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Auto sales still booming, 'car' sales still aren't: Forbes

September 11, 2015
Car companies were generally happy with their August sales, as the engine that drives both the U.S. manufacturing and retailing sectors continues to run near its redline. Consumers and businesses snapped up new vehicles at an annual rate of about 17.5 million in August, maintaining near-historic buying levels.
But buried in those economy-pumping numbers is a potentially troubling oddity: Car sales are booming; sales of "cars," no so much. Pickup trucks, SUVs, crossovers — people are buying just about everything instead of a plain old car. But it’s crossovers that really are replacing the family "car" as, well, the family car.
"Except for 2012, market share for (crossover models) has grown every year since the first one went on sale in 1995," said Haig Stoddard, senior industry analyst for automotive data giant Ward’s Auto. In 2009, cars accounted for almost 52 percent of all sales and crossovers just more than 22 percent. Since then, market share for cars has dropped seven points and crossover share coincidentally has gained seven points, Stoddard said.
Being what many believe is one of the gold standards of cars hasn’t helped the Honda Accord in the consumer flight to crossover models: Accord sales were down 20 percent in the first eight months of this year. Instigators of the decline are some of Honda’s own crossovers.
For the domestic auto companies, car sales in August put the trend in vivid relief. Ford had its best August since 2006 despite a 7 percent slide for its car sales. Ford’s total sales for the first eight months of this year, at just more the 1.75 million vehicles, are up 2.7 percent in spite of an overall 2.8 percent decline for cars. Sales of the Focus compact car plunged 26 percent in August and, so far this year, sales for every Ford car except the redesigned Mustang are in the red.
Meanwhile, August sales of Ford’s crossover and SUV models were up more than 12 percent and pickup truck sales were up more than 11 percent for the month; respective sales for the first eight months were up 6.8 percent and 4.6 percent.
At General Motors, where sales were off less than 1 percent in August, the skew in the nation’s buying preferences is displayed in black and white. Sales at the company’s car-skewed divisions, Buick and Cadillac, are respectively down 2.6 percent and 2.8 percent for the year, while sales at the more balanced Chevrolet are up 2.6 percen. And get this: Sales at the no-cars-at-all GMC brand are up 10.6 percent for the year, making it GM’s best-performing division.
At Buick and Cadillac, year-to-date sales for every one of the brands’ car models are down and yep, sales for every crossover model are up.
FiatChrysler bragged that August continued its remarkable string of 65 months of year-over-year sales increases, but cherry-picking through the numbers shows the company still struggles to sell cars. Year-to-date sales for some of its newer car lines are up, mostly due to weak-ish comparisons, but sales at the Dodge division (Dodge admittedly is restructuring) are down 16 percent for the year, while the Fiat small-car unit needed eight months to sell just more than 28,000 cars.
When Honda can’t sell the Accord and Civic — still believed by many to be the gold standard of cars — it suggests that cars, as a breed, are in trouble. Sales for the midsize Accord plunged 20 percent in August and the Civic dropped 6 percent. Year-to-date Accord sales are off 15 percent and the Civic is down 4 percent. Between the two, Honda is down 50,000 sales compared with the same period last year.
The upside to all this is profitability. Giving consumers what they want — more crossovers and fewer cars — generally means more money in the carmakers’ till, as crossovers almost invariably bring more profit than a comparably-sized car.
So what’s not to like with people getting what they want and companies profiting from that demand? In the short run, nothing. But longer-term, the trend may cause trouble for the car companies’ capital-intensive manufacturing empires, which since World War II been oriented toward the "traditional" mix of cars versus everything else. Although vehicle assembly plants are increasingly flexible in what kinds of vehicles can be produced, retooling from cars to typically larger crossover models isn’t always easy and quick. Or cheap.
Then there’s the gas-price wild card. Stoddard and many industry analysts concur that ongoing decline of gasoline prices is a factor in many consumers’ choice of a larger crossover rather than a car.
"Although lower gasoline prices likely are helping CUV sales, CUV share was increasing in 2014 even before gas prices started to decline. But the gas price decline certainly has (negatively) affected car market share," Stoddard said.
What is further enhancing CUV sales this year, Stoddard added, "is increased offerings of subcompact crossovers such as Chevrolet Trax, Jeep Renegade and Honda HRV, among others — those seem to seem to be cutting even more into cars."