Large SUV Sales Surge Faster Than Small Cars
Plug-in electric hybrids and electric cars have taken up much of the digital airwaves over the past few weeks (or years, depending on your perspective), but it may surprise you to find out that “passé” full-size SUVs are increasing in popularity once again.
So far this year, full-size SUV sales have increased 19%, beating overall industry growth of 17%. The full-size SUV category is composed of large body-on-frame SUVs, like the GMC Yukon, and large crossovers, such as the Lincoln MKT and Chevrolet Traverse.
If the surge in SUV sales catches you off guard, the same can be said for automakers. GM has low supplies of its Cadillac Escalade and Chevy Tahoe, triggering overtime at the truck factory in Arlington, Texas, where they’re built. Some employees are now working 10 hours a day and even working on Saturdays to fill demand, according to USA Today.
Toyota has increased production of its Toyota Sequoia, but the automaker wouldn’t specify by how much. Nissan can't keep up with the demand for the new 2011 QX56 Infiniti, representatives recently told Cars.com.
According to USA Today, part of the reason for the surge in large SUV sales may have to do with the impending regulations that may make these vehicles a rare find, or at least much more expensive than today’s models in order to curtail demand and meet the federal government’s more stringent Corporate Average Fuel Economy standards. Today’s stable gas prices, now at $2.75 a gallon, are helping out as well.
Large SUV sales are good for automakers because it’s basically like “printing cash,” says Jim Hall at 2953 Analytics. That’s because traditional body-on-frame SUVS share much of their hardware with full-size pickup trucks.
Interestingly, the much-hyped compact car segment – which is right on the cusp of getting new entries from GM, Ford, Hyundai, Mazda and Scion – is underperforming in the overall market, with just 14% growth for the year. More refined and expensive compact vehicles were supposed to help automakers not only meet CAFE standards but sustain profits with the loss of more profitable SUV sales.
Small-car market share of the overall industry now stands at 17.3%, which is still dramatically up from the same time in 2009, as other segments — such as large cars, small SUVs, minivans and luxury car sales — have lost market share.
Despite the surge in SUV sales, the segment still makes up only a fraction of the market. So far this year, about 121,000 have been sold, compared with 974,000 small cars. We still sell more cars than trucks in this country, a shift that occurred in mid-2008 and has stayed that way ever since.
Overall, light-truck sales – which include minivans, crossovers, SUVs and pickup trucks – are up 14.6% for the year, at 2.6 million, according to Automotive News.
Still, the surge in SUV sales may be a bittersweet affair for automakers. Intense political pressure to reduce our dependency on oil – especially after the BP oil spill – could force automakers to build more fuel-efficient cars, regardless of consumer demand. Starting in 2011, the first boost in CAFE will take place and will steadily increase throughout the years until it reaches 35.5 mpg for the new car fleet in 2016Surprise: Sales of big SUVs surging faster than small cars (USA Today)