Automakers reported August sales on Wednesday and their numbers were fantastic. The industry remains on pace to sell 17 million or more new cars and trucks in the U.S. in 2014.
This is extremely impressive when you consider that sales collapsed during the financial crisis to a 10-million annual level.
Industry observers and analysts were concerned that the sales might settle into a 14-to-15 million yearly range, which would have been bad news for some of the smaller players, who would have struggled to achieve meaningful market share.
It would have been rough for the Big Boys, too, as they battled over tiny market-share gains and fought to hang on to customers.
So, boffo U.S. auto sales is helping everyone to succeed. But there’s another big story in the numbers.
Remember SUVs? We left them for dead five years ago. Lousy gas milage, at a time when gas prices were rising, sent buyers in search of smaller, more fuel-efficient rides.
The federal government also mandated better overall fuel economy for the automakers fleets, which gave car companies a reason to build a lot of really good small vehicles.
And then there were some more … conceptual developments.
SUVs — especially BIG SUVs — just got a bad name. You wanted to be seen in a modest Prius, not a gigantic Suburban.
What a difference a few years makes. SUVs are now pushing new-vehicle sales back to levels not seen since the early 2000s. Compact SUVs, such as Honda’s CRV and Ford’s Escape, are extremely popular. But so are full-size SUVs. GM’s August sales were tepid overall, but as USA Today reported, its Cadillac division “couldn’t keep the hulking Escalade [luxury SUV] in stock.”
Pickup trucks are also helping to keep the party going. But in the U.S., Ford, GM, and Chrysler are always going to be able to sell a lot of pickups. Which is good. Pickups are profitable to build and sell.
And so are SUVs. When SUVs are selling, everybody starts to make money.
The big difference between the pickup and SUV markets is that a certain level of full-size pickup sales can be assumed, simply because owners wear out F-150s and Silverados faster than, say, Corollas and Accords. SUV sales, by contrast, are sensitive to gas prices and consumer sentiment.
Gas prices aren’t currently low, but they are stable. Americans also like SUVs — minivans might be better family haulers, but they come with that dreaded minivan stigma. And SUVs are far less truck-like than they were 10 years ago; the automakers have re-engineered them to look more like modern-day station wagons and drive more like cars (and invented a whole new SUV-esque genre, the “Crossover”).
Finally, SUVs offer versatility: You can fill them with kids, friends, pets, and gear — and if road or weather conditions are poor, well … SUVs do have off-roading in their DNA.
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