Chart Of The Day: The Great American Downsizing

The best-selling nameplates in America may still be pickup trucks, but for the first time in nearly a decade, cars and car-based crossovers are outselling the body-on-frame competition. The shift occurred in the second half of 2007, as gas prices built to their Summer 2008 peak, and despite more reasonable energy prices, consumers do not appear to be going back to large trucks and SUVs en masse. And, as Automotive News [sub] reports, the downsizing of America’s buying tastes is doing more than just putting a fork in the SUV fad.

It should come as no surprise that car-based crossovers are the leading cause of this decline in SUV sales… we don’t call them “the methadone of SUV addiction” for nothing. According to AN [sub], car-based vehicles (including CUVs) make up a full 77 percent of the market, as trucks and SUVs fell from 31 percent of the U.S. market in the first half of 2007 to about 23 percent this year. In that same time period, truck-based SUVs have fallen from about 13 percent to about eight percent.

Meanwhile, small cars nearly closed the gap with midsize cars during the height of gas prices in 2008, and the two segments are still closer in volume than they’ve been in decades. Furthermore, AN [sub] points out that, even within a given segment, buyers are downsizing. Large luxury cars like the Mercedes S Class are losing out, as smaller luxury sedans like those in the BMW 3-Series segment improve their performances. Sporty car segments are being dominated by cheaper options like the Mustang and Camaro, and the large-car segment is not recovering as well as the midsize segment, suggesting that buyers are generally looking for smaller, less ostentatious options. As one Lexus dealer puts it

We’ve got people trading Lexuses for Camrys

But here’s the real kicker: though Americans appear to be slowly trading down vehicles, transaction prices are actually rising. That’s because the uptick in compact car sales is largely driven by consumers who are willing to downsize, but refuse to give up the features and options they once enjoyed. With more and more technology and options available in the compact segment, Americans can buy less car with more features… and they are.

The lesson then, is a strange one. With sales holding steady at relatively low levels, it’s clear that poor economic conditions are keeping buyers out of the market. But the buyers that are in the market aren’t spending less per se… they’re simply trending towards smaller, less flashy vehicles. Are these buyers consciously trying to project a more austere image? Do they think they’re getting more car by buying less space and more features? Or are we simply returning to some semblance of normalcy after a long sojourn in the time of giant SUVs and showy luxury cars? Whatever the reason, analysts figure the downisizing trend is here to stay. Given the looming CAFE standard increase, the fact that Americans are buying smaller but paying more is some of the best news the industry has had for quite a while.