Depressed About Flat U.S. Car Sales and the Death of the Sedan? Will 90 Million Units Globally Cheer You Up?

Ronnie Schreiber
by Ronnie Schreiber
depressed about flat u s car sales and the death of the sedan will 90 million units

While it’s definitely not the same doom and gloom vibe felt around the domestic auto industry as it was financially circling the drain in 2008, headlines in the new year seem to forecast storm clouds on the horizon.

After nearly a decade of sales growth, the American market for passenger cars and light trucks flattened out in 2017. Actually, sales didn’t just flatten in the U.S., they dropped 1.75 percent for the year. Not only has the overall U.S. market shrunk, we’re seeing predictions of the death of an entire segment of that market, the sedan — a segment that has pretty much defined the American automotive world for a century. It’s one thing for an iconoclastic website like TTAC to be talking about a sedan deathwatch, but when that prediction is on the front page of the Detroit News, with reports that Ford may very well stop building sedans in America and that Buick sedan sales have been cut in half over the past year, people will take notice.

I’m not here to depress you, though. Despite the gloomy cast to things, in reality the automotive industry as a whole is doing very well. That 1.75 percent drop in U.S. sales? Well, it was a drop to 17.245 million new vehicles and, by any historical measure, a 17 million-unit year is a very good year. The U.S. car market is still the most profitable in the world. Domestic and foreign automakers are profitable and making billions of dollars here.

Also, while the U.S. market has plateaued, growth in the rest of the world has propelled global new car and light truck sales beyond the 90 million-unit mark for the first time in history. Based on data provided by Wards, the Wall Street Journal reports that global light vehicle sales went up 2.7 percent in 2017, exceeding population growth. More and more of the world’s people have access to automotive vehicles. There are now more than 1.33 billion cars and light trucks in use in the world, about one for every five people on the planet.

Part of that story is, of course, in China, now the biggest automotive market in the world. More than a quarter of the new cars and light trucks sold in 2017 were sold in the former Middle Kingdom. China is now home to some of the fastest-growing automakers in the world. In 2016, for example, privately held Geely saw its sales grow by double digits, 28 percent, and state-linked SAIC, one of GM’s partners in China, saw its sales grow that year by triple digits, 115 percent. Dave Zoia of Wards attributes the expansion of the Chinese market to sales growth in second- and third-tier cities, as the markets in cities like Shanghai and Beijing mature.

China isn’t the entire story, though. Three other important markets, one established, the other two relatively new, saw growth in 2017. After years of stagnation and the Euro debt crisis, it looks like the European car market has finally recovered and is started to grow again. Two newer markets, Russia and Latin America, which had formerly been seen as having potential for great growth but then went through their own challenges, are also growing again. The Journal attributes that renewed strength to income growth in emerging markets, resulting in a growing number of first-time buyers for both new and used cars.

This is not to say there aren’t challenges facing the auto industry. Massive investments will be needed to develop electric and autonomous vehicles, and the industry as a whole has to address cultural shifts away from privately owned vehicles and towards ride sharing and “mobility.” That being said, as we enter 2018, the industry as a whole looks to be healthy and growing.

[Images: Toyota, OICA (graph includes commercial vehicle sales)]

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  • Jimmyy Jimmyy on Jan 05, 2018

    The sedan vs. CUV debate is dumb. I own a sedan and a CUV. Why? Because if I am going to Home Depot, the CUV can carry the goods home. If I am driving hundreds of miles, the CUV is just dangerous at high speeds maneuvers so I take the sedan. I need both vehicles.

  • Johnhowington Johnhowington on Jan 08, 2018

    clickbait. sorry guys, slightly declining sales and people buying less sedans is only a minor news blip, not some grand conspiracy.

  • Lou_BC "Owners of affected Wrangles" Does a missing "r" cancel an extra stud?
  • Slavuta One can put a secret breaker that will disable the starter or spark plug supply. Even disabling headlights or all lights will bring more trouble to thieves than they wish for. With no brake lights, someone will hit from behind, they will leave fingerprints inside. Or if they steal at night, they will have to drive with no lights. Any of these things definitely will bring attention.I remember people removing rotor from under distributor cup.
  • Slavuta Government Motors + Government big tech + government + Federal police = fascist surveillance state. USSR surveillance pales...
  • Johnster Another quibble, this time about the contextualization of the Thunderbird and Cougar, and their relationship to the prestigious Continental Mark. (I know. It's confusing.) The Thunderbird/Mark IV platform introduced for the 1971 model year was apparently derived from the mid-sized Torino/Montego platform (also introduced for the 1971 model year), but should probably be considered different from it.As we all know, the Cougar shared its platform with the Ford Mustang up through the 1973 model year, moving to the mid-sized Torino/Montego platform for the 1974 model year. This platform was also shared with the failed Ford Gran Torino Elite, (introduced in February of 1974, the "Gran Torino" part of the name was dropped for the 1975 and 1976 model years).The Thunderbird/Mark series duo's separation occurred with the 1977 model year when the Thunderbird was downsized to share a platform with the LTD II/Cougar. The 1977 model year saw Mercury drop the "Montego" name and adopt the "Cougar" name for all of their mid-sized cars, including plain 2-doors, 4-doors and and 4-door station wagons. Meanwhile, the Cougar PLC was sold as the "Cougar XR-7." The Cougar wagon was dropped for the 1978 model year (arguably replaced by the new Zephyr wagon) while the (plain) 2-door and 4-door models remained in production for the 1978 and 1979 model years. It was a major prestige blow for the Thunderbird. Underneath, the Thunderbird and Cougar XR-7 for 1977 were warmed-over versions of the failed Ford Elite (1974-1976), while the Mark V was a warmed-over version of the previous Mark IV.
  • Stuart de Baker This is depressing, and I don't own one of these.