The US auto market is booming. It’s at its highest level in a decade, on a pace to see sales of 17.8 million new cars and trucks this year.
And in that market, you’re doing fantastically well if you’re selling trucks and SUVs. And by “fantastically well,” I mean stupendously, stonkingly, monumentally well.
Sales of Ford Motor Co.’s newly redesigned Edge SUV rose 34 per cent to a record 14,399 last month, while the Lincoln Navigator soared by 50 per cent. Deliveries of most of General Motors Co.’s crossover SUVs increased, with the Cadillac SRX and extra-long Escalade ESV each gaining more than 20 per cent. Fiat Chrysler Automobiles NV’s Jeep sales surged 13 per cent to 79,652, led by the Wrangler and the Cherokee.
There will be a temptation with results like this for automakers to go back to the future and neglect small cars. It’s happened before. GM, for example, effectively abandoned the small-car market prior to the financial crisis, preferring to concentrate on more profitable big SUVs and full-size pickups. This worked out well for the Japanese and the Koreans, who were able to grab customers when gas prices spiked in the mid-2000s and into the financial crisis while Detroit suffered.
But markets are obviously cyclical. And how! Five years ago, few would have predicted a massive resurgence in truck and SUV buyership in the US. But the few who did predict it were, fortunately, at the automakers currently building big trucks and SUVs (as well as smaller crossovers). Which is understandable, given that a Ford or GM executive could look at the US market and conclude that decades of solid truck sales were the norm rather than an exception.
The bottom line is that Americans like big cars. They like pickups. Periodically over past five decades, Americans have shown an interest in smaller cars. Think Volkswagen Beetle in the 1960s, the Ford Falcon and even the early Mustang, cars from Honda and Toyota in the mid-1970s and 1980s, and then the South Koreans in the 1990s. By the mid-2000s, even GM and Ford were aiming to crack the code on small cars, driven by rising government fuel-economy standards.
But the dominant trend in the the US market is clear. Big cars and trucks sell. And return excellent profits. If you want to sell smaller vehicles, increasingly consumers are asking for downsized SUVs rather the the small sedans of yore.
That’s the state of auto sales in the US. Bigger is better. For now.