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Transcript

00:00:01
>> Walk around the New York Auto Show this week and you'll quickly notice something. There are loads and loads of sport utility vehicles, or crossovers, on display. Sure, hefty US demand for SUVs has been keeping the auto market afloat, as fewer Americans want to step foot in a traditional sedan.
00:00:19
That trend is also catching on with foreign buyers in China and elsewhere. But as Reuters Correspondent Nick Carey points out, there is a potential dilemma brewing.>> Automakers are coming to market as fast as they can with new SUV and crossover models in order to pursue that growth.
00:00:37
The problem is that growth is expected to slow over the next four or five years. Even as the number of new models in the market grows dramatically. So what you're going to have is albeit a growing market, but a lot more vehicles chasing market shares. So everyone's going to have a smaller piece of the pie, or they're going to have to cut prices in order to chase that market share.
00:00:59
Because it's going to get very, very busy.>> Making matters potentially worse for automakers. Millions of relatively new SUV and crossovers will come off lease at the same time. Providing even more competition, but with smaller price tags. But what's bad for companies might be good for consumers. According to Kelly Blue Book, average sticker prices dipped last year to just under $36,000.
00:01:25
After rising steadily for the previous five year period. So with all the competition, are automakers looking to slow down on production? Not yet, it all comes down to simple math. Right now, they can fetch anywhere between one-third and 50% more for SUVs compared to a car without higher production cost.
00:01:47
So even if that number gets smaller, that's not the kind of profit margin any automaker is willing to turn down.