Is it the end of the road of the road for 4x4s?

Jun 18 2008 Alistair Houghton

TEETH at Land Rover must collectively clench every time its vehicles are described as "gas guzzlers". Land Rover sales in the US and UK are suffering thanks to high fuel prices, the global economic downturn and mounting environmental concerns, all of which are making people think twice about buying new cars.

In the UK, Land Rover sales were down 32.5% in May and the company now expects global sales to be flat, bringing an end to the high sales growth of recent years.

But, as Land Rover is at pains to point out, it has already invested in making its vehicles more fuel- efficient.

And today’s announce- ment of new engineering jobs at Land Rover to develop environmentally- friendly technologies shows just how seriously the company is taking the need to go green.

Land Rover has con- firmed that its first model to have new "stop-start" technology, which turns the engine off when the vehicle is stationary in traffic, will be the Hale- wood-built Freelander 2.

The innovation will save drivers at least 8% on fuel and cut down on carbon emissions.

Another innovation, unveiled with great fanfare at the Detroit Motor Show earlier this year, is the environmentally-friendly "Baby Land Rover" LRX concept car.

Unveiling the LRX last year, the company said the vehicle "demonstrates Land Rover’s seriousness about continued relevance and sustainability – with new technologies, lightweight design and environmentally-responsible materials".

The test vehicle includes a diesel hybrid engine capable of running on biodiesel, which Land Rover says could reduce fuel consumption by as much as 30%, compared to other similar 4x4s.

Land Rover has not officially decided whether the compact LRX will go into production, but industry sources say that, if the project does get the green light, it will be built at Halewood. The last thing Land Rover needs in the current economic climate is a backlash against its vehicles. Figures earlier this month showed the number of new Land Rovers registered in the UK in May fell 32.55% compared to the same month last year as the economic slowdown hit hard.

This month’s sales statistics from the Society of Motor Manufacturers and Traders (SMMT) also showed overall registrations of 4x4s in the UK fell by 18% last month, compared to May, 2007.

Land Rover is offsetting that decline by pushing its vehicles in other markets – but transforming its image can surely only help it to win back customers who need to economise on their fuel bills.

Even in the US, the spiritual home of the gas guzzler, rising fuel prices are making people think harder about fuel efficiency.

Last week, newspapers in Detroit, the home of the US motor industry, reported that Ford was planning to convert plants building SUVs and pick-up trucks to build cars instead, reflecting a move by US consumers towards more fuel-efficient vehicles.

Fellow motor giant GM has put the future of the Hummer brand up for review – and Land Rover’s new owner, the Indian motor giant Tata, has been linked with a bid for the firm.

In Europe, many countries have introduced taxes on cars with high carbon emissions.

Land Rover’s managing director Phil Popham said the trend against 4x4 vehicles has made it clear to car manufacturers that they need to adapt to survive.

He said: "It’s pointing out the need to respond to environmental pressures in the area of fuel consumption. It really does support the need for investment – of the kind that we’d already started to make 18 months ago – in alternative technologies.

"The new vehicles we’ve introduced are significantly more fuel-efficient than their predecessors.

"We had a very positive response to the LRX concept vehicle we showed earlier this year. It’s had a phenomenal response around the world. We hope we’ll find a way to bring that into production.

"That will showcase the new technology we’re working on at the moment across our vehicles.

"By 2012, the industry has to have an 18% reduction in its CO² emissions. At Land Rover, we’ll be significantly ahead of that."

Mr Popham said Land Rover’s sales decline, from May, 2007, to this May, actually stood at around 26% when company car sales were included.

He said the reason the decline seemed so sharp was that Land Rover had had a very strong May, 2007, thanks to the introduction of new Freelander models, as well as a remodelled Defender series.

For Professor Garel Rhys, of Cardiff University, one of the world’s leading automotive industry experts, a fall in demand for 4x4s is a reflection of a general slump in automotive sales following the credit crunch.

HE EXPECTED this year would see the biggest fall in UK car sales since 1991 as customers rein in their spending.

He said: "There’s been a very big decline in sales and registrations of all vehicles in the UK.

"The reality of the world economic situation has at last caught up with the car-buying public."

Prof Rhys agrees the Freelander 2 is not a gas guzzler, and says it is, in fact, well-placed to cope in a market where American buyers are looking to move away from their much larger SUVs.

"Land Rover is ahead of the game," he said. "The Freelander 2 is the SUV for Europe.

"It’s got a parallel in the multi- purpose vehicle area. That market started with the Renault Espace, a very expensive product and big for Europe. We’ve seen variation over the last ten years to the baby people carriers like the Renault Scenic. Every European and Japanese manufacturer has a small people carrier. That category didn’t exist 10 years ago and has become a popular segment.

"Land Rover has got nothing like the Hummer or the Cherokee Chief with their large engines. The entire range of Land Rover is much more in keeping with the future direction of the marketplace."

Prof Peter Cooke, KPMG automotive professor at the University of Buckingham, said he expected 4X4 sales would hold up once fuel efficiency issues were addressed.

"I would say this is a hiccup rather than a decline," he said.

But Prof Karel Williams, a motor industry specialist at Manchester Business School, said he believed the fall in SUV sales marked a permanent change in car buyers’ tastes.

He said: "The rising petrol price is going to force a dramatic restriction in demand. This is reflected not simply in downsizing, but also in changes in niche popularity in different types of vehicles.

"My view is that the demand is not going to go back to 4x4s, though they will retain a place in the market.

"It would have been much better for Tata if they had bought JLR five years ago, so Land Rover could have had five years of the upswing of the SUV boom.

"Tata has now bought into the downswing of the 4x4 boom."

Hummer falls out of favour in West as fuel prices rocket

THE Hummer has become seen as the epitome of the American gas guzzler.

The military-inspired vehicle, favoured by California’s "Governator" Arnold Schwarzenegger, boasts fuel efficiency figures of between nine and 15 miles per gallon.

It has become an American motoring icon but has aroused the ire of environmentalists – a US Friends of the Earth official described it as "the most anti- environmental vehicle in the history of the world", while some California Hummer garages have even faced arson attacks.

The Hummer’s best known fan is governor Schwarzenegger, the bodybuilder turned film star turned California governor who owned a fleet of them.

Schwarzenegger was a fan of the original Hum-Vee military vehicle from which the Hummer was derived, and he has claimed that he suggested the vehicle could be adapted for civilian use.

But, as California governor, Schwarzenegger has been keen to display his green credentials and has sold his fleet. In 2004, he even unveiled the first hydrogen-powered Hummer.

Hummer sales have fallen 30% already this year, and GM announced earlier this month it was reviewing its options for the brand.

Analysts have suggested the brand is most likely to be bought by an Indian, Chinese or Russian business, rather than a Western one, as European and American car buyers are increasingly looking for smaller vehicles.