Passenger Car Sales Set to Hit 60-Year Low in 2018
As SUVs and trucks continue to dominate the automotive market, the industry is set to sell the fewest number of passenger cars since 1958
For the past few years, the automotive market has been moving away from passenger cars as consumer tastes shift toward trucks and SUVs. Still, the average driver may not realize just how badly sedan sales are hurting.
If passenger car sales keep their current pace for the rest of the year, then the industry will sell the fewest number of passenger cars since 1958.
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Edmunds predicts that only 5.3 million cars will be sold by the end of 2018. As a result, passenger cars are set to hit a new 60-year low in terms of sales.
The shift away from the passenger car segment has been swift and somewhat unexpected. Only five years ago, new vehicle sales were evenly split between cars and light trucks.
So far this year, light trucks have made up more than two-thirds of new vehicle sales. Cars have been limited to only one-third of new sales for 2018.
What’s more, analysts aren’t certain that sales for the segment will recover any time soon.
“Exactly where the floor is, we’re still sorting it out,” explains Stephanie Brinley, a senior analyst with IHS Markit.
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In addition to the failure of passenger cars to attract new customers, this segment is also failing to attract returning customers. So far in 2018, only 53 percent of car drivers chose a car for their next vehicle. 40 percent decided to go with an SUV.
Just four years ago, 68 percent of car drivers replaced their vehicle with another car. At that time, a mere 26 percent decided to go with an SUV for their next vehicle.
There’s a number of factors contributing to the rise of SUVs and trucks. Low fuel costs are convincing drivers to opt for a larger vehicle, but improved fuel economies for these vehicles help them compete with most passenger cars in terms of efficiency.
Automakers have responded to this shift in a number of different ways. Some have benefited from focusing solely on SUVs and trucks, while others that have traditionally sold sedans are currently racing to add utility models to their lineup.
Right now, it is predicted that 71 percent of vehicle introduces through 2022 will be SUVs or trucks. In fact, Jeff Schuster, president of LMC Automotive’s American operation, states that trucks and SUVs could potentially make up 75 to 80 percent of new vehicle sales by 2025.
As the popularity of trucks and SUVs continues to grow, it has become a real possibility for passenger cars to become a niche market in the next few years.
New Source: Automotive News (subscription required)