• Market share for traditional mid-size sedans has hit a multi-decade low.
• A debate has broken out in the auto industry about whether the switch is permanent.
• New crossover SUVs have captured the bank accounts of car buyers.
Americans don’t want family sedans anymore.
The sales trend of sedans being passed over for SUVs and crossovers has been obvious for a while, but market data is starting to prove just how severe the switch has been.
“After spending 20 of the last 27 years as the best-selling vehicle segment in the US, midsize sedans have taken a dramatic downward turn in popularity,” consumer auto site Edmunds.com said in a statement.
According to the site, mid-size sedans — once mainstays in the US auto market for carmakers such as Honda and Toyotas — are in trouble, falling from the best-selling segment of vehicles in 2014 to number five in 2017.
“Market share for midsize sedans is now a meager 10.7 per cent,” Edmunds said, adding that the figure is the lowest since 1991 when the site began tracking data.
“While it’s common for consumer tastes to change over time, it’s surprising to see just how quickly shoppers have made the switch from sedans to SUVs,” Jessica Caldwell, Edmunds.com executive director of industry analysis, said in a statement.
“As recently as three years ago, the Accord made up nearly 30 per cent of all of Honda’s sales in the US, and so far in 2017 it’s down to 22 per cent. Now that shoppers can now get an SUV for a similar price as a sedan and not have to pay much more at the pump, it’s hard to convince them the smaller vehicle is a better choice.”
The great debate
For the past two years, as auto sales in the US have boomed amid low gas prices, a debate has raged about whether automakers should remain committed to the traditional family sedan.
These vehicles are less profitable than pickup trucks and SUVs, so carmakers have been pleased to see consumers shift away from them — but challenged to decide whether the trend is cyclical or structural. Auto companies remember being burned badly in the early-to-mid 2000s when spiking gas prices sent buyers searching for cheaper-to-operate small cars and hybrids. SUVs were derided for being gas-guzzling dinosaurs.
A change in design and engineering created a new class of vehicles — SUVs built on more fuel-efficient car platforms — and customers have flocked to these so-called “crossovers.”
The change has been so dramatic that big automakers have started to ask themselves whether they should discontinue sedan production altogether — or outsource it to markets where the vehicles are still favoured, such as China, or where sedans are cheaper to build, such as Mexico.
Fiat Chrysler Automobiles has led the way here. While both General Motors and Ford are more or less staying the course with sedans, FCA is in the process of shifting US production to SUVs. CEO Sergio Marchionne is in the “structural change” camp and has been unflinching about how much pain carmaker will endure if they don’t follow consumer demand.
“I think we will be de-car-ed the US by probably the end of [the first quarter] of 2017,” Marchionne said on an earnings conference call in 2016.