End of the road for the sedan?
Models of family car to dwindle in Canada as buyers move toward light trucks, SUVs
Last week, Ford announced that it will shed almost its entire North American passenger vehicle lineup except for the Mustang and a Focus crossover hatchback as part of a historic shift that has implications for consumers, rivals and the environment.
Ford is not alone. Fiat Chrysler in 2016 said it would phase out the Dodge Dart and Chrysler 200 to focus on more profitable Jeep sport utility vehicles and Ram pickups. General Motors has reduced sedan production, with the Impala and the low-priced, fuelefficient Chevrolet Sonic compact reportedly on the chopping block. Cadillac has also focused more on SUVs in the high-end segment of the market.
In fact, the number of sedans on Canadian roads will dwindle in the next few years as buyers’ preference for a bigger ride drives automakers to invest in light trucks and SUVs and stop making many models of the traditional family car.
Ford’s move is only the latest that signals the end of an era for the sedan, at least as the vehicle of choice for the masses.
“This is going to be disappointing to a lot of people, but most of those people are over 50,” said John Ford’s global markets chief Jim Farley said automaker plans involve trucks and SUVs that will feature a hybrid system or electric power plug-ins. Wolkonowicz, an automotive historian and former Ford product planner. “This is about making money. This is what Wall Street demanded.”
In the U.S., President Donald Trump’s pledge to relax fuel efficiency standards could add even more momentum to the SUV and truck boom that started amid low oil prices in North America and is now marching across Europe, the U.K., Australia, East Asia and beyond.
In 2009 during the Great Recession, sedans commanded more than 39 per cent of the U.S. market, while SUVs were at 29 per cent and pickups had 13 per cent. Last year, SUVs had 43 per cent of the market, followed by sedans at less than 28 per cent, while pickups had climbed to almost 16 per cent of the market.
April’s sales figures showed every major automaker reporting declining passenger-car sales.
Toyota’s Camry and Honda’s Accord, which often vie for the title of bestselling U.S. sedan, declined 5 per cent and 19 per cent, respectively, according to Bloomberg.
Even with gasoline prices rising each of the last two months to the highest since November 2014, the mass migration from cars continues unabated.
“This is not going to derail the shift to SUVs,” Mark Wakefield, head of the auto practice at consultant AlixPartners, told Bloomberg.
“Consumers haven’t seen it go up enough or fast enough to start making big changes. The crossover has become the new sedan.”
In Canada, a wintry climate and expansive geography have sparked an all-in move to the category, with Scotiabank auto industry specialist Carlos Gomes noting that light trucks accounted for more than 71 per cent of total auto sales in March, driving first-quarter volumes to the highest level on record.
Passenger car sales in Canada fell 12.4 per cent in March while light truck sales rose 5.2 per cent, according to industry statistics compiled by DesRosiers Automotive Consultants.
Given this ongoing shift, Gomes said automakers plan to increase North American light truck production 5 per cent year over year in the second quarter.
“A lot of it has to do with technology,” said BMO Capital Markets senior economist Alex Koustas. “Notable gas guzzlers” of the past, he said, have been replaced with trucks built of lighter material on smaller platforms and with more efficient and increasingly electrified engines.
Ford, for example, in January bumped its planned investments in electric vehicles to $11 billion (U.S.) by 2022 and said it would have 40 hybrid and fully electric models in its lineup by then.
And even if political tensions were to trigger a massive runup in gas prices, analysts said the trend to larger autos will continue, suggesting that many buyers would rather opt for a smaller engine in a so-called baby SUV crossover than revert to the gas-sipping, four-cylinder passenger car.
And while a gap of as much as 30 per cent in fuel efficiency exists between large and smaller vehicles, Koustas said consumers appear willing to accept the trade-off in the interest of the power, performance, comfort and safety that is the promise of today’s smoother-riding larger vehicles.
In unveiling its production road map going into the next decade, Ford said it will “not invest in next generations of traditional Ford sedans for North America,” adding that trucks and SUVs will soon be- come 86 per cent of the company’s U.S. volume.
Ford’s global markets chief Jim Farley said plans involve trucks and SUVs that will feature a hybrid system or electric power plug-ins. Ford will introduce hybrid versions of the Escape and Explorer SUVs, as well as the reintroduced Bronco, due in 2020. Ford said Canadian operations will remain intact since they are focused on light trucks and SUVs.
Jeremy Acevedo, manager of industry analysis for auto research firm Edmunds, added that Ford’s new vehicles will enter an SUV market that is beginning to contract even though sales are still robust. “When dealer lots are inundated with SUVs of every size, shape and brand, it’s going to take a lot to stand out.”
The passenger car segment of automotive sales has been shrinking since 2012 as sales of SUVs have grown, with the trend accelerating on the Fiat Chrysler plan to retool factories to assemble SUVs and pickups. The boost in profit that followed the move paved the way for the Detroit brands to shift passenger car production offshore, especially to China.
Crossovers such as the Toyota RAV4 and Honda CR-V have gained sales in the interim as they offer many of the benefits of full-sized SUVs but with smaller engines, lower purchase prices, greater fuel efficiency and a more car-like ride.
Still, while the SUV trend is well entrenched, sedans aren’t being discarded entirely. Fiat Chrysler says it hopes to continue selling mid-size and compact vehicles, adding that the muscular, Canadian-built Dodge Charger and Chrysler 300 sedans have remained popular with buyers.
Passenger car sales in Canada fell 12.4 per cent in March while light truck sales rose 5.2 per cent