Everyone likes to toss about sales stats to prove their bias for or against certain cars or brands, but they’re often quite misleading, as fleet sales skew those numbers, sometimes quite drastically. Only retail sales reflect what actual consumers are buying with their wallets, and when it comes to passenger cars, Honda is their first choice. Not only is it #1 retail passenger car brand, but in 2018 the Civic was #1 again for the third straight year, and the Accord was #2 in the second half of the year. And both have strong momentum in 2019.
And Honda has zero intent on abandoning the passenger car market, as they see it for what it is: the key entry point for new and young buyers. 55% of all first-time buyers buy passenger cars, and that jumps to 70% for Gen Z. Honda, along with Toyota and the other Asian brands, is quite happy to see the Big Three exit the passenger car market. Not only does that mean a bigger share for them, but also a much better shot at selling their car customers an SUV or truck in the future. Brand building, the way Honda has been doing it since…forever.
Does all that sound like the Big Three are painting themselves into something of a corner, even if it is a very profitable one?
Henio Arcangeli Jr., senior vice president of the automobile division of American Honda Motor Co., put it this way:
“What’s perhaps more unusual and important for us, however, is our cars. We all know the narrative: Cars are dead and dying. That’s certainly true for some, but not for us. Our story is a little different,”
“We’ve also been able to maintain a strong car presence, growing our share of this still roughly 5 million-unit market,” Arcangeli said. “But cars really matter for another fundamental reason: the future. Cars play a crucial role for Honda in attracting and retaining new buyers, particularly young buyers, millennials and Gen Z.”
“Why would we turn our back on those customers, which represent the future of our brand?”
Looks like it’s time to update my GM’s Deadly Sin #23: Name and Form
Sources:
The Honda guy has a strong point. New buyers don’t go out and buy a Ford F series or Dodge Ram as their first new vehicle. For many the costs involved have a bearing given the educational costs they are carrying so money can be tight for car, insurance, gas, and maintenance. Once hooked on great quality and reliability, compared to others, Honda now has a legion of satisfied buyers.
Seems like Honda is using a variation of the Sloan ladder. Ironically now abandoned by the company that created it.
I don’t see it so much as a Sloan ladder, but more like Honda supplanting Chevrolet as the ubiquitous brand with something for everyone.
Except me. If they make another Element I might darken their door again, otherwise it’s straight for the Parts counter, and rarely at that.
Except that Honda doesn’t have the rest of the Sloan Ladder.
Honda is Sloan-era Ford, not GM: a big volume entry product but nowhere to go. They’re creating buyers for other manufacturers. Acura is a made up word that actually translates to “Lincoln-Mercury.”
It’s not like someone buying a Civic or Accord today can’t buy a CR-V or Pilot if that’s the car they really want. There’s nothing especially aspirational about buying a CR-V next time instead of a Civic.
“Once hooked on great quality and reliability, compared to others, Honda now has a legion of satisfied buyers.”
Having spent some time around a ’17 Civic of a friend, I can say Honda is playing with fire if they keep making them as shoddy as this one.
Given their very light presence in the rental and fleet sectors, this wouldn’t be surprising. How big of a margin are they winning in retail, though, and is this true for models other than Accord and Civic? Who knows. The data behind this is opaque to us layfolk, both in collection methods and tabulated results. The autonews source is simply a restatement of a boasting American Honda VP, and the prnewswire article was provided by American Honda itself and cites the data firm Urban Science as its source, but provides no link. It’s all proprietary from what I can see. Good way for an automaker to select the stats it wants to make public in order to pursue a marketing or brand image angle.
The strategy of continuing their passenger car offerings makes sense for Honda–they’re playing to their strengths. They have no presence or experience in the RWD BOF arena and you can only slice the FWD-based unibody crossover market so thin. Plus, they’re very good at FWD passenger cars.
The manufacturers report retail and fleet sales. It’s not opaque at all. If you think they’re lying about retail sales, than you might as well think they’re lying about all their sales figures.
The relative difficulty of locating fleet information compared to the ease in which Mr. Archangeli’s (or any other automaker) marketing message is broadcast demonstrates that if not opaque, then it is heavily fogged to the same effect.
The word “lying” is bit hyperbolic in this case Paul, but I suppose in the sense of “lies, damned lies, and statistics” that is essentially what Mr. Arcangeli is doing in this instance. Which is normal, it’s a business.
