By on November 27, 2017

2017 Honda Civic Si Sedan - Image: Honda

The hard-done-by sedan, once as commonplace as weeds, junk mail, and shattered dreams, doesn’t need any more of a push as it shuffles towards its waiting grave. The buying public is already killing the segment through neglect. Last month, the once-Godlike midsize sedan fell below 10-percent market share in the U.S.

It’s grim times for the traditional sedan, be it compact, midsize, or land yacht. However, anyone hoping for a plateau or even a sales revival is kidding themselves, according to a study by KPMG. The advent of technology will only push more buyers away from sedans and towards their one true love.

The latest threat? Mobility services like ride-hailing in big and medium-sized cities. An even larger threat comes from automation, as such services stand to become much cheaper once you remove the driver from the equation. Cheaper service means more users. And with it, fewer people buying that commuter car, which is traditionally a smaller sedan or hatch.

In its study, KPMG “projects that sales of personally-owned sedans in the U.S. will drop precipitously – from 5.4 million units sold today to just 2.1 million units by 2030.”

The predicted move towards ride-hailing services among commuters means households could save that one vehicle purchase for something big, something desirable. Something that covers most of the bases. A truck or SUV for vacations, road trips, and the like. But probably not a compact or midsize sedan.

KPMG sees the future of mobility as growing out of some 150 urban and suburban areas in the U.S., with each city possessing its own specific needs. The firm expects a piecemeal start as the technology rolls out. Ride-hailing fleets, helmed by automakers, will not emerge en masse across the landscape. Like with “old fashioned” services like Uber and Lyft, the biggest cities (“islands of autonomy”) will see the option first. This means smaller cities, and certainly towns and rural areas, will remain stuck in a traditional car-buying market for some time to come.

“This creates an extremely complex problem for today’s OEMs, as they can no longer segment markets merely by traditional vehicle segment methodologies to create a vehicle that covers all user needs,” said Gary Silberg, automotive sector leader at KPMG LLP. “Instead, the OEMs that win will be those who identify the correct product portfolio within billions of individual trips across hundreds of islands.”

KPMG feels it’s possible that technology will advance far enough to have autonomous ride-hailing fleets in all decent-sized U.S. cities by the end of next decade. By this time, sedan sales will have shrunk so much, the majority of automakers won’t sell them.

“Several OEMs will likely close plants and exit the segment entirely,” said Tom Mayor, KPMG’s strategy leader for industrial manufacturing. “At these volumes, we would expect the current 10 OEMs  serving the U.S. market with more than 800,000 sedans per year to contract to only three or four.”

KPMG’s predictions are just that. So, fallible. The rollout of autonomous vehicles, even in urban fleets, might not be as swift as the firm believes. Still, there’s no denying that we’ll see the culling of a great number of sedan nameplates in the coming years if sales continue on their present course.

[Image: Honda]

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18 Comments on “KPMG Study Has Even More Bad News for the Lowly Sedan...”


  • avatar

    I question why KPMG is doing this study. If nobody’s paying them to do it, then they’re trying to sell the idea of fewer sedans to… who? Manufacturers?

    Maybe I’m missing something.

    • 0 avatar
      stuki

      They’re doing what all management consultancies spend virtually all their time doing: Regurgitating whatever is currently hyped in the airport-bookshop “business” section. In what they believe will be a headline grabbing fashion.

      • 0 avatar
        stuntmonkey

        I used to work in a related field. The way our sausage was made was to come up with a product nobody asked for, issue a press release that had absolutely zero useful information, and then unleash the account execs onto industry types trying to tease people that we actually had solid information. It was an absurd way to make a living.

    • 0 avatar
      gmichaelj

      This is a marketing exercise. I worked for Grant Thornton and Deloitte. What they want to establish is their reputation as “Thought Leaders”. This term is used extensively as a means to influence clients to hire your firm in the future. They are showing their unique insight, so if in the future you need a financial consulting firm for say tax management, or a new auditor, then you are hiring a firm that “knows” your space (industry).

