GM, Fiat Chrysler outrun Ford in feeding SUV boom – USA TODAY
With the classic American family car on the ropes, and the timing couldn’t be better for General Motors and Fiat Chrysler to cash in on the crossover SUV boom.
But third Detroit stalwart, Ford, may be falling behind.
Sales of midsize sedans have fallen steadily this year. Crossover SUVs, particularly small ones like the Buick Envision, Chevy Trax, Honda HR-V and Jeep Renegade, have surged.
There’s no sign that trend will end any time soon, and GM and Fiat Chrysler’s new-vehicle plans look particularly in step with the SUV-friendly mood of the times.
The upshot? GM brands Buick, Chevy and Fiat Chrysler brand Jeep could be winners, introducing new vehicles in the hottest part of the market.
Sales of midsize cars have fallen steadily since 2012, but the slide became precipitous this year. They’re on target to fall from 2.4 million last year to 2.2 million this year.
That’s roughly the loss of demand for the production of one entire assembly plant in 12 months, and they ain’t comin’ back. Meanwhile, sales of compact and subcompact SUVs have grown from about 1.3 million in 2010 to 3.2 million last year. Compact SUVs replaced midsize cars as the best-selling market segment for the first time in 2014 and they’re 41% ahead of the sedans through August this year, according to Kelley Blue Book.
“This is a long-term trend. Midsize cars are in free fall,” said Michelle Krebs, Autotrader senior analyst. “The increase in SUV sales is driven by two huge demographic trends:
•Aging baby boomers who appreciate the ease of getting in and out, the high seating position and good visibility
•Millennials who had their first child and appreciate how much easier it is to use a child seat in an SUV than a car you have to bend over to get into.”
GM is particularly well positioned to ride this wave. The compact Buick Envision just went on sale and new versions of the popular Chevrolet Equinox and Traverse, Buick Enclave, and GMC Terrain are due over the next 12 to 15 months. The subcompact Buick Encore and Chevy Trax get meaningful upgrades this fall, to boot. GM will have the biggest, broadest and newest line of SUVs in the business.
Fiat Chrysler’s strategic direction illustrates the trend. It’s practically getting out of the car business to concentrate on SUVs. Over the next few months, FCA will stop building the compact Dart and midsize 200 and add a new version of the compact Jeep Compass. We haven’t seen the new Compass yet, but FCA has been very successful with other Jeeps it’s developed.
Ford may be short-handed. It has a competitive lineup of SUVs like the Escape, Edge and Explorer, but not subcompact. Its new-vehicle pipeline consists mostly of cars for the next two years.
The prospects for Honda and Toyota are less clear. The midsize Honda Accord and Toyota Camry sedans have dominated American car sales for decades. Their makers may not be prepared for buyers’ switch to SUVs.
Toyota’s SUV lineup is thin and aging, but the compact RAV4 is having a great year. Sales are up 15%. It outsold the Camry midsize sedan for the first time in August. A new RAV4 is expected next year. It could replace the Camry as Toyota’s top-seller for good by 2018. Less promising, a replacement for the larger Highlander is probably two years off, and Toyota has no clear play in the fast-growing subcompact SUV segment. The Toyota C-HR subcompact due later this year is a marginal player, originally intended for Scion, the brand Toyota killed this year. Its quirky looks and small size presage equally small sales.
Honda may be better positioned than Toyota. The subcompact HR-V is a year old and selling strongly. A new version of the compact CR-V should put a charge into sales when it arrives late this year. Honda’s large Pilot SUV is struggling, though, with sales off 7.8% in this, just its second year on the market.
Hyundai and Kia have suffered from an over reliance on cars as buyers increasingly turned to SUVs. They’re adding more SUVs, but may pay a price for being late.
“It’s not good to be last to a trend,” IHS Automotive senior analyst Stephanie Brinley said. “The big, easy volume gains will be over as the growth of the market slows.”
That’s particularly daunting for Volkswagen, which was slow to catch onto the SUV boom. It has a new version of the compact Tiguan and its first family-hauling midsize SUV coming next year.