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SUVs: 40% of U.S. auto market by 2020?

November 20, 2015
Baby boomers emptying the nest and their adult offspring starting families are driving demand for sport utility vehicles, which will account for two in five new auto sales in the U.S. by 2020, Ford Motor Co. predicts.
Americans will buy a record 5 million SUVs in 2015, fueled by low gasoline prices, cheap car loans and a desire for high-riding big rigs that can haul plenty of people and possessions, according to Kevin Schad, brand manager for the Ford Escape. Sales of SUVs and sport wagons are up 16 percent this year, according to researcher Autodata Corp. And they account for almost one-third of auto sales in the U.S., Schad said.
"The two largest cohorts in America are evolving into different life stages, which, ironically, require the same vehicle," Schad said at a preview of the new Escape this month. "Millennials are evolving into a life stage where they’re starting to settle down and have families and they need more space in their car. Baby boomers are looking for a vehicle that supports the reality of some of their physical disposition."
The freshened Ford is on display at this month’s Los Angeles Auto Show. Other SUVs at the event include Jaguar’s first, called the F-Pace; the Bentley Bentayga; and Cadillac’s XT5, which replaces the SRX. Toyota is also refreshing its compact RAV4, including a hybrid to the lineup.
Boomers who pioneered the SUV a quarter century ago "feel more comfortable on the road" in them because they ride high and are easier to get into and out of than low-riding sedans, Schad said. Millennials who grew up in the back seat of SUVs see them as the family car of the modern age. And now that they are having children, millennials are moving out of small sedans and into SUVs, he said.
New family car
The return of the SUV has caused car sales to plummet. Family sedans such as the Toyota Camry and Honda Accord and small cars such as the Ford Focus were considered "the heart of the market" a few years ago, Schad said.
"Well," Schad said, "that was thrown out the window when the compact SUV segment surpassed both of those segments last year to emerge as the No. 1 segment in the industry. And we haven’t seen that growth slow at all this year."
Schad called the compact SUV "the epicenter of growth. That segment has really taken off since the economic downturn and industry recovery in 2008 and 2009 and doubled sales."