    • 0 avatar
      psarhjinian

      Disclosure: I used to work for the ‘G.

      They do a lot of research in advance that they sell as part of subscriptions, consulting engagements, speaking events and/or internal material for their own teams. Automotive & Industrial is on the fields they do this sort of work for.

      A lot of this work gets used as guidance my small/medium business that don’t have the staff to do the analytical work, like a smaller supplier. The reports are not thin; there’s a lot of numbers in them.

  • avatar
    conundrum

    KPMG, oh yeah. 30 years ago I was put on a company taskforce to examine the whole way our company ran. The scheme was run by KPMG as project leaders. It was two months intensive, relief from normal duties and then at the end of it, the two boy “consultants” threw out all that we’d come up with and wrote the report they’d have have written anyway, discarding all our input. Probably have a standard template they issue to their junior “geniuses”, all geared to hiring their “services” again. A total shambles. When you hire “consultants” you expect to get sharp experienced people, not boys barely out of shorts equipped with an MBA, no experience and heads so big they couldn’t pass through doorways. Incompetence personified.

    What they think about anything can be guaranteed to not be relevant to anything but their own bottom line. Maybe they’re dangling a hook out in front of clueless auto company execs, hoping to get hired to design a program to halt sedan sales decline through some magic formula they’ve devised at an afternoon coffee break. The Panama and Paradise Papers thing is a bit hot right now on the “how to avoid paying your fair share of taxes” front.

  • avatar
    cimarron typeR

    I remember we spent 15k in late 90s on an Ivy league consultant one of my partners went to Harvard with. This was his “discounted rate,” as it was a favor.He interviewed us individually for an hour each separately about what our expectations and goals for the company was.
    We could have just spent the money on weekly steak dinners with a couple of bottles of wine in a private room and achieved the same consensus result.

  • avatar
    dal20402

    Sedans will be as common in 2025 as coupes are today.

    I don’t need a management consultant to tell me that, just to listen to what every car owner I know (and their dog) is saying. “I think my next car’s going to be an SUV.”

    • 0 avatar
      FreedMike

      It depends on a LOT of factors, including economic conditions.

      But, no I don’t think sedans will ever sink to coupe-level sales.

      • 0 avatar

        If CAFE gets sh!tcanned then we’ll quickly see the death of everything other than SUVs in this country in the name of profitability and public taste. Meanwhile the rest of the world will continue to develop small hatchbacks and alternate fuels and when the next oil crisis inevitably hits we’ll have Carmageddon all over again.

        • 0 avatar
          FreedMike

          I don’t buy this. No matter how many SUVs automakers *want* to push on us, they can’t force us to buy them. There will always be a slice of the market that just doesn’t want them, doesn’t need them, or can’t afford (and/or refuse to pay more for) them.

          The only question is how big that slice is. It’s shrinking, but we’re still talking about hundreds of thousands of sales. The only automakers who will walk away from that many potential sales are the ones who never had much cred in the segment to begin with (example: FCA).

        • 0 avatar
          Bazza

          While I agree with your basic premise, “the next oil crisis” is getting further away every day with Peak Oil fears nowhere in sight. OPEC is a dead man walking. The only real-world choke point remaining in supply is refinery capacity.

  • avatar
    sportyaccordy

    Ugh, what is this, the 3rd article today hinging on the impossibility of rapidly viable autonomous tech? End of the decade? We will be lucky to see this rolled out by the end of th century.

  • avatar
    Sanman111

    Hmm, will any of these autonomous vehicles that will be picking up future us be… Sedans? No mention of that in the article. Not to mention that all the evidence suggests is that car sales overall will go down. Not sedans as a percentage of car sales. However, I don’t disagree with the premise. As cars become more like washing machines, they will all converge toward Max utility. However, autonomous minivans make more sense than autonomous SUVs. Minivans and hatchbacks. Make my personal pod a convertible with a v8, thank you.

  • avatar
    DearS

    I love cars like the BRZ and Corvette, but it is great to have more than a sedan to carry stuff around. I am getting a CR-V or like wagon next.

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