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Cutting Off the Guzzlers

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"The movement toward smaller vehicles is very pronounced and very clear cut," adds Tom Libby, senior director of industry analysis for J.D. Power. "The small vehicles, the crossovers, and the subcompacts are all doing very well, while the large utility and large pickups are struggling."

Part of the reason for the decline in large vehicle sales is that manufacturers are now focused on providing smaller and smaller vehicles.

Ford Motor, for instance, plans to revamp its vehicle lineup, making a smaller version of its bestselling F-150 pickup truck and slashing its production of S.U.V.'s while ramping up the manufacture of its more energy-efficient models, like the Ford Focus.

But high gasoline prices are ultimately the force behind these changes. Automobile manufacturers, who have seen sharp declines in sales of trucks and S.U.V.'s, are switching production now to meet the growing, if less profitable, demand for smaller cars. It is a consumer trend that might be even stronger were it not so hard to unload the gas-guzzling behemoths that Americans have already purchased.

"A year and a half ago I paid $42,000 to $43,000 for my Chevy Suburban," complains Sonia Rose, one of the nurses at Shepherd Home Health who is currently shopping for a more fuel-efficient alternative. "Now they'll give me less than $30,000 trade-in for it. That's a huge loss."

The loss is even more pronounced when one looks at the amount of debt owed on many new cars. In a situation similar to what happened in the housing market, when credit was easy, many people bought more car than they can now afford.

"People being upside down on their vehicle—owing more than it's worth—is definitely an issue because people want to trade in their vehicles," says Kyle Northway, marketing and advertising manager for Jim Burke Ford in downtown Bakersfield, California. "If they are too upside down, we really can't help them. They won't qualify for credit."

Dealers say this is making some large vehicle owners hold off on buying a more fuel-efficient car, or causing them to just mothball their S.U.V. if they actually have the funds to buy a new high-mile-per-gallon model. But this has, in general, led to fewer car sales overall this year, compared with last year, and increased the push of incentives by manufacturers and dealers trying to move their inventory.

The most inventive try to turn the problem into a selling point.

For example, Chrysler's "Refuel America" promotion woos customers to specific models with the promise of a three-year supply of discounted gasoline. And one Missouri car dealer is offering customers a choice of a $250 gas card or a $250 credit at a local gun shop to spruce up sales.

Oddly, given the steep price of gasoline, the Missouri car dealer reports that most customers are still opting for the credit at the gun shop; a sign, perhaps, that gas prices need to move even higher to catch some people's attention.

The question going forward is whether high gas prices are here to stay. Some dealers are betting they aren't, and that when they come down, the road hog will reign supreme again.

"It may take a couple of years, but they will go back to their big vehicles," says David Howe, who's sold cars in Oklahoma since 1976. "This has happened several times over the 30-odd years I've been in business. All we are selling now are cars. They are trying to trade in those Escalades and Avalanches. But when gas goes back to $2.50, they will trade those cars back in on trucks."

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