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."
I believe you.
Bring back the Cortina and bring it here.
I don’t.
Hated them ever since I was a kid.
Makes sense. The new Ford Expeditions and Lincoln Navigators are as hot as hot gets right now.
Yes sir. Mine is the 04 and the 98 open top. First is the Grand Cherokee. I read an article many years ago that the Jeep guys who designed THAT 02/04 Grand Cherokee brought that template to design the Land Rover’s later shape.
The Baby Boomers are getting old and the young people see cars as just getting from point A to point B.
My grandfather had one about that year.
I dreaded going anywhere in it, especially mountain roads. I tended to get car sick. Fresh air was the best thing.
The car had great AC and got used a lot. If it weren’t for the cigarette smoke, I might have done ok. The car sealed up tight.
Cadillac has the CT-6, it's their first rear wheel drive car since the Fleetwood Brougham ceased production in the 90's.
For the same money you can get a loaded Escalade so it's rare that they sell a thousand a month.
But get gas back above $5 gallon and they might get hot.
One day my antiques will hit the streets.
My Cj7s wheels are being spruced up. The original chrome had deteriorated a lot.
My old Willys, Ill swing the pricey stuff some day.
Just Empty Every Pocket.
I have no real life anyway.
yep happened to me some time ago.
Get the UAW out of politics.
Art.
A Rembrandt.
The elephant in the corner is China. One China begins selling cars in the US, it’s all over.
As it is, right now you can get a Malibu for 30% off. I love my G8, but today’s consumer sees SUVs as premium, and cars are those things “the poors” drive.
It’s sad, but from Ford’s point of view, staying in sedans is like clinging to the buggy whip franchise.
I don’t like it, but that’s how the economic cookie crumbles sometimes.
Basically they have 80 year old men designing cars with 1/4” gap door seems and continue using AC/Delco red/blue dashboard indicators.
And my 2004 Town Car still runs nice and may have to find a good mid 90’s Continental.
And don’t get me started with the inconsiderate aholes that think its so fashionable nowadays to BACK into parking spaces ...while the rest of us have to sit there and wait.
I don’t get the whole exercise. 10x longer to back in than pull in and 10x more of a chance that your going to clip a car on 3 different sides.
It seems the whole backing-in phenom started about 3-4 years ago.
I DONT FREAKING GET IT!
Ford is advertising its F-150 pickup truck.
Other manufacturers are pitching SUVs.
The traditional car market is on its way out.
Judging by cable TV ads...
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