Regarding transparency, where do manufacturers report fleet vs. retail percentages that we all can access? Autonews data is behind a paywall. Sites like goodcarbadcar and autosalesbase that use these data don’t report it. Monthly retail+fleet numbers are a piece of cake to locate, but anytime I’ve casually tried to find fleet numbers on the open web, I either find snippets reported by an auto news site for a single year on a single model (or perhaps lumped from an entire manufacturer), derived from inaccessible data analysis firms like RL Polk or Urban Science, or I come up with quotes like this Fortune article:
“But even though retail sales are a better measure of true demand, the numbers aren’t published industrywide and don’t get wide circulation. As a result, nobody can claim the award for most retail sales in a particular model.”
I seriously doubt that RL Polk is gathering information on retail and fleet sales for the fun of it.
The data may not be “published industrywide,” but no doubt Polk regularly compiles industrywide figures. And I’m guessing that, for the right price, Polk will share said information with any auto company.
“for the right price, Polk will share”
That’s exactly it. We don’t have access to this information, but a car company exec who wants to cherry-pick numbers for a press release does–and the exec’s interpretation and message is what ends up in the news stream.
It’s marketing for Honda and there’s really no harm in it per se, but I work with data so this sort of thing bugs me on principle.
My goodness you’re a cynic! 🙂
You think that Toyota (or any other company) wouldn’t call Honda out if they weren’t telling the truth?
Car companies don’t necessarily report retails sales publicly like they do total sales, but it’s “material” information for investors, and as such I often see retail-fleet percentages tossed about in various reports. In any case, lying about this, as you essentially claim Honda could well be doing, would be something the SEC would take up if it was pointed out to them. You cannot make public statements like this if you can’t back it up. Ask Elon Musk how he learned that.
And a contrarian, and sometimes a grouch :). Although the latter usually isn’t intentional.
I’m not claiming anything is being fabricated, I’m sure everything the Honda guy said is technically correct, but there’s a lot withheld that could provide context. As I wrote, it’s not a big deal, I’m just fixating on it because I’ve seen how data can be massaged to emphasize a point in a research setting. And sometimes calling it out isn’t worth the fuss.
I’ll stop being a pest now.
The other issue I have with your position is that it essentially implies I would write a post here based on sketchy/unreliable information. I’ve been covering the industry professionally since 2006, and no one has ever accused me of that, or implied it. I happen to have a particularly sensitive BS meter, and it’s served me well.
This is hardly a new development; Toyota and Honda have been at the top of this segment for quite some time. This isn’t just some marketing yahoo cooking up a story without the facts to back it up.
If anyone tried to do that, it would have serious negative repercussions. FCA had to pay a big fine for distorting their sales figure some years back, and that was a shot across the bow by the feds.
In any case, if I see something that smells even remotely fishy, I’m not going to regurgitate it here. My reputation is too important to me for that, and I’m not into click bait.
Let us now forget how so many of those young people choose Honda. We car nuts are deluding ourselves if we think they are making independent decisions about what they want in a vehicle. No, they go to older friends and family members who know a little something about cars and ask what they should buy. Those practical advice givers share what has worked for them, and Honda is up near the top of most of those lists.
The Japanese companies (Toyota and Honda in particular) have played the long game in this market. Year after year they build vehicles that don’t cause undue drama in the ownership experience. Their sedan strategy fits here. The longtime owners (people like me) will tell a young person to consider a Honda. That person buys an inexpensive Honda. His/her personal experience will take it from there.
Too many times, all 3 of the main American companies have screwed up in multiple steps in this chain by cheaping out on design, manufacture and components. Now they are cheaping out by bailing from a market they should be cultivating. Oh well.
JP – to anecdotally echo what you’re saying –
My niece, in her mid twenties, turned to me (as the family ‘car guy’) for my opinion as to what her first car purchase should be. After having told me what she wanted from me, her first words were, “I know -no American cars”. I didn’t even have to say it; it’s in the zeitgeist. I gently discouraged her dream cars of the moment (a Jeep or a Mini) and without further input she decided on an Accord so old she named it “Patches”. It never gave her any headaches, even as it approached 200K.
Some years later, when she and her husband had the money for a car payment, they bought based on their experience and got a Civic.
I don’t know what GM, Ford or Chrysler could have offered them that would have persuaded them to purchase one of their cars. So…. I understand the American makers’ situation. If they underprice the Japanese, they’ll make no profits, but if they match Japanese pricing, perceived lesser quality will turn buyers to buy Japanese for the same price. Perhaps they are better off to abandon the field for a generation, and keep making what they know how to make. Let other companies struggle with the electric car revolution, and then step back in when the future path of cars has been decided by the market, and -hopefully- the bitterness of 70’s and 80’s American-car buyer’s has faded into forgotten legend.
