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Carmakers shift to SUVs as buyers shun sedans

Charles Fleming, Los Angeles Times on

Published in Automotive News

Toyota Camry and Corolla sales have declined, but sales are up the company's Tacoma and RAV4. The RAV4 is the best-selling non-truck vehicle in the country.

Premium and specialty car companies are experiencing a similar scenario.

Sales for Jaguar, Maserati, Alfa Romeo, Porsche and Bentley are all up.

That's largely because of the introduction of new SUVs, like Alfa's Stelvio and Jaguar's F-Pace, Caldwell said, and to ongoing strong sales of SUVs already in the market, like Porsche's Macan and Cayenne.

Major American car brands are in a double bind. They are committed to building midsize and full-size sedans because those traditionally have made up most of their fleet sales to government agencies, for example, and rental car companies.

The shifting sales picture has created headaches at the retail level too. Many dealers have had to expand their space to accommodate new SUVs, while also saving room for the less-popular sedans -- and keeping sufficient inventory of both types of vehicles, in enough trim lines and colors, to satisfy the manufacturer and customers.

"Dealers are being asked to build these huge Taj Mahal showrooms that showcase the SUVs and the whole lineup of cars, by manufacturers who believe they are following the market," said Aaron Jacoby, who handles dealership legal matters for the Arent Fox.

The tension between the dealers and car companies is exacerbated, Jacoby said, because dealers are required every five to seven years to upgrade their showrooms to stay current with new models.

 

But the market is changing so fast that $5 million to $10 million face-lifts may not make sense if gas prices rise, for example, and SUVs and larger vehicles go out of favor.

"Dealers would like to stay where they are until the future is more clear, so they don't spend millions of dollars to service a need that turns out to be obsolete five years from now," Jacoby said. "But the here and now is that gas is cheap and people want to buy bigger cars."

Chevy's Majoros advised, however, that the current enthusiasm for crossovers does not necessarily mean the end of traditional sedans.

"Americans like big things, but the rumors of the midsize car's death are greatly exaggerated," he said. "These are still the straw that stirs the drink."

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