Americans Crave SUVs And Carmakers Oblige
New SUVs dominated media previews at the New York International Auto Show in April, the latest sign that the shift away from traditional cars is more than a short-term trend. And the new vehicles are all about muscle. Ford Motor released a more powerful version of its extra-large Lincoln Navigator. There were high-octane offerings in the Jeep and Mercedes-Benz lines. And General Motors moved to cement its leadership in the category with a midsize model capable of towing a 20-foot speedboat.
In short, with oil prices half what they were three years ago, and President Trump vowing to cut back on fuel-economy regulations, automakers are raising the stakes in the SUV segment.
Pickup trucks and SUVs have accounted for about 62 percent of all new vehicles sold in the United States so far this year, compared with 57 percent in the first quarter of 2016, according to the research firm Autodata. That extends a trend line that has inched upward since gasoline dropped below $3 a gallon in 2014.
The big American auto companies have been the greatest beneficiaries of the public’s appetite for high-riding, spacious SUVs, which generally earn bigger profits for manufacturers than mainstream cars. In March, more than 70 percent of the vehicles sold in the United States by General Motors and Ford Motor were trucks and SUVs. The proportion was even higher, about 85 percent, for Fiat Chrysler. All three Detroit automakers and their foreign rivals are working overtime to add new or updated sport utility vehicles to their lineups.
The trend worries environmentalists because SUVs generally burn more gas than smaller cars, generating more of then harmful emissions believed to cause global warming.
Some automakers are also adding electric cars to their portfolios, but not in volumes equal to the proliferation of SUVs. But Pres. Trump’s move to cut back regulations — starting with his announcement in March that his administration would revisit the Obama administration’s fuel-economy standards — has given the industry less motivation to devote resources to electrified models or smaller, high-mileage passenger cars.
And while companies are committed to electric-car programs, their earnings are heavily dependent on feeding consumers’ appetite for new and improved SUVs.
NAFA Fleet Management Association
http://www.nafa.org/