Yes Honda and Toyota have built up a (well deserved) bulletproof reputation, much like suggesting a fullsize GM sedan to someone was non-nonsense advice back in the day as well. But I do wonder, with Honda in particular, that the double-whammy of new MPG-maximizing tech (small turbo motors with DI, CVTs) AND what looks to me to be cost-cutting on materials and QC, will start to catching up to them, and fast. The reputation might coast along for another decade or more mind you. But judging by what I’ve seen in a friends’ Greensburg built ’17 Civic, the fuel/oil contamination issues on the 1.5Ts, the drubbing the first year of the new Odyssey got for reliability from CR… they better right the ship and fast before this grows into something worse.
Toyota is right there with them, although IMO less risk averse on the tech (insisted on dual port/DI injection), and I think they run a tighter ship with exterior fit/finish but at least as bad on the cost cutting on things like interior subassemblies.
In your face Ford and Chevy. It’s not that there’s no market for sedans, everyone just thinks that yours suck.
There is a market for sedans, albeit a much smaller one than before. Looking around my area, trucks and S/CUVs have all but taken over. Another recession, tightening of credit, and higher gas prices may change that though.
Ford left the sedan market years ago when they started to outsource their non-trucks to Mazda and to a lesser degree Volvo. When they sold off Mazda and Volvo, they were forced to use Euro Ford designs, which some claimed were too expensive for the American market.
How big is the market for first time new car buyers, and how important is Gen Z at this point? The Auto News piece mentions that they’re still a small piece of new car shoppers. And the used car market is pretty substantial, which gives shoppers the chance to sample vehicles from every automaker. Honda deserves all the success it can get from continuing to sell small cars and sedans, but this narrative that the Japanese are benefiting from the American automakers exiting the market is not supported by the data.
Year to date sales of popular cars through May 2019 compared with May 2018: Honda Civic down 3.78%, Honda Accord down 3.61%, Toyota Camry down 2.3%, Toyota Corolla down 6.97%, Nissan Altima down 4.76%, Nissan Sentra down 6.76%, Hyundai Elantra down 16.42%. The Volkswagen Jetta is up 57% compared to last year, but that does not account for all the lost volume of the top selling Japanese sedans.
Here are some vehicles that posted year-over-year gains: Ram pickup up 21%, Toyota Rav4 up 0.49%, Honda CR-V up 0.16%, Jeep Grand Cherokee up 13%, Toyota Tacoma up 8%, Subaru Outback up 1.7%, Subaru Forester up 9.4%.
Obviously this data doesn’t tell the whole story because cowardly Ford and GM decided to switch to quarterly sales reports, but it’s been pretty clear for a while now that people are simply jumping ship to crossovers en masse. There are plenty of new entries like the Hyundai Kona, Kia Telluride, and Volkswagen Atlas that have come out of the gate swinging. And stalwarts like the Kia Soul and Nissan Pathfinder continue to find success. These sales have to come from somewhere, and it’s the sedan market they’re eating into.
Honda and Toyota stand to benefit for offering the best products in a shrinking market. They won the battle, but no one is winning the war. It’s a crossover world now.
Source: http://www.goodcarbadcar.net/2019/06/may-2019-the-best-selling-vehicles-in-america-every-vehicle-ranked/
How big is the market for first time new car buyers, and how important is Gen Z at this point? The Auto News piece mentions that they’re still a small piece of new car shoppers.
Yeah that was my first thought… Gen Z who can afford a new car? Must be 5 or 10 shoppers.
Considering half the generation’s too young for a driver’s license (aren’t they still being born? And what will we call the next generation as a placeholder until something original sticks – surely we should’ve started further up the alphabet if that was the intent?) I would say so. Ignore long-term trends at your peril though.
I think if Toyota is selling 300,000 or whatever Camry’s and they experience a 3% drop they won’t freak out about 9,000 sales. Same for the others. Once the laggards exit the market that’s just extra share to be picked up by those in it for the long haul.
Even if the youngs buy a used car first at some point there will be a choice between a used Honda with a model name that is familiar and still sold as a new version or a Ford or Chevy with a model name that hasn’t been in stores for a decade. If those cars are 10yrs old with 140,000 miles on them at some point they will need replacing, if the car did well there’s a potential new sale from someone already familiar with the brand/model. That’s called playing the long game.
