More families buying large SUVs
Automakers see hot growth as Millennials age.
DETROIT – Anne Fildew Grobel is a mother of four who drives “a big, giant mom-mobile.”
“I have children over 6 feet tall, and all six of us haul across the country as a family to the Adirondacks with two kayaks on top, a dog and cats stacked up like a Japanese hotel room in the back,” she said.
For SUV buyers, it’s all about space. As a newlywed, she drove a Honda CR-V compact sport-utility vehicle. When her family grew, she acquired a Honda Odyssey minivan. And later, a full-size 2015 Ford Expedition SUV. Grobel is not alone.
Both foreign and domestic automakers are vying for the checkbooks of busy parents who want to trade up for size, space and transport potential.
Ford sees big opportunity as 80 million Millennials begin to have children. Nearly half of new car buyers are between 45 and 64, and the oldest Millennials are turning 38 next year, said Erich Merkle, U.S. sales analyst at Ford. “We know the demographic, over the next five to 10 years, is going to grow significantly.”
About 35% of the consumers who purchase large SUVs are 35 to 44, which means a huge demographic shift into a new vehicle category, he said. “The one thing all generations have in common is children.”
In fact, sales of large SUVs spiked 22% between 2015 and 2016, which means 340,530 drove off dealership lots last year alone.
Every SUV category has seen steady growth over the past five years — com- pact, small, midsize and large — as fuel prices have stabilized and fuel efficiency has increased.
But automakers especially value the large-SUV segment because it delivers a healthy profit margin and sales growth for now. In 2016, it made up 2.7% of the total vehicle market.
The purse problem
Maeva Ribas, manager of design analysis at The Carlab, an automotive product planning consulting group, said consumers now are all about storage. “Space is the selling point.”
That means space not just for big people, but for things. Ford, for instance, has designed the new Expedition SUV with space for large purses.
Todd Hoevener, chief program engineer of the Ford Expedition, credits his wife with the new design, saying, “We’ve talked about where to put her purse, and it’s a big one.”
Professional women feel uncomfort- able putting expensive purses on the floor or awkwardly tucking them under passenger legs or on their laps.
Family habits
Hoevener looked to his own family for input, including his 6-foot-2 sons — one in college and the other in high school — who discussed leg room, reclining seats and use of space that shaped the interior design of the new Expedition.
“We’re in the car for a six-hour drive to see my parents in southern Indiana,” said Hoevener, who grew up on a farm. “Or we’ll go to Clearwater, Fla., for Christmas. Our family is the target demographic.”
When families shift into the large SUVs, they can pay from $50,000 to $90,000 with extras. Buyers who purchased the Chevy Tahoe, Chevy Suburban, Ford Expedition, GMC Yukon, Nissan Armada and the Toyota Sequoia grew the large SUV segment of the mar- ket to a five-year high, from 2.3% in 2012 to 2.7% in 2016.
“The growth is not insignificant, given where the industry is going,” Merkle said.
Over the years, automakers have watched the appeal of large SUVs rise and fall with economic cycles and gas prices. The segment jumped from 1.4% to 5.6% of the overall market between
1994 and 2003 and then dropped to just
1.8% in 2014, according to Kelley Blue Book data. Now sales are climbing again as lifestyle and mobility needs change.
“These vehicles are well-suited to family life,” said Stephanie Brinley, senior analyst at IHS Markit. “People just bring more stuff. And they want access to everything while they’re sitting at the stoplight.”
General Motors is trying to rack up sales in the segment with more tech features, not just space.
Many consumers want charging ports for phones and infotainment packages, but large SUV owners gravitate toward luxuries such as wireless hotspots to check e-mail and livestream movies. This segment uses more data, Chevy spokesman Jim Cain said. “We actually have 75% of the retail market share of large SUVs, between the Chevy Tahoe, the Suburban and the GMC Yukon.”
GM’s ‘free pass’
Wendy Luczak, 49, of Berkley hauls her three enormous Bouvier des Flandres, runs a luxury dog boarding facility and drives up to five of her daughter’s friends. After owning about five Chrysler minivans and two Dodge Durangos, she purchased a 2017 Yukon SLT.
“I should’ve had this all along,” Luczak said. “And Costco trips? I’m telling you, I don’t know how I did without this. I’m never going to go back.
“Never.”