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."
It's so sad. We Americans more or less invented the modern car. Now Henry Ford is long gone and the foundation bearing his name might as well be called the Joseph Stalin Foundation.
YES, I see this every day !
Sadly, we’ve succumbed to the gay, Prius-driving environmentalists.
One of the things me and my passengers do, is to count the number of American cars we see in traffic. Practically every car is of foreign origin, Japanese, Korean or European. Rarely do we see an American car company brand that isn't a truck or SUV. The foreigners can make sedans, it's stupid that the big three cannot. Now China wants to sell sedans (like the Chery model) in the USA, that's crazy. Chery makes the Jaguar Land Rover in China. American car companies are led by very stupid short-sighted people.
If they can niche market it at a price where they can make money ok. Even stealing from the parts bin, how many sales / yr do they need to break even or make money, that is the big enchilada. Then it has to compete against MB, Lexus, BMW, Cadillac etc. Will this Hemi-Rod-Luxo really make it? Or would it handle like a Viper and be such a hog the whole care wouldn't last long and they'd loose their shirt on the whole deal....
“evidenced by the growth of its Jeep brand.”
I own 2 Jeeps. Any Jeep past the 2012 model the blackbox tracks your every movement.
NASCAR shoulda switched over to Full Size SUVs long ago...
The Fusion ( I have driven them ) are freaking amazing, and when intro'd even the likes of the "Autoextremist" website ( the place for the cutting edge of the Biz ) said this is a game changer.
It sold good for a bit now ho-hum. Is is that they truly suck vs a Camry or bias again against American Manufacturers as some still haven't forgiven them for the junk of the 70's/80's etc?
Again the trend is room and room for my stuff, the sedan maybe isn't cutting it anymore...
GMC for those who don’t want a Chebby.
Especially when someone with a BIG FAT TRUCK or a BIG FAT SUV FULL OF KIDS parks next to you and SMASHES THEIR DOORS RIGHT INTO YOUR CAR for a few select permanent DENTS that YOU will have to live with unless you spend a few hundred $$$ getting them repaired and the doors repainted.
Love the Lincoln Town Car.
My 1996 Suburban runs real good too.
Elio is trying, but it's not looking good.
“OVERSIZED SUV’S”
Try comparing one of todays large SUV to a Cadillac or Lincoln from the late 60’s or early 70’s. Those cars were huge. The size of parking spots have changed. The current SUV’s are easier to drive because you sit higher up. (The drivers have gotten worse, not the cars). If you compare the current larger SUV to four door sedans from the late 30’s they are rather similar in size and height.
There is really nothing new under the sun.
My Ford dealer says they have a waiting list of people who want a clean used Town Car. Sure, gas mileage sucks but, it’s still a beautiful car.
The new Continental doesn’t seem to have sold well. I hear they are not going to keep making them.
We only got up to Olds, then Jeep, VW beetle and finally any old cheap thing that would run at least 6 months or more.
You are right about "the driver has changed". More females driving, AND more third worlder immigrants who immediately get into cars and reap havoc upon us all on the roads. ADD to this the 'texting' madness and it's a miracle any of us survive driving. I can't tell you how many times I've glanced in my rear view mirror and the person behind me is checking their phones or TEXTING, ARRRRGGGGGGHHHHHHH!!!!
I loved Cannon’s Lincoln.
I drive a TRUCK because if you’re tailgating me and I have to stop suddenly, you’ll be wearing your engine in your lap and my bumper will have just a bit of paint I’ll scrape off with a green weenie.
Did I tell you I HATE SUVs?
My 65 and 82 will never have that problem built in.
Electronic ignition on both. That’s all. I converted the 65. World of difference.
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