves up quickly with options. The Premiere MKC model is powered by Ford’s 2.0 liter, 240-hp EcoBoost I-4, which has plenty of pop. With the other two trims, you have the option of the 2.3 L, 285-hp version. All-wheel drive is available on all three.

I drove the bigger power plant with AWD, and there’s nothing lacking there; it delivers 305 lb-ft of torque, and churns plenty of power. The EcoBoost engine is a Ford mainstay, and totally fitting for the MKC. With the Reserve trim you can also opt for a technology package that includes adaptive cruise control, collision warning with brake support, active park assist, forward sensing, lane-keeping, and driver alert systems. This is a really good safety grouping; let’s hope it’s standard on all cars some day.

The fact that Ford has piled so many nice touches into the Lincoln MKC is a bit confounding in auto circles, since the car is built on the same platform as the Ford Escape. It evokes memories of earlier times, when the Big Three created really bad luxury cars this way, Lincoln among them. But in modern practice, wherein manufactures try to minimize the number of platforms across a global product line, it works just fine. If Audis can sit on VW beds, there’s no reason Lincolns can’t sit on Fords. It’s all about execution. And with the MKC, Lincoln has pulled it off.

TIME Autos

Ford Issues 5 Separate Recalls for 202,000 Vehicles

A new 2014 Ford F-150 truck exits a quality control inspection after undergoing assembly at the Ford Dearborn Truck Plant on June 13, 2014 in Dearborn, Mich.
A new 2014 Ford F-150 truck exits a quality control inspection after undergoing assembly at the Ford Dearborn Truck Plant on June 13, 2014 in Dearborn, Mich. Bill Pugliano—Getty Images

One recall will aim to correct a flawed repair from a previous recall

Ford Motor Company issued recall notices on Tuesday for more than 200,000 vehicles to check for defects ranging from potentially leaky fuel lines to stalled engines.

The largest recall encompasses nearly 135,000 Ford Flex and F-150 vehicles (model year 2014), which may have a fault in the passenger seat sensor that will cause airbags to not deploy in the event of a crash.

More than 38,600 Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car models (2005 to 2011) are being recalled for a second time after a faulty repair during the previous recall may have introduced a defect into the steering shaft that could lead to a sudden loss of steering. And a potentially defective fuel or vapor line routing in roughly 27,600 Ford Transit Connect vehicles (model year 2014) that could lead to leaks.

Ford also issued three smaller recalls for possible faults in the fuel and brake pedal systems.

The company said the defects have caused no known injuries and that faulty parts will be replaced and repaired at no expense to the owners.

MONEY Autos

The Price of Hybrid and Electric Cars Is Plummeting. Here’s Why

2012 Toyota Prius
Toyota Prius David Dewhurst

Among the trickle-down effects of cheaper gas prices are lower sales totals for alternative-fuel cars—which in turn have forced automakers to slash prices on these vehicles.

USA Today just reported that Ford is cutting the sticker price of the fully battery-powered plug-in Focus Electric by a flat $6,000. That’s on top of a $4,000 price reduction on the same vehicle a year ago. The new sticker price is $29,995 including shipping—but not including federal tax credits of up to $7,500 and state incentives that might effectively knock another $2,500 off the amount buyers pay.

Obviously, Ford wouldn’t be instituting such dramatic price cuts if the Focus Electric was selling well, and part of the reason sales have been poor is that the model doesn’t stand out in an increasingly crowded field of midlevel-priced plug-ins where the Nissan Leaf, the pioneer in the category, remains the indisputable leader. Another reason for underwhelming sales of the Focus Electric—and for many alternative-fuel cars in general, for that matter—is simply that gas prices have been getting cheaper and cheaper.

According to the AAA Fuel Gauge Report, the national average for a gallon of regular was just under $3.10 on Tuesday, compared with $3.35 a year ago and around $3.70 this past spring. Gas prices for the year as a whole are down slightly compared with 2013, and projections call for continued lower prices in 2015. All of which hurts automakers’ efforts to convince buyers that it’s a savvy move to pay a premium over a standard gas-powered vehicle for a hybrid or electric car right now, with the anticipation that they’d more than make up the difference later on in the form of savings on gas.

To help sales, automakers have been trying mightily to make the difference in price between alternative-fuel cars and their traditional car counterparts disappear. Nissan slashed the price of the Leaf in early 2013, effectively bringing the takeaway price of the vehicle under the $20,000 mark. Leaf sales have been strong throughout 2014, up 23% year over year thus far. Ford Focus Electric sales are up in the U.S. as well, with September units sold up 60% compared with the same month last year. Even so, we’re talking about extremely small numbers: 176 Focus Electrics sold last month, versus only 110 for September 2013.

