Car companies are increasingly focusing their product strategies on high-profit trucks like the Chevrolet Silverado (pictured), as well as SUVs.
Car companies are increasingly focusing their product strategies on high-profit trucks like the Chevrolet Silverado (pictured), as well as SUVs.

Truck frenzy: US buyers swerve away from small cars, sedans

By Nova Safo Time of article published Jan 4, 2019

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Detroit - 2018's new vehicle sales figures show that US consumers continue to move away from small cars and sedans - something that could certainly influence the product strategies of global car companies going forward.  

Major automakers on Thursday announced slowing 2018 sales in the US even as the industry maintained close to its overall total from the previous year, defying expectations. 

Overall, the North American motor industry maintained a healthy sales total, boosted by low unemployment and tax cuts. A total of 17.3 million vehicles were sold, about the same as in 2017, according to figures provided by the analytics firm Autodata. 

However, many major carmakers struggled to match 2017 sales, signaling US consumers were pulling back, increasingly squeezed by higher interest rates and rising price tags. 

Also, Americans' love of larger, and pricier, SUVs and trucks was not enough to offset plummeting sedan and small car purchases. 

GM, the biggest of the US auto makers, reported a 2.7 percent sales dip in the fourth quarter and a 1.6 percent decline for 2018 - despite selling more crossover SUVs than in 2017. 

Ford also struggled. Sales were down 8.8 percent in December to end the year 3.5 percent lower than 2017. It, too, sold more of its larger vehicles, including F-Series pickups and SUVs. 

FCA US improved its annual total by nine percent - fruits of its new focus on larger vehicles and the company's sales rose 14 percent in the final month of the year. 

"This year's performance underscores the efforts we undertook to realign our production to give US consumers more Jeep vehicles and Ram pickup trucks," FCA US's sales chief Reid Bigland said. 

Another US motor industry giant, Toyota, also recorded US sales slumps in December and the year - 0.9 percent and 0.3 percent, respectively. 

Further slowing in 2019

The figures came in near analyst expectations, who predicted a healthy economy and massive tax cuts would lead to another year of robust, if slowing, sales. 

"We are forecasting sales to slow further in 2019. For some auto makers, the slowdown has already begun," Cox Automotive Senior Economist Charlie Chesbrough said in a statement.

Carmakers were expected to face further challenges in 2019. The effects of the tax cuts, especially for businesses buying fleets of cars, were expected to wane. 

Those challenges were coinciding with rising prices for new vehicles. 

Kelley Blue Book predicted the average new-car price was up about three percent in 2018 to an average of more than $36 000 (R515 000). 

"Despite retail sales falling for the sixth consecutive month, the continued growth in transaction prices is allowing manufacturers to offset lower sales with higher revenue," JD Power analyst Thomas King said in a statement. 

More trucks and SUVs

That combination led GM to announce it would double down on large vehicles with higher price tags in 2019. 

"We feel confident heading into 2019 because we have more major truck and crossover launches coming during the year and the US economy is strong," GM sales chief Kurt McNeil said in a statement. 

But Edmunds predicted consumers will feel more squeezed in 2019 as auto prices rise and interest rates are set to climb further. 

The analytics firm said the industry would sell fewer cars - down from a forecast 17.2 million in 2018 to 16.9 million in 2019. 

Among other carmakers, Honda boosted its December sales by 3.9 percent but declined 2.2 percent for the year. Truck and SUV sales nudged up for the year, but car sales plummeted. 

Nissan similarly rose 7.6 percent in December but fell 6.2 percent in 2018. Its car sales fell 17 percent while truck-SUV sales gained 2.5 percent. 

Mazda fared the opposite: declining 3.8 percent for December, but up 3.7 percent for the year. The brand was buoyed by unusually high gains in SUV sales. 

Tesla delivered 90 700 cars in the fourth quarter, slightly below the 91 000 expected by analysts. 

It also delivered 245 240 for all of 2018, more than twice the number from the previous year as it worked out shipping and delivery problems for its newly-debuted mid-priced Model 3 sedan. 

Agence France-Presse

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