As the ’05 model year begins, one question permeating the auto industry – particularly the domestic auto industry – is whether SUVs, the cash cows of the last decade, are “dead.”

There are disturbing signs, foremost among them late-summer double-digit sales drops for segment stalwarts such as General Motors Corp.’s Chevrolet Suburban and other yachts of its ilk.

Ford Motor Co. announced in September that, in the face of shriveling sales and a glut of industry-wide excess capacity, it will eliminate early next year the second shift at the St. Louis Assembly plant, which builds the once-untouchable Explorer and its Mercury Mountaineer and Lincoln Aviator platform siblings.

All this in an environment of record-high incentives that customers now count on to chop away, in many cases, $7,000 or more from the sticker of a fullsize SUV.

And despite domestic auto makers’ assertion gasoline prices stubbornly hovering around $2 per gallon are not having a discernable impact on SUV and light-truck sales, some industry analysts insist fuel economy is rapidly moving up on consumers’ priority scale.

Whatever the underlying assumptions, sales of SUVs – broadly defined by Ward’s as utility vehicles either based on a pickup-truck platform or long targeted in the market as a “traditional” SUV (a la Jeep Grand Cherokee) – essentially have been declining since a peak of nearly 3 million units in 2000.

And despite astonishing incentives for many models, SUV sales for this year are tracking to fall at least 200,000 units short of 2000 levels.

But does this – along with a marked dearth of new introductions for ’05 – really spell the end for the SUV as we know it?

Hardly. Although there have been a few breathless stories insinuating escalating gasoline prices and changing consumer tastes have quickly co-mingled to make the SUV the dodo bird of the industry, some 2.75 million customers this year suggests a species far from extinction.

It appears more likely SUV sales simply have peaked and now are settling toward a level that will remain consistent – and sustainable – for many years. In this sense, the segment’s historical sales trend closely resembles that of another red-hot segment that, when it began to cool, prompted Mark Twain-type premature media obituaries: the minivan.

Minivans exploded onto the market in 1983, notched a 700%-plus increase in 1984 and in just a decade had surpassed the 1-million sales mark. But by that time, sales actually were leveling. Minivan sales peaked in 2000 and for the past decade have hung in a consistent range averaging about 1.2 million units – a couple hundred thousand units less than peak levels.

Although the proportions are different, SUV sales display a similar history.

And just as the advent of SUVs initiated the leveling of minivan sales, today’s new SUV breed, the cross/utility vehicle, likely is the “alternative” that started the SUV sales plateau now under way. U.S. consumers, it seems obvious, are beginning to choose softer-riding, more nimble-handling, (sometimes) more-efficient CUVs to replace trucky SUVs.

From the scant number of new SUVs launched for ’05, it appears manufacturers may have identified the trend. There is but a handful of new SUV introductions, where five years ago there may have been a dozen.

Most meaningful to the broad market is the Chrysler Group’s all-new ’05 Grand Cherokee. Pluses include a new independent front suspension, more interior room and the availability of the all-conquering Hemi Magnum 5.7L OHV V-8.

But the new Grand Cherokee’s derivative sheetmetal already is drawing critical fire, and it remains to be seen if the Hemi genuinely belongs. Still to be determined, too, is whether the old GC’s shimmying highway ride has calmed.

Ford’s Rover Group launches a rare all-new replacement in the tony Land Rover lineup. The LR3 supplants the Discovery, a mainstay of the Rover line that nonetheless had become more than a bit of a fossil.

The LR3 is all-new, with a mega-complex Terrain Response feature that integrates powertrain and chassis-control systems in one of five user-selectable settings. Ford’s Jaguar Cars, meanwhile, supplies LR3’s 4.4L DOHC V-8, and its 300 hp should do a lot more for forward motivation than the previous Discovery’s 8-cyl. lump.

Nissan Motor Co. Ltd.’s Pathfinder also is all-new, featuring (for better or worse) body-on-frame construction borrowed from the Titan fullsize pickup and a new 270-hp, 4L version of Nissan’s dominating “VQ” DOHC V-6. Styling takes cues from the Titan, too, including the like-it-or-leave-it chrome-look “V” front grille.

The SUV market-share stealers, CUVs, represent a segment with more action this year, although one that for the first time in several years also is not bulging with new entries.

Chevrolet’s Equinox, on sale since earlier this year, is off to a strong start, with a convincing package and price, marred only by a brittle interior and a China-built 3.4L OHV V-6 that is neither strong enough (185 hp), or modern enough to make one feel good about GM’s views on mass-market powertrain competitiveness.

Ford also makes up for lost time with the discussed-to-death Escape Hybrid, a convincing if somewhat compromised first play in the hybrid-electric vehicle landscape. At almost $29,000, a 4-wheel-drive variant is slightly pricey.

And as is the case with most HEVs, real-world driving does not seem to jive favorably with the window sticker’s fuel-economy rating. Nonetheless, the Escape Hybrid should boost Ford’s beleaguered environmental reputation.

Freestyle may be Ford’s most critical ’05 launch.

Infinitely more important to Ford’s bottom line is the all-new Freestyle, the wagon-CUV based on the upscale Volvo P2 platform. Stolidly styled and underpowered with its 203-hp 3L variant of the dusty Duratec DOHC V-6 family, the Freestyle goes for the win in an area GM still doesn’t understand: interior quality.

Is Freestyle boring? Absolutely. And just as Ford pulls the trigger on the efficiency enhancing continuously variable transmission (CVT) technology – Freestyle’s only available transmission – it appears the world may already have passed by the CVT. And it’s possible some Ford diehards will abandon the default-choice Explorer to try the fresher approach of Freestyle.

Hyundai Motor Co. Ltd. looks well placed with its new Tucson, a smaller-than-Sante Fe proposition that sports one of the few V-6s for the lower end of the segment. Each new Hyundai seems of higher quality and better refinement than the one before it, and Tucson is not an exception, although interior materials clearly remain pegged to a low variable cost.

Analysts predict the CUV segment will continue on a strong growth path, and it’s obvious some of the gains will come at the expense of the traditional SUV. The SUV is far from dead, but just as SUVs gave minivan buyers a new and more-fashionable alternative, CUVs will continue to have the same effect on the SUV market.

bvisnic@primediabusiness.com