Honda deserves all the success it can get from continuing to sell small cars and sedans, but this narrative that the Japanese are benefiting from the American automakers exiting the market is not supported by the data.
And how would Honda and the other Asians’ sedan sales be right now if the Big Three had genuine competitive passenger cars on the market?
Sure their car sales are down some, as is the total market. But I can’t see how you can make a supportable argument that the Asians are not benefiting by the exit of the domestics from the sedan market. Better to have a larger share of a smaller pie than a smaller share of a smaller pie. Or?
“And how would Honda and the other Asians’ sedan sales be right now if the Big Three had genuine competitive passenger cars on the market? ”
Once I acquire a device that enables me to travel to that alternative Earth, I’ll let you know what I find.
“But I can’t see how you can make a supportable argument that the Asians are not benefiting by the exit of the domestics from the sedan market. Better to have a larger share of a smaller pie than a smaller share of a smaller pie.”
Obviously it’s better to own a larger share of a shrinking market. I suppose the data we need is the marketshare percentage of the vehicles in question versus a year or two ago. My point is that as of today there is no direct correlation that can point to Honda, Toyota, Nissan, or other manufacturers directly benefiting from the demise of the American sedans. Keep in mind I’m only making this argument as it applies to their passenger cars, not crossovers. I wouldn’t be surprised if they are benefiting from the Americans ceding certain segments via their respective crossover lineups.
As I understand it, the assertion is that Ford and GM’s retreat from the subcompact, compact, and midsize segments will result in automakers like Honda and Toyota earning the business of customers that could have potentially bought a Focus or Dart or 200. It might be too early to get any definitive data. If you want to make the argument that Honda and Toyota are better prepared to absorb entry level buyers because they’re fielding less expensive cars, I understand. But if Honda does the majority of their business with retail customers, and those customers are buying less Hondas then they were in 2018, it doesn’t make a strong argument that Ford and GM’s loss is the Japanese automaker’s gain.
It’s not the immediate sale that is being focused on, it is the future sale that is or is not derived from the current sale. If the likelyhood of someone buying a Honda or a Ford is greater in the future if they buy one now, then if Honda keeps their sales more or less steady and still affordable to “relatively” entry level buyers, and Ford doesn’t (by dint of exiting whole segments), then that will show up in the future as Honda keeping or increasing their volume and Ford (or GM or whoever) not. Since Honda and Toyota are presumably more profitable at this point, then keeping those models going is good for the now AND for the later. Again, the long game that’ll be realized long after the current management at the domestics has pulled their golden parachute cord.
Again, I am fine with the argument that buyers of a new Civic or Corolla may end up staying with those brands and that the American automakers will stand to lose due to their absence in those segments, but that is something that can’t really be proven until a couple of years from now, if ever. And even then it seems the trend is pointing to buyers just flocking to crossovers and abandoning the sedan segments, which is exactly what Sergio predicted.
but that is something that can’t really be proven until a couple of years from now, if ever.
Not everything can be “proven” with stats. Making business decisions going forward requires good judgment too. My argument is based on logic.
And since the domestics are still in the process of winding down car sales, it is a bit too early too be able to call this with stats.
re: Edward S and Sergio’s prediction..
I think that Sergio wanted to, NEEDED TO, juice up Chrysler’s numbers, and reduce product overlap with potential partners, to make it a more attractive merger candidate.
Making Chrysler into Jeep/Ram/larger RWD car motors supports both of those.
Sergio also had common sense enough, and a Canadian background to know that Chrysler’s one and only truly successful, highly regarded small car, was not small by global standards (Dart/Valiant/slant 6).
During good times, when NA is awash in cheap fuel, Jeep/Ram/Charger/300 is a cash cow, very attractive for some one else. During lean times, partner with (hopefully) small car expertise and electric cars will take over. In the interim, they can spread out costs of many components over bigger volume.
Chrysler’s current partner/owner, Fiat, is weak in small cars and premium cars. It’s also a millstone around US Chrysler’s neck.
Hyundai would be a good fit. But what to do with Fiat’s Euro operations?
And Fiat will never sell off the Chrysler part while fuel is cheap because that’s what’s keeping it alive. When fuel is expensive, no one will want US Chrysler.
Renault? Again, kind of weak in small cars that can compete in NA. And the clash with Fiat. Kind of moot point now.
