Picking Up On Alternatives

In 1986, when new vehicle sales last peaked, non-car segments accounted for barely 29% of the market. By 1989, their share was up to 33%. As the previous chart shows, pickup, van and sport-utility segments today represent over 38% of the market. It should be noted, however, that some of their increased popularity is relative. It's partly a function of declining car sales. But there is no question that these alternative vehicles are making up an ever-increasing part of the vehicle population.

Two reasons are America's changing lifestyles and the industry's willingness to create different kinds of vhicles to best unit them. But another, equally compelling reason may be economic.

It now seems unbelievable, but in the last two decades, the cost of the average new car has increased more than 425%. Government economists attribute at least two-thirds of this increase to emission and safety equipment, quality improvements and the general upgrading in the mix of new models sold. It can therefore be said that consumers are getting more for their money. Incomes have also risen, but unfortunately not nearly as much or as quickly as the cost of new cars.

According to the National Automobile Dealers Association, 20 years ago the cost of the average new car equalled about 17 weeks of the average family's annual household income. Today, the average car equals more than 24 weeks. So if everything else were equal and adjusted, today's average buyer would be looking at a 40% increase in price for the average new car.

Just from 1989 to 1992, the transaction price for cars (the price paid by consumers--not the sticker price) rose an average of 23%. During 1992 the average transaction price for domestic cars was $17, 070. For imported cars it was $19,910. There are cars which cost a lot less, like Geo's Metro XFi, which carries a base MSRP of less than $7,000. And at the other end of the spectrum there are cars like the Mercedes-Benz 600SEC, whose 1993 base MSRP was a nice round $132,000, not including a $3,700 "Guzzler Tax." But based on overall volume, the average transaction price for all cars sold last year was about $17,700.

Identical statistics aren't available for light trucks; however a look at what happened during the same time frame to the base MSRP for America's best-selling vehicle might provide some insight into why pickup trucks are so popular.

>From 1989 to 1992, the base MSRP of Ford's full-size F-150 pickup went from under $10,000 to just over $10,300--an increase of about 2%. Nineteenth-three brought an increase of about 10% to over $11,300. But it also brought a driver-side airbag and other car-like features.

Obviously, by adding options or moving up the truck-model ladder, a person could easily run up the price of a pickup to the average car's. But in doing so he or she would end up with a vehicle that's anything but average. As an example: for 1993 the base MSRP for Ford's top-of-the-line Flareside Supercab four-wheel-drive F-150 pickup was just over $17,400.

About 45% of all pickup truck buyers opt for a compact model. And while this is a type of vehicle that was invented by the imports, the leading sellers today are domestics. In this category, base prices generally start at under $90,000. However, a fully equipped, high-line version of a compact like Ford's best-selling Ranger can cost nearly as much as a similarly equipped, full-size counterpart.

Of course, the above doesn't only apply to Ford trucks. The same can be said for most domestic and imported light trucks. That's why it's hardly surprising to see Chevrolet's full-size C-K pickups are the second best-selling vehicles in America. It's also why Chryslerr is so anxiously anticipating the introduction of its all-new, full-size Dodge Ram pickups.

Chrysler estimates that about half of Ford's and General Motors' light truck sales go to the "personal use" market--people who use their trucks like for daily transportation. In the past, Chrysler has been able to tap into only about 5% of this market. With its all-new full-size Dodge trucks, it hopes to garner a lot more. To do so, these trucks--code-named T300--have been designed with an emphasis on style, passenger car-like ride and quietness. But full-size pickup trucks aren't the only alternatives of which "personal use" buyers are availing themselves.

Vans are the next most popular alternative. Among those choosing a van, nearly 75% choose a compact or minivan--a type of vehicle that's been around barely a decade. The price range in this category, using as an example the industry's best-selling Dodge Caravan, can go from about $14,000 to well over $24,000 for a Grand Caravan with all-wheel drive.

Finally, there are the sport-utilities--the fastest growing segment of car alternatives. If you trace their genesis to the WWII-style Jeep, vehicles of this type have been around for at least 40 years. But these days, "sport-utility" is pretty much defined by vehicles whose underpinnings are derived mostly from compact or full-sized pickup trucks with outer-skins that resemble tall, truncated station wagons.

Among current sport-utility buyers, more than 85% opt for compact varieties, and most find four-door versions most useful. Base prices among the compacts can range from a low of just over $12,000 for two-wheel-drive four-door Suzuki Sidekick, to well over $28,000 for a four-wheel-drive, four-door Jeep Grand Cherokee. Among full-size sport-utility vehicles, prices range from about $20,000 for a vehicle like GMC's Yukon, to over $49,000 for a long-wheelbase Range Rover County. Prices for the best-selling vehicle in the category, the Ford Explorer, start at about $17,000.

Behind sport-utility vehicles, in terms of popularity, are those types of vehicles whose share of mind far outweighs their share of market. Here you'll find the luxury cars, on whose heavily laden and highly taxed stickers ride the engineering and quality reputations of corporations and countries. Here too you'll find America's one-time favorites--basic large cars--whose prospects are limited by legislated demands for Corporate Average Fuel Economy (CAFE). And lastly, there are sports cars, whose share of market commands less than a single digit, but on whose spirit rides the notion that cars can be fun to drive.

1 Go for Test Drives

Only 25% of all new car buyers actually test drive a car or truck before buying one. Consequently, overall satisfaction is lower than it ought to be. This isn't the fault of the vehicle, but rather a poor fit between driver and automobile. Test driving a wide variety of vehicles is not just the first step in shopping for a car, it's crucial to understanding what a vehicle is all about and whether it's right for you. So drive as many different types of vehicles as you might be remotely interested in. Use this checklist as a test drive guide.

RATING SCALE: 5=excellent, 1=poor

2 Compare Apples to Apples

Once you've decided on a particular type of vehicle (sedan, sport-utility, etc.) you'll want to look at the different models (Taurus, Accord, etc.) available within the category. Feature comparisons are one of the best ways to evaluate what you get versus what is all costs. From there you should have a pretty good read on who gives you the best value, as well as a more accurate picture of a vehicle's true price.

3 Check out the Warranty

Test drives not only give you exposure to the vehicle, but provide an opportunity to evaluate the dealership, gather literature and check out how significantly a manufacturer backs its products. In most cases, you'll be covered for at least three years or 36,000 miles, but what's included and excluded can vary.