What’s especially noteworthy is that the combination of lower gas prices and increasingly fuel-efficient internal-combustion engine cars appears to be putting the squeeze in particular on hybrid cars like the Toyota Prius. According to Toyota data, 14,277 Priuses were sold in the U.S. last month, compared with 15,890 for September 2013. For the year thus far, Prius sales are down 11.4% compared with the same period a year ago—and mind you, this slump took place a time when Toyota sales overall are up 5.7%. By far the worst-performing Prius has been the plug-in PHV; only 353 sold in September, a decline of 71% versus the same month a year ago (1,152). As for hybrid sales overall, a total of 31,385 units sold in the U.S. in September 2014, a decrease of 35% from the previous month, and a decline of 6.5% from the same month in 2013.

Bear in mind that the hybrid sales slump has occurred while automakers have gotten more aggressive with discounts. As Automotive News lately noted about the struggles of alternative-fuel cars:

Data from KBB.com show that Toyota boosted Prius incentives to $2,300 per vehicle in September from $1,400 a year ago while Ford ramped up C-Max spiffs to $4,900 from $2,650 per vehicle in the same period; neither move helped sales.

So cheaper gas prices benefit drivers not only in terms of the obvious—cheaper gas prices—but also because they’re forcing automakers to slash prices on hybrids and electric cars that boast savings on gas as a primary sales pitch.

MONEY Autos

The $64,000 GMC Sierra Denali Shows How Pickups Have Gone Crazy Luxe

A powerful engine, a moon roof, USB ports and comfortable seating for five are all signs of booms in agriculture and construction.

Even in the darkest days of the American automobile industry, pickup trucks came through. Detroit couldn’t build profitable cars to save its soul, but pickups always delivered sales and profits.

In the last couple of years, with agriculture booming and construction recovering, the auto companies have been outdoing themselves to hang on to this lucrative turf. Ford is about to launch a new, aluminum version of its top selling F-150. Chrysler has had to increase production of its Ram 1500 to keep up with demand. Meanwhile, GM is about to debut two middleweight contenders, Canyon (GMC) and Colorado (Chevy).

GMC also rolled out new versions of its heavy duty 2500 and 3500 Sierra HD models that highlight another trend: the pickup gone crazy luxe. For the successful farmer who now pilots a climate-controlled, $325,000 John Deere 9370R tractor with mission-control computer display terminals, the fully-equipped Sierra Denali 2500HD that we tested might be no less than the minimum required. This diesel-driven, high-waisted brute feels more like a working Escalade, and at $64,000 for the crew-cab, diesel version, it’s priced in the neighborhood.

Who would drop $64,000 on a pickup? Look, I’m a car guy so I really can’t answer that question, but if I had to get up at 4 a.m. every day and do actual labor on a farm or ranch, or at construction sites, I’d like to think I’d earned a cushy ride. And in the Sierra Denali you’ll get one. Once you adjust to sitting a mile high and towering over mere cars — and in Manhattan (New York, that is, not Kansas) it’s kind of a cool perspective — you realize that the Sierra doesn’t feel like a truck. On the highway, it’s one of the quietest vehicles on the highway that I’ve tested this year.

That’s even more surprising considering that this particular Sierra Denali is powered by a 6.6 L V8 Duramax diesel tied to a 6-speed Allison Transmission. But this combo, odd to say, doesn’t shout its 397 h.p. worth of trucky-ness. Because the diesel delivers bigtime torque at low revs, (765 lb. ft. @ 1,600) the pickup’s power sounds more oceanlike as it gathers force. You’ll pay for that power, with the diesel package adding $8,845 to the standard price of $53,740. Since you are already in luxury car territory, why not throw in a power sunroof ($995), aluminum rims ($850), and 20-inch tires ($200)?

You are now styling in four-wheel drive and your buddies will appreciate it: You can fit four of them in the Sierra Denali 2500HD, and they will be properly seated in the more-than-roomy-enough crew cab. You, though, will have the best seat, one that’s heated and air conditioned and equipped with its own alarm system: The seat shimmies to keep you alert in slow traffic or if it senses you are drifting out of your lane. And because this is a work truck, the center console is loaded with storage for files, laptops, or even power tools; there’s also a power panel that includes USB ports, a couple of 12-volt ports, and a standard electrical outlet.

It would be silly of me to try to tow a trailer around New York City, but the Sierra Denali 2500HD can haul one weighing up to 13,000 lb. On the other hand, we did manage a brief four-wheel drive test on a rough patch of Harriman State Park about 50 miles north of New York. The fall foliage was beautiful and the pickup handled the high brush easily given its substantial ground clearance. I’d be looking forward to winter driving in this thing if I worked outside. Although I wouldn’t be looking forward to working outside.

MONEY Tech

Why Siri Is the Worst Backseat Driver

iPhone with Siri on screen
Iain Masterton—Alamy

Two new studies find that Apple's voice-activated virtual assistant is the most distracting hands-free technology to use while driving.

Hoping to arrive at your destination in one piece? Up your odds: Leave Siri out of it. According to two new studies out Tuesday from AAA and the University of Utah, the iPhone’s little helper is more distracting for drivers than any other voice-activated technology.