So Chrysler, as in 1973, stands most exposed if the era of cheap and plentiful fuel should abruptly come to an end. And now GM joins it as vulnerable, at least until (if?) they are established with profitable electric/autonomous vehicles.
If something has happened before, it can happen again. 1973. 1979.
.
Honda mostly strikes me as a car company that has Done Things Right. There are rarely any incentives on their cars, and they’re not relying on fleet sales to pump up the numbers. Sure, they have made mistakes, but generally fewer than other manufacturers.
I recently read an article that says the Fit has the lowest overall TCO, over a 5-10 year period, than any other vehicle sold in the US. I think that says a lot, and it might sway my next and final car purchase.
I’m thinking Yaris or Fit for my next car
Nine years with a manual transmission Fit and it has been trouble free and very cheap to operate. It is also fun to drive. Not quite the BMW 325i it replaced, but close enough at a far lower operating cost.
As the father fo two high-school age Gen-Zers, I can confirm this. Other than some family hand-me-downs, there are very few utility vehicles in the student parking lot at the local High School. Most are sedans or coupes.
Part of it might be simple economics (used cars are cheaper to buy and operate than used SUVs), but part of it is definitely preference (at least in the case of my kids).
I wonder if Gen Z will come to view utility vehicles the same way Millennials viewed minivans: As mommy vehicles driven by their parents.
I’d still argue it primarily comes down to price/cost versus desire among Gen Z and other first-time buyers.
Tastes are harder to predict. I also have 2 teens, both of whom vastly prefer my Jeep Grand Cherokee to their mother’s BMW 5 Series, viewing the sedan as the dreaded “old person/mom-n-dad car” while the Jeep is at least acceptably “cool.” They grew up riding in SUVs (various Jeep Grand Cherokees, a Honda Pilot and an Acura MDX) and don’t seem stigmatized by them at all. My daughter fully intends to own SUVs, while my son wants a sports car with a stick shift–but he’s an anomaly among his friends, most of whom also aspire to the “cool” SUV brands.
Honda is clearly ready to take advantage of the profits associated with CUV/SUV image premiums, whether for a first time sale or a follow-up purchase. The Fit hatchback starts at $16,190, versus $20,520 for the related HR-V. The Civic sedan starts at $19,450, versus $24,350 for the related CRV. Those are pretty big deltas for price-sensitive buyers (first time or otherwise), but it still may not mean they wouldn’t prefer the CUV/SUV if affordability was less of an issue. But there’s no question that Honda has been very clever covering the market, and strategically smart in keeping sedans less expensive than related CUV models to attract a full spectrum of value-seeking buyers.
Anecdotal evidence is just that. Not statistically relevant.
The problem with these kinds of anecdotes is that they invariably reflect geography, demographics, income levels, race, ethnic origin, etc.
What’s popular in the suburbs of Eastern or Midwest USA is likely very different than the suburbs of Los Angeles. Did you know that passenger cars are still unusually popular in CA? In large part because Hispanics prefer sedans. CUVs and trucks are seen as something of a white-guy thing.
And when you spend 2-4 hours a day on the freeways commuting, sedans make a lot of sense in a number of ways.s
What is statistically relevant is that U.S. car sales are declining while CUV/SUV sales are climbing, and there are no indications that this direction is going to change in the near future. Ironically, I actually think we were trying to make the same point, that individual tastes can vary widely. But where you lost me was making California-centric, West Coast-biased assumptions about the whole of the U.S., while inferring that I somehow have a Midwest bias that clouds my perspective.
Actually I’ve lived in CA for a number of years, both Northern and Southern. And I’m in CA frequently both for work and to see friends, so I’m very familiar with buying patterns across both inland and coastal areas (plus I’m painfully familiar with the state’s high gas prices, which surely drives some CA-specific automotive purchases skewed toward fuel efficiency). I’ve also lived/worked in New England, Metro New York City, Texas and the Southeast, and yes I’m currently living in the Midwest. However, given my job and travel, I’ve observed buying patterns firsthand and recently in many, many different U.S. markets across all regions of the country. So I don’t buy the “only white guys like trucks” any more than I accept generalizations that “Hispanics prefer cars.” Have you been to Texas lately? Care to guess what a lot of Hispanics there drive? Did it occur to you that perhaps fuel prices might be key drivers for those decisions, rather than ethnicity? And did you know that Illinois, which you seem to think of as “white bumpkin land,” actually has the 5th largest concentration of Hispanics in the U.S., trailing only CA, TX, FL and NY?
