Sedans make stand at auto show

As Big 3 go for trucks, SUVs, global ri­vals pull dif­fer­ent way

The Detroit News - - FRONT PAGE - BY IAN THI­BODEAU The De­troit News

Pas­sen­ger cars aren’t relics for ev­ery au­tomaker — look no fur­ther than what is ex­pected to de­but at the De­troit auto show this week.

Volk­swa­gen AG will roll out a new Pas­sat sedan. Hyundai Mo­tor Amer­ica is ex­pected to de­but an Elantra vari­ant. Subaru will pre­miere a zippy new WRX STI. Lexus will un­veil a new RCF trackedi­tion. And Toy­ota is us­ing the De­troit show to bring back the Supra.

And De­troit’s Big Three? It’s all trucks and SUVs, as Gen­eral Mo­tors, Ford and Fiat Chrysler in­creas­ingly aban­don the sedan and small-car mar­kets for what they see as more prof­itable, in-de­mand ve­hi­cles.

The mar­ket for sedans is shrink­ing, but the cars will still make up around 30 per­cent of the U.S. new ve­hi­cle mar­ket once the dust set­tles, ex­perts and an­a­lysts say. And in­dus­try lead­ers out­side the U.S. are an­gling to scoop up buy­ers who de­cide they don’t want a new cross­over or SUV in their drive­ways.

“There’s still a huge num­ber of ve­hi­cles avail­able to sell,” said Jack Hol­lis, Toy­ota group vice pres­i­dent and gen­eral man­ager of the Toy­ota divi­sion of Toy­ota Mo­tor North Amer­ica. “We’re pick­ing up mar­ket share. You can pick up share when you have a great prod­uct.”

The strong­est sedans will sur­vive, ac­cord­ing to in­dus­try an­a­lysts. That’s much in the same way the best mini­vans are still sell­ing years after other au­tomak­ers ditched the seg­ment.

Mul­ti­ple au­tomak­ers, in­clud­ing Toy­ota, are us­ing the di­min­ished and fi­nal Jan­uary edi­tion of the North Amer­i­can In­ter­na­tional Auto Show to roll out brand­new cars even as a ma­jor­ity of U.S. buy­ers vote with their wal­lets for big­ger, more ex­pen­sive pick­ups and SUVs.

“When you change your lineup, you do leave the op­por­tu­nity for some­one else to come in,” said Stephanie Brin­ley, an­a­lyst with Lon­don-head­quar­tered anal­y­sis com­pany IHS Markit. “We don’t see that the sedan mar­ket is go­ing to go to zero.”

The on­go­ing mar­ket shift in 2018 prompted both Ford Mo­tor Co. and Gen­eral Mo­tors Co. to an­nounce plans to trim sedans from line­ups. That fol­lowed de­ci­sions in 2016 by Fiat Chrysler Au­to­mo­biles NV lead­er­ship to ax most sedan

models.

Ford will kill ev­ery car but the Mus­tang, though its over­all lineup will grow by 2023 with new crossovers and SUVs the au­tomaker plans to in­tro­duce. Ford ex­ec­u­tives have said they be­lieve U.S. con­sumers’ shift away from cars is per­ma­nent.

When Ford an­nounced its de­ci­sion in April, mul­ti­ple GM of­fi­cials said sedans would re­main im­por­tant pieces of the GM lineup.

“With these car seg­ments, yeah, we’ve seen a de­crease, but you’ve also seen an in­dus­try that’s grow­ing, and these (car) seg­ments are still worth 2 mil­lion ve­hi­cles,” Alan Batey, GM’s ex­ec­u­tive vice pres­i­dent and pres­i­dent of North Amer­ica, told The De­troit News at a dealer event in Las Ve­gas then. “A 2-mil­lion-ve­hi­cle mid­size car mar­ket in the U.S. is not a seg­ment that you don’t want to be part of.”