One study looked at brand-specific automotive infotainment systems, like Chevrolet’s MyLink and Toyota’s Entune, while a second examined hands-free use of Siri. The researchers asked 162 University of Utah students to use the voice-based systems to perform a variety of tasks while in a lab, operating a driving simulator, and actually driving a test route. Each technology was scored from 1 to 5, with 1 being the mental capacity required to drive with no distractions and 5 representing the degree of distraction when drivers are asked to solve a complex math problem. Siri received the worst rating: 4.14. To add insult to (virtual only!) injury, two testers actually crashed their simulators while using Siri.

Among the in-car infotainment systems, Chevrolet’s MyLink earned the worst marks (3.7), followed by Mercedes’ COMMAND (3.1) and Ford SYNC with MyFord Touch (3.0). Toyota’s Entune was rated least distracting, at 1.7.

The testers used the infotainment systems for tasks like changing radio stations and making phone calls. They used Siri (version iOS 7) for a different set of activities: navigating, sending and receiving texts, posting to Facebook and Twitter, and using the calendar. All tasks were done without looking at or touching the phone itself.

According to the AP, Apple noted via statement that the studies did not use the company’s CarPlay or Siri Eyes Free, which are integrated into certain new cars and designed specifically for use while driving. (We reached out to Apple for comment but have not heard back as of the time of this posting.)

The researchers concluded that the less complicated technologies proved less distracting in part because they’re simpler to use and more accurate. Some systems proved so challenging to use that study participants “were cursing the systems out,” said University of Utah psychology professor and study leader David Strayer. That’s likely to strike a chord with many Siri users—just check the hashtag #SiriFail on Tumblr, Twitter, and Instagram—as is the study’s note that “some participants also reported frustration with Siri’s occasional sarcasm and wit.”

As the technologies improve, the study authors say, there’s an opportunity for hands-free systems to get less distracting. In the meantime, Jake Nelson, director of Traffic Safety Advocacy and Research for AAA, says drivers who want to use hands-free technologies should try to avoid tasks that involve composing messages. While checking messages proved no more distracting than listening to an audiobook, the study found that responding is significantly more complicated. “Our message is, just because technology enables to you to different things while you’re driving doesn’t mean you should,” Nelson says.

MONEY Autos

Used Car Prices Are Plummeting. Here’s Why

Vehicles for sale at a used car lot.
Chuck Franklin—Alamy

When the market for new car sales is hot, smart buyers know to look instead at the overflowing inventory of used cars—a supply that's cheap and getting cheaper.

It’s a great time to be in the market for a used car. The Wall Street Journal recently cited data indicating that used-car prices declined for the four consecutive months through August. USA Today noted that the average used car purchased at a franchised auto dealership sold for $10,883 in August, down 1.6% from the previous year and 2.4% versus July 2014. Edmunds.com predicted that used car prices would dip around 2% overall this year, and that some used vehicles—in particular, large crossover SUVs like the Chevy Traverse—would drop in price by upwards of 8%.

What’s more, the forecast calls for used-car prices to stay on a downward trend for the foreseeable future. AutoTrader.com, the Atlanta-based online marketplace for new and used vehicles, says that its inventory of certified pre-owned vehicles has risen 6% since March, and that by year’s end buyers can expect a handful of top “pre-loved” car models—including the 2011 versions of the Ford Fusion, Toyota Corolla, and Honda CR-V—to be priced at roughly 5% less than what dealers were asking just six months ago.

What accounts for the sudden price dip? A quick review of what has happened in the new and used car markets over the past few years sheds some light. In 2011, used vehicle prices hit a 16-year high in the wake of the Great Recession, when relatively few consumers were purchasing or leasing new cars because money was tight and credit was less available. That meant a shrinking supply of used cars, as there were fewer trade-ins or vehicles coming off lease. The “Cash for Clunkers” stimulus program also removed millions of used vehicles from the market, further tightening supply.

According to Cars.com, the average 2012 listing price for five popular used vehicles five or more years old had risen a whopping 29% over the three years prior. Around that time, however, new car leases and sales surged, rising 13% in 2012 and continuing with impressive growth in 2013 and 2014. All of those new vehicle purchases and leases have translated to a parallel rise in trade-ins and cars coming off leases. “Leasing has surged in recent years with thousands of those cars coming back to dealerships as used cars,” Michelle Krebs, AutoTrader.com senior analyst, said via press release. “The abundance of returned lease cars should result in used cars coming off their historical highs of recent years, representing good buys for consumers.”

The takeaway is that used cars are cheap, at least when compared to the record highs of a few years ago, and that the market for previously owned vehicles should remain attractive to buyers through the near future.

Yet this turn of events isn’t all good for consumers. When used car prices tank, so does the value of your trade-in, if you have one. Also, automakers are more likely to offer low-price lease deals when their anticipated resale value is high. The flip side is that when used car prices crater, like they’re doing now, car dealerships must assume that they’ll be forced to sell off-lease vehicles for less money—and therefore they need to make more money from the person leasing the car in the first place. In other words, typical monthly payments for a customer leasing a new car are likely to rise compared to the rates available not long ago.

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