Suddenly that F350 dually isn't as much fun anymore.
Posted on 04/26/2018 2:35:14 PM PDT by Red Badger
Ford's plan to reduce its passenger car lineup to just two models, and GM's difficulty selling passenger cars in the U.S. show how much tastes are drifting toward trucks, SUVs and crossovers.
Ford will only update the Focus Active crossover and Mustang for the U.S. market, while GM called out a challenging passenger car environment. ======================================================================================================
So is it really the end of the American car on its home turf?
From the way Detroit's major executives are talking, it would seem so.
Ford said Wednesday it will only offer two new cars in North America over the coming years — its iconic Mustang and the Focus Active, a rugged-looking hatchback that has already debuted in Europe, and somewhat resembles the Subaru Crosstrek or the Buick Regal TourX.
GM is moving along the same lines.
"I think we have been on this path for a number of years," GM CFO Chuck Stevens said on a call with reporters on Thursday, after the largest U.S. automaker released first-quarter earnings.
Many of Fiat-Chrysler's biggest successes have been SUVs in recent years, evidenced by the growth of its Jeep brand.
"Virtually eliminating Ford's NA car portfolio makes a lot of sense, in our view," said Adam Jonas, an analyst at Morgan Stanley. "No more Fusion. No more Focus. No more Fiesta. No more Taurus."
GM still makes quite a few cars. For now, Chevrolet alone still sells somewhere around 12 car models if you count Corvette, although there have been rumors and news it will cut or end production of at least some of those. Buick has some sedans and a crossover that looks a lot like a wagon, and Cadillac has so many sedans industry observers and dealers say it missed the crossover trend.
And despite the fact that American companies are reshaping their lineups, sedans will still form a substantial portion of the vehicles sold in the U.S. for the foreseeable future.
"Although passenger car segments have declined over the last number of years, they are still very important," GM's Stevens said Thursday. "Small cars are important internationally, and they still make up a chunk of sales in the United States."
But crossover sales were largely what drove GM's earnings beat on Thursday, and the automaker's income was down because it had spent a lot of time retooling its factories — to build more trucks. Buick's best-selling model is the subcompact Encore crossover, and Cadillac's biggest debut this year has been the XT4, a model the company is making to finally catch up with rivals already in the luxury crossover segment.
Throughout the rest of 2018, GM's crossover sales should be strong enough to support margins despite costs from new truck launches, CFRA analyst Efraim Levy said in a note Thursday.
By 2022, almost 73 percent of all consumer vehicle sales in the United States are expected to be utility vehicles of some sort, and about 27 percent will be cars, according to auto industry forecasting firm LMC Automotive.
By that same time, LMC automotive expects 84 percent of GM's U.S. sales volume will be SUVs, crossover and trucks. Ford will be at 90 percent, and Chrysler at 97 percent.
So sedans and other cars are expected to still form more than a quarter of all consumer vehicle sales in the U.S., but the overall trend appears to be that American companies especially are giving up trying to sell cars to Americans.
What will they sell instead?
Detroit is already strong in pickups and large SUVs, such as the Cadillac Escalade and Lincoln Navigator, which is enjoying remarkably brisk sales after its first complete redesign in more than a decade. The Big 3 control almost 85 percent of the domestic pickup market, according to LMC Automotive, despite competitive products from foreign brands such as Toyota and Nissan.
And Ford, for example, will also double down on "authentic off-roaders," Ford President of Global Markets Jim Farley said on a conference call Wednesday, after Ford reported first-quarter earnings. This includes trucks like the Raptor, and the upcoming reintroduced Ford Bronco, and an unnamed SUV. GM and Chrysler are entering this segment, too.
The second-largest U.S. automaker also plans to refresh its current lineup of SUVs and crossovers and create new products that fill "white spaces" in the market, essentially meaning the company will try to combine or tweak various designs or combinations of features to find new segments no other company is targeting yet. This means combining various elements of both cars and SUVs in ways that distinguish Ford's vehicles from what is already out there.
"We will have a very diverse passenger car business," Farley said on the call. "It just won't be traditional silhouetted sedans that tend to be commoditized."
In ditching cars and pursuing this strategy, Ford made a difficult choice, said Kelley Blue Book analyst Rebecca Lindland.
"I think this is one of the challenges that the Big 3 has faced, that they really had a tough time finding their way on the car side," Lindland told CNBC. "They have struggled for too long to be profitable, to be a full-line manufacturer, and they have made the hard decision to start over. The problem is they are so far behind."
Farley is very smart, Lindland said, and Ford has a catalog of vehicle platforms around the world they can search through to quickly develop some products. But it will be challenging.
"Even though they are starting fresh, they have to accelerate their timeline to get their products as soon as possible," she said. "I am driving a Toyota C-HR right now, which I believe is the kind of car they are thinking about making."
Sounds like hogwash to me. I’ll believe it when I see it.
I agree. Why not a Model A or vintage WW II Jeep? I’m serious. I’d love to have either as an all round city car.
The problem is that the cars are too expensive, too overladen with electronics, and too small. A cheaper car with a bench seat would sell like hot cakes. But fuel economy laws and safety regulations won’t allow it. There is a federal law requiring a console in cars so driver and front passenger are forced to keep their feet in the perfect place for minimal damage; as if a car side collision accident will take place every moment you own the car. Like so many good things, the government killed the passenger car, not the buyers.
>>What are the rental car companies going to do now? Small sedans are their staple.
Toyota, Nissan, Honda, Hyundai, Kia—basically what they do now.
“I wonder who might be best positioned to grab this sudden gap in American automotive innovation...”
Honda.
The reason there are no more ‘bench’ seats is they would have to put in another air bag.................
Suddenly that F350 dually isn't as much fun anymore.
Since then it's been minvans, cross-overs and pickups.
Can't say that I'd ever buy a sedan again.
Kia, Hyundai?
Ford, GM and Chrysler are basically abandoning the market to the imports...................
If Detroit stops selling sedans how will they meet the CAFE standards? Will them have to power down their trucks and SUVs?
Why would you say sad?
The gist of the article is that sedans are not as useful aas the various other vehicles and thus no longer in demand. Vehiles have evolved to meet consumer needs and the manufacturers have provided what they want
SUVs and TRUCKS pose a threat to other drivers on our highways because they can't stay inside their lanes and they are a nightmare in PARKING LOTS!!!! Even truck owners park 'TAIL IN' because they DREAD backing out of their parking spots!!!!
UNSAFE, UNNECESSARY, and an overall PAIN IN THE ARSE.
Sounds like hogwash to me. I’ll believe it when I see it.
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See my post 9. Chrysler has quit making cars. Why not Ford and GM?
Meanwhile, parking lot spaces seem to be sized for smart cars.
Front bench seats are what I miss
And get into and out of, easily! I want to see bench seats back in trucks, cars, etc.
Thank the Federal government CAFE standards making SUVs and trucks more attractive due to larger size.
No, they will have to follow. The marketplace right now is about "room" and "your stuff". CUV's / SUV's fill that niche as well as up high enough to see things. Funny thing is the CUV is car that is tall and maybe a raised running gear. Their is no aero /handling penalty for the larger platform. From the manufacturers perspective, the run/sales rates have to at a certain number or they are not making money. Consumer choices are what they are, look at the car types that consumer has said bye bye too: stationwagons, personal luxury, mini-vans etc. This trend will have legs for how long? I have no idea, however it is what the consumer and or those who follow them see the market at. BTW and interesting snapshot of Tall/Stuff/Room is the 4 Door CJ vs the 2 door and how many more they sold, that is kind of this whole discussion in a nutshell.
parking spots today are a joke.
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