DETROIT — Don’t write the passenger car’s obituary yet.
Ford Motor Co.’s announcement that the iconic brand that put America on the road is killing almost all of its traditional car models is dramatic proof that passenger cars have lost their luster for U.S. automakers and consumers.
But is the traditional car really dead, and is Detroit’s fascination with larger vehicles a sign of danger ahead should economic winds shift? Not exactly, according to industry experts, on both counts.
Ford’s rival, General Motors, which is eliminating a shift at its Lordstown, Ohio, plant where the Chevy Cruze sedan is made, isn’t ready to call for last rites.
Following the release of GM’s first-quarter earnings Thursday, Chuck Stevens, the company’s executive vice president and chief financial officer, was asked about reports that the Chevrolet Sonic and Impala could be “on the chopping block.” Stevens, who did not weigh in on the fate of those models, did offer a bit of a defense for the lowly car.
“Although passenger car segments have declined over the last number of years, they’re still very important,” said Stevens. “The compact crossover segment globally is the biggest, and then it’s compact cars and they still represent here in the United States … (a) fairly significant portion of the overall sales.”
Stevens said it’s all about picking vehicles that can win in the marketplace, and adjusting supply to meet demand.
Ford’s plan, announced Wednesday, is to stop selling the Taurus, Fusion, Fiesta and C-Max, leaving only the Mustang and upcoming Focus Active crossover to be sold in North America. The automaker, like others, is having to choose where to put its resources and is using more profitable vehicles — pickups and SUVs — to pay for research into a future geared toward new forms of mobility.
Analysts have been predicting for months that a shift in consumer preference toward SUVs is permanent, but Sam Abuelsamid, an analyst for Navigant Research, said the reality is that cars still have a place.
“Even if it’s only 20 percent globally, that’s still 15 to 20 million a year. That’s not an insignificant quantity,” Abuelsamid said.
And Ford spokesman Said Deep told the Free Press on Thursday that at the affliated Lincoln brand, “The Lincoln MKZ and the Lincoln Continental remain important parts of the Lincoln lineup.”
Jim Farley, Ford’s president of global markets, said that some of today’s SUVs will be considered cars.
“We’re going to have a fantastic passenger car lineup,” he said. “They just won’t be traditional sedans. Consumers will look at vehicles like the next-generation of the Escape, one of Ford’s most popular SUVs, and won’t “classify them as a truck at all.” They’ll have space, comfort and good fuel economy.
He called it a “new era of classification.”
Sales trends have clearly favored SUVs for some time.
In 2009 during the Great Recession, sedans commanded more than 39 percent of the U.S. market, while SUVs were at 29 percent and pickups had 13 percent of the market. Last year, SUVs had 43 percent of the market, followed by sedans at less than 28 percent, while pickups had climbed to almost 16 percent of the market.
Even previously solid sedan performers like the Honda Accord and Toyota Camry saw their numbers fall in March compared with the prior year.
But Michelle Krebs, executive analyst at AutoTrader.com, said those automakers have reason to to be optimistic.
“While car sales are in decline, small and midsize cars are still hefty segments. The risk is losing some buyers to competitors. Toyota and Honda have mostly held their own in cars. I suspect that will continue as others diminish their presence in those segments,” Krebs said, noting that she suspects GM and other automakers will trim some of their car lines.
But what if gas prices spike?
The U.S. Energy Information Administration forecasts that U.S. regular gas retail prices will average $2.74 per gallon through September, up from $2.41 per gallon last summer. CNBC reported this week that gas prices are at a three-year high, and had already hit $2.76 per gallon nationwide.
Andrew Linhardt, deputy legislative director for transportation for the Sierra Club, said automakers are ignoring history by ditching smaller vehicles in favor of larger ones.
Linhardt said gas prices have been low for a long time, and trucks and SUVS have become more fuel efficient thanks to regulations. But he noted that during previous periods of higher gas prices, automakers have had trouble selling larger vehicles.
“It’s difficult for anyone to predict a permanent change in American consumers buying preferences,” Linhardt said.