From my observations, today’s most noticeable automotive taste splits are between urban areas, versus suburban, versus rural, including variances between wealthier and less wealthy zip codes, and that holds true pretty consistently across the country. When was the last time you were in Chicago? Come to my North Shore suburb and you could easily be on the Westside of Los Angeles from an automotive standpoint (one of the largest Ferrari dealerships in the world is in my Illinois town–who’d have thunk Midwestern rubes could support that?). Head to Chicago’s Western ‘Burbs with long commutes and automotive tastes will be more sedan-based and more closely resemble the Inland Empire where people are seeking efficiency for long drives, irrespective of ethnicity.
I don’t think CA is the bellwether it once was for U.S. automotive taste trends, and I know that buying clusters across the country are more consistent than not by zip-code clusters (the EV-centricity of CA excepted). So yes, there are trends and biases, just not necessarily the ones that you presume.
I don’t think CA is the bellwether it once was for U.S. automotive taste trends
Neither do I. And there’s nothing I said that suggests that I do. I was simply pointing out there are very strong regional differences in response to two commenters who made anecdotal comments about their kids.
As to the “CUVs being a white guy thing”, I was very intimately connected to the Latino community in LA through my work in Spanish tv for a number of years, and maintain connections. That’s something I’ve heard more than once. Yes, it’s anecdotal, I admit. But I have reason to think that it may reflect a certain degree of relevance.
As to Hispanics buying sedans for fuel efficiency, there’s obviously some truth to that. But cultural biases are a factor. Hispanics in SoCal buy Corollas in exceptionally large numbers, but won’t hardly touch the Prius. Which is one of the biggest reasons Toyota USA is going to offer the Corolla as a hybrid, because they know their Latino buyers. The Prius also has a “white person” image. What can I tell you…I hear things. Take it for what it is, but Toyota USA is very aware of their SoCal Latino buyers’ preferences. And Jim Lentz, Toyota USA’s CEO, specifically mentioned this point about the Corolla hybrid and their California Latino customers in an interview a while back.
And no, I’m not wearing blinders; I can see the trends in the market quite clearly, thank you.
So yes, there are trends and biases, just not necessarily the ones that you presume.
What is it that I presume? I think you read a lot more into my comment than what I intended and actually said.
As to the whole gist of my comment, it wasn’t to make any specific assumptions about what your kids or Tom’s kids prefer. I barely remember what they are now, because my point is that anyone who responds to these “what do young persons like” posts with what their kids like is making a statistically irrelevant comment. Sorry; it does not in the slightest reflect anything on who you are or where you are. It’s just one data point.
To follow up on Paul’s thesis, car markets are very localised, at least here in Canada and it has a lot to do with the local culture.
For example, the reason Hyundai brings in the 5 door base manual Accent is that Quebecois want them.
Here in Vancouver, you will see relatively few trucks on the roads. That’s because they are simply too large to park and at our fuel prices are the highest in North America. Big surprise: you’re going to wait a year for any EV. Hyundai and VW, for example, are sold out for 2019.
Analysts often cite fleet sales as degrading a brand’s actual consumer desirability (in terms of new-car prestige and used-car resale value). What interests me about that now is that the car-sharing company Car2Go is now using Mercedes models in many markets (both CLA’s and GLA’s around here). These are highly visible due to the company’s logos on the cars, so I wonder if Mercedes is heading down the same road traveled by Lincoln and Cadillac decades earlier?
Regarding Generation Z drivers, my 19-year old niece just bought her first car, which is a Hyundai Elantra. No interest in a CUV like mom drives, I guess.
Good question as to whether Mercedes is on that same slippery slope that Cadillac and Lincoln are on. I personally think they are. They seem to believe that the 3-pointed star can sell any car, and for higher prices, regardless of engineering and build. Short term, it works. They are even showing up in fleet use, much like the US brands populated Hertz and Enterprise lots. And they really, really want you to move up to a CUV or SUV. I don’t think Mercedes is that bad off yet, but they seem to be heading in that direction.
As to the Gen Z folks, it does appear that the hated form is the CUV, as it is what Mom or Dad drives. It seems generationally that we tend to eschew whatever our parents liked, and it does seem cyclical. That means that sedans will come back, perhaps not exactly as they are now, but close. And then wagons, then MPV/minivans, then CUVs again, ad infinitum until the autonomous pods take over driving for us.
