Watch CBSN Live

GM's Sport Utility Woes

The General Motors strikes at two Michigan plants -- which have closed down assembly lines for lucrative pickup trucks and sport utility vehicles -- are taking a financial toll on the company, reports CBS News Correspondent Bob Orr.

That's because the trucks and sport utility vehicles are a cash cow, with profits far exceeding those generated by cars.

"Four or five or six thousand dollars would not be out of line for the profit on a well-loaded sport utility vehicle or a pickup truck," says David Cole, of the University of Michigan. "On the other hand, on a small car they may be losing money and a mid-size car barely breaking even."

Fortunately for automakers, drivers are demanding the money-making trucks. New figures for the first five months of the year show that while overall car sales are down, SUV's are racing out of the showroom.

"The American car manufacturers are clearly making most, if not all, of their money building light trucks and sport utility vehicles," says Jamie Lincoln Kitman of Automobile magazine.

To tap into that hot market, car makers now are rolling out new SUV models, such as the Grand Jeep Cherokee, in glitzy productions.

No one blames automakers for riding the SUV profit wave. However, analysts warn SUV'S may not be hot forever.

Detroit must also find a way to make money on cars, and prepare for the possibility that customers may decide to return to the family sedan.

Reported by Bob Orr
©1998, CBS Worldwide Inc., All Rights Reserved

View CBS News In
CBS News App Open
Chrome Safari Continue