Just How Bad Are Car Sales Going to Get?

As the industry stresses about the new vehicle market taking it easy for the foreseeable future, there’s one aspect of it that’s of particular concern: car sales. After dominating the field for so long, passenger car sales fell below half of the market just a few years ago. That gap continued to widen through 2018.

Automakers responded by shifting output towards utility vehicles and crossovers. Ford ultimately decided to abandon the majority of its passenger cars in the United States as other manufacturers scramble to adjust their lineup to account for consumer tastes. However, these changes are also helping to push shoppers further away from cars. Bank of America Merrill Lynch estimates that 71 percent of vehicle introductions for the 2019 through 2022 model years will be light trucks.

Some automakers still believe cars hold an importance that’s not to be ignored. True, some models still sell incredibly well. But the general assumption is that they’ll continue losing relevance in the coming years. It’s likely to take another energy crisis or major shift in consumer preference to turn back the tide of crossover vehicles.

According to Automotive News, manufacturers are on pace to sell about 5.3 million cars this year, which would be the fewest since 1958. “With so many consumers taking advantage of low fuel costs to test out larger SUVs and trucks — which benefit from significantly better fuel economy than their predecessors — it will be harder and harder to convince anyone who has made a recent truck or SUV purchase that reverting back to a car would make any sense,” explained Ivan Drury, Edmunds senior manager of industry analysis.

Trade-in data from Edmunds shows shoppers are opting to replace cars with another car less and less every year. Just 53 percent of consumers replaced one car with another in the first five months of this year, while roughy 68 percent did so in 2014.

“There’s definitely further growth ahead,” said Jeff Schuster, president of LMC Automotive. He estimates SUVs, crossovers, and pickups will account for 75 to 80 percent of U.S. light-vehicle sales by 2025.

If that sounds hard to believe, trucks and crossovers have already outsell cars by a ratio of more than 2-to-1 in 2018. There’s no reason to think the trend won’t continue for the foreseeable future. “Exactly where the floor is, we’re still sorting it out,” said Stephanie Brinley, senior analyst with IHS Markit.

[Image: Honda]