Agreed on Mercedes. My new neighbor/friend works for MB and gets a sweetheart lease. He currently has the small SUV (Whatever it’s called-I haven’t been bothered to care), that my husband and I rode to dinner with his husband and him in.
I was not impressed. It wasn’t particularly quiet. It wasn’t any nicer than my husband’s Fusion Titanium inside. It didn’t seem particularly fast, although as a passenger that is harder to gauge.
Honestly, if someone can go out and buy a nicer Ford, what’s the point of MB?
Mid-sized sedans aren’t quite dead yet. Camry sales were up 21% for May, although Corolla sales were down. Of course, Toyota had some decent incentives.
The form factor or body style seems so cyclical, I can’t believe that the manufacturers would actually make decisions that affect long-term capital investments based on those trends. I’m old enough to remember when just about everyone drove big four doors, then personal luxury coupes (and the import equivalents like Celicas), then hatchbacks, then sedans again, then minivans, BOF sport utilities, CUV’s etc. I think the factors that have really influenced the industry have been regulations (safety, emissions, CAFE, local content, and of course impending fossil fuel restrictions) and tariffs; fuel prices; global economic development (cars from Korea and Japan); and some basic technology like unibody and FWD. Otherwise, I think it’s like hemlines and tie widths. I exaggerate a bit, but I think there is far more here than just Honda PR.
Personal observation tells me that there is an exodus from cars to CUVs, SUVs, and pickups. At every gathering I go to almost without exception the people arrived in a utility vehicle or pickup.
The blocks around me in non-hipster Brooklyn have become full of CUV’s and SUV’s, including mine. I would have preferred a minivan type car and considered a Pacifica, but the ones today are enormous. Even the reasonably sized ones in Europe are turning more SUV-like if not disappearing. Like dman wrote above, there’s an element of fashion in all this.
When I first heard of GM and Ford giving up on passenger cars, my first thought was this:
“Honda and Toyota are going to clean up on this segment of the market.”
Low and behold, they have.
In my opinion (which isn’t worth much) it was a huge mistake for GM and Ford to abandon a large segment the market. There are a few reasons for my opinion.
First is fuel prices. Most the USA is enjoying cheap gas and the US car makers are supplying gas guzzlers to eager consumers. Will cheap fuel be with us forever? My experience is that it won’t. West Coast fuel prices are high at the moment and trucks are not selling, either.
Second is fashion. Having a giant car that is called “a truck” may be in style now, but styles change. Not having a full product line is going to hurt if fashion changes.
Third is price. The economy in North America is good at the moment but there will always be a cyclical up and down. Giant cars cost a lot and the prices of said gigantic objects have skyrocketed. When they hit a point where buyers rebel, having a full model line can’t hurt.
Finally is reputation. I fully believe that anyone who buys a new Honda will get a good car they will enjoy and give them many years of good service. Honda has been building that reputation since the beginning. They still have two basic models that have always had the same name: Civic and Accord. Everyone, even non-car people, knows that these are good brands.
Is that guy wearing a leather suit?
It’s Teflon to ward off the blowback from his data and predictions.
COTD!
Sergio called it, and got it right. While I was never a big fan of Sergio, there were some things he did that were correct, even if I didn’t agree with them. I think the main reason why Honda, Toyota and H/K are all-in on sedans is that’s what they have a lot of. I find it hard to believe that if they had the product mix/capacity to sell more SUVs and trucks, they wouldn’t. Why wouldn’t they go for the sweet spot in the market. “Oh, we’ll not maximize our profits, let’s exert the same amount of effort and make less money” said no company ever…
When you mostly have sedans and still have to support dealers and factories, etc., you double down on sedans until you can re-tool. Run what ya brung, so to speak. I’m not saying that SUVs are the be-all to end-all, but even on this board we’ve noted several times that SUVs re-establish the high hip point of pre-1950’s cars, when lower, longer and wider became the norm.
In addition, it’s not like domestics couldn’t re-tool or have their subsidiaries produce cars again. But, I don’t think these “new” cars will be the same idiom as the cars that came before “SUV uber alles”. I think they will be taller and boxier than the cars that preceded them, in fact, many of them already are. Look at a car from 1995, then 2005 and finally 2015. The newer cars are getting taller and wider succesively, whether from government or consumer diktat. I just feel this is a lot of hand wringing for no good.