Said GM CEO Mary Barra: “We think there’s an op­por­tu­nity (in sedans), be­cause we’ve made the in­vest­ments. We need to de­ploy lit­tle-to-no cap­i­tal as we move for­ward. We have worked on each of our car lines over the last year to make sure that we’re driv­ing ef­fi­cien­cies across all ar­eas of the busi­ness that sup­ports those.”

But by Novem­ber, GM had an­nounced it would pull mul­ti­ple car models out of U.S. fac­to­ries, leav­ing them idle and ef­fec­tively killing the Chevro­let Im­pala, Volt and Cruze. Also dead: the Buick LaCrosse and Cadil­lac CT6.

“We’ve made some changes and an­nounce­ments around our car port­fo­lio,” U.S. Vice Pres­i­dent of Chevro­let Brian Sweeney said dur­ing a busi­ness up­date for the brand ear­lier this month, re­fer­ring to Gen­eral Mo­tors Co.’s plans to stop pro­duc­tion on the Chevro­let Im­pala, Volt and Cruze later this year. “How­ever, we are still in the car busi­ness and cars still ac­count for close to 4.6 mil­lion units an­nu­ally.”

GM will still make the Chevy Mal­ibu. The au­tomaker is also plan­ning to launch new Cadil­lac sedans in the fu­ture.

GM will use the De­troit auto show to de­but its all-new Cadil­lac XT6 cross­over; Ford is flood­ing the floor with an all-new Ex­plorer and all its vari­ants, as well as a Shelby Mus­tang GT500 su­per­car; Fiat Chrysler is ex­pected to roll out a be­he­moth heavy-duty Ram pickup. All of which sig­nals De­troit’s fo­cus.

“It’s not just the car to­day,” said Karl Brauer, an auto an­a­lyst with Kel­ley Blue Book. “It’s the plan­ning and prepa­ra­tion for to­mor­row. The mar­ket will con­tinue to shrink, but it will never go away. Cars will al­ways be a com­po­nent of this mar­ket and of the new-ve­hi­cle mar­ket, but the ques­tion is how big will the mar­ket be, and how many models will sup­port it.”

Hol­lis, who’s charged with get­ting the right Toy­ota prod­ucts into U.S. buy­ers’ drive­ways, said sedans are valu­able for a few rea­sons. They get first-time buy­ers in the door. They’re cheaper to fuel, even though new tech­nol­ogy has made trucks and SUVs more fu­el­ef­fi­cient. And they’ll still rep­re­sent a sig­nif­i­cant por­tion of the U.S. sales mar­ket, de­spite the de­cline.

Toy­ota sold more than 608,000 Corolla and Camry sedans last year, de­spite both of those ve­hi­cles see­ing sales de­clines. The au­tomaker also sold 427,170 RAV4 com­pact SUVs. Hol­lis said Toy­ota be­lieves it doesn’t have to cut cars to ride the SUV wave in the U.S.

It can make — and sell — both prod­ucts.

“We do not buy that the claim that U.S. con­sumers don’t want cars,” Hol­lis said. “We be­lieve they do want cars. Many peo­ple come into our brand through the sedan. We be­lieve in the car mar­ket.”

Jose Juarez / Spe­cial to The De­troit News

High-pro­file guests and Cadil­lac of­fi­cials crowd in after the de­but of the new XT6 on Sun­day night in De­troit. Ten­nessee Gov-elect Bill Lee, left, Cadil­lac Pres­i­dent Steve Carlisle, Ten­nessee Gov. Bill Haslam and Ten­nessee Com­mis­sioner of Eco­nomic and Com­mu­nity De­vel­op­ment Bob Rolfe pose with the XT6. The ve­hi­cle will be built in Spring Hill, Ten­nessee.

Jose Juarez / Spe­cial to The De­troit News

Gen­eral Mo­tors CEO Mary Barra talks with Ten­nessee Gov. Bill Haslam, left, and Gov-Elect Bill Lee on Sun­day at the De­troit auto show. GM joins Ford and Fiat Chrysler in fo­cus­ing ef­forts on trucks, pick­ups and SUVs.

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