General Motors is spending more than $500 million on its Arlington assembly plant over the next 18 months, indicating that GM officials believe there's still a bright future for the large sport utility vehicles built at the plant.
And all indications are that it will be a good bet.Last year, GM sold more than 213,000 of the full-size SUVs it builds in Arlington, a 7 percent increase over 2010. It was the best since the economy tanked in 2008 despite gasoline prices that sailed past $3 a gallon early in the year and surpassed $4 at times in many areas of the country.Analysts say the big SUV, tops on the most-hated lists of environmental activists, seems likely to have a place in the U.S. auto market for many years to come. And that's despite the long-term likelihood of gas prices continuing to rise."The love affair with large SUVs is going to continue, especially in markets like Texas," said Jesse Toprak, vice president of industry trends and insights for the TrueCar auto buyer's advisory service in Santa Monica, Calif.To be sure, it's a market segment that's shrunken dramatically since the peak of 2003-04, when more than a million large SUVs of all models were sold each year. GM and Ford owned a combined 80 percent of the market.Total sales last year topped out at 373,000, with GM still owning 57 percent of the market while Ford's share has fallen to just 13 percent.Both companies will continue to fight for sales, Toprak said, because "the profit margin on those vehicles [large SUVs] is among the highest in the industry."Many of the families that bought the large, truck-based SUVs a decade ago for hauling kids to soccer games and cheerleading practices have switched to lighter, smoother-riding, more fuel-efficient crossovers."But you can't pull a trailer full of horses" behind a car-based crossover, said Tracy Handler, market analyst for IHS Automotive in Detroit and owner of a 13-year old Chevy Suburban that she has no intention of letting go.There are fewer SUV buyers, but still many loyal ones. "There are people who still come in and buy a [Chevy] Tahoe or Suburban because either they just like that size vehicle or they need the size and towing capacity," said Jim Hardick, general manager of Moritz Chevrolet in Fort Worth.GM used to have three assembly plants building the large SUVs, but as the market contracted the company consolidated production in Arlington. In 2011 the plant, with about 2,500 full-time manufacturing workers and 200 salaried employees, produced 270,000 vehicles compared with 282,000 in 2010.In addition to retail and fleet sales, GM sells large numbers of the vehicles to the federal government -- the Suburban seems to be the official vehicle of the Secret Service -- and exports thousands each year.The large, luxurious Cadillac Escalade remains a prized status symbol in many quarters, and not just with professional athletes and other well-off individuals. "They love them in China and the Middle East," Handler said. "That's the advantage of the Arlington plant: You serve the world."GM is retooling the Arlington plant now for the 2014 models, which it won't begin producing until the second half of 2013. The announcement last week that the company will locate a new parts stamping facility next to the assembly plant is part of GM's plan to make the plant more efficient and more flexible.When the stamping facility and the retooled assembly plant are both running, the Arlington plant will employ close to 3,000.GM has revealed next to nothing about its plans for the 2014 full-size SUVs, but analysts say they expect that when the vehicles are rolled out late this year or early next there will be incremental gains in fuel economy and power as well as more amenities for drivers and passengers.Hybrid models of the large SUVs have not been big sellers, partly because of premium prices well above those of conventional gas-engine models. Still, analysts say they expect GM will likely offer a new generation of hybrids and may likely use hybrid technologies to boost overall fuel efficiency.Studies have shown that the instant start-stop technology now being used in some vehicles can boost overall fuel economy 10 percent, which Toprak said could make it a candidate for use in the SUVs.Improved six-cylinder engines and perhaps diesel engines could be in the not-too-distant future as gas prices and national fuel economy rules rise.The big SUV remains a core part of the business of GM dealers, Hardick said, and "I think that market could grow again because they're finding ways to increase the fuel efficiency of those vehicles."Bob Cox, 817-390-7723Twitter: @bobcoxictHave more to add? News tip? Tell us