The passenger car market in the US is 5 million units. Your argument supposes that those 5 million cars were sold only because there weren’t enough light trucks available for those poor bastards. i’m afraid that’s not an accurate reflection of reality, by a long shot. There’s 70-100 days worth of inventory sitting on the truck dealers’ lots, with juicy incentives (getting bigger by the day) on their hoods.
Can you imagine what would happen if the makers of those 5 million pass cars suddenly switched to trucks?
We have a free market, based on choice. 5 million folks actually chose to buy passenger cars, in total freedom. 🙂
Toyota has six CUV/SUVs – C-HR, Rav4, Highlander, 4Runner, Sequoia, LandCruiser. I believe they cover every segment including two of those with Hybrid options with maybe the exception of the sub-subcompact like the Nissan Kicks. The RAV4 was the top selling non-truck vehicle in the US last year (427k). As far as trucks go the Tacoma was the top selling midsize in the country (245k). A new factory just came online to build more. The Lexus division has what, five more SUV’s? The RX is and has been the top seller in the premium CUV class.
How is that “mostly sedans”? But in any case the Camry does happen to sell at or near the top of the sedan class as well (343k last year, about twice the rate of the Fusion). The Corolla does quite well (303k), as does the Avalon in its segment. The one that is floundering a bit is the Prius, however since they are Hybrid-izing (successfully) much if not most of the rest of the lineup I don’t think they are really losing sleep over that.
Besides the big3’s full size trucks, the ONLY other domestic brand vehicle in the top 10 last year was the Equinox. Then #12 for Escape, #13 for Explorer, the GMC midsize and three Jeeps in the top 25 but several more import label sedans. Yes, many import sedans are outselling domestic SUV/CUV’s.
I switched – on May 3. From Ford to Toyota.
Many new Ford passenger cars over the years: Probe; Contour; Taurus; T-Bird; Mustang; Focus (plus some F-150s). Ready for a new car and a Focus ST would have been fine but no . . .
So I am a month into a ’19 Corolla hatchback (six speed manual too!). It is fun and screwed together very well. Bought it from the same dealer; they sell both. But no more Fords for me simply ’cause there are no more cars.
Oh, and did I say I like the Toyota?
It’s amazing to compare my friend’s brand new Honda Civic to my Mazda3. Both are base models, yet mine feels positively old fashioned without things like lane keep assist, active cruise control, and a full screen display for a gauge cluster.
I like my Mazda for still being relatively simple for a new car. No CVT, just a six speed automatic. Actual gauges with dial pointers that move. It’s simple stuff, but I think it’s interesting. I may like driving classic cars more, but it’s amazing how far we’ve come sometimes
Yes, we have come a long way, but perhaps too far.
If we need active lane assist, then we need to get rid of drivers and go fully autonomous, immediately. If you as a driver cannot be responsible enough to keep in your own lane by your own self, then you should not be behind a wheel.
It’s not that we are Luddites, it is that the new technology has supplanted actual personal responsibility for being in control of a 3000 lb object moving at speed.
It reminds me of the multi-color pens from back in the day. 4 colors, all new and fascinating, when all we needed was a pencil instead.
Interesting observation and clearly Honda et al are doing the right thing from a long term brand perspective. Retreating from a viable market because you don’t want to invest but would rather focus on what may just be a fashion is a short term option, surely?
2 points come to mind for me – younger buyers are more likely to be open to being early adopters of affordable new technology (electrification specifically) and these brands will have to be present in that arena.
Second, don’t we need also to consider the qty of buyers and choices in the used market as well – many younger buyers will not be buying new cars but a used car, maybe CPO, maybe Grandma’s. And that could be a GM or Ford product, of course, and loyalty could start there.
This news is another example of the kind of short-termism prevalent in the US domestic car industry. The wierd thing is that pushing Ford and GM and Chrysler to give up on cars was the apparent lack of ability to develop competitive cars. Ford and GM did seem to try and never hit the mark and kept not hitting the mark for decades.
Ford and GM will regret the decision to vacate smaller, gasoline-powered vehicles.
As others have noted, while the trend toward CUVs is real, there continues to be demand for cars.
Many wannabe Fusion or Cruze buyers will not buy Escapes or Equinoxes, they will buy Camrys or Civics or Hyundai/Kia.
This will help the the Asian manufacturers stay in those markets.
Many of these people will return THERE for their CUV later on, should they want one. They will never consider a Detroit Three offering.
Yes, we appear to have plenty of oil. Today. But the economics of fracking are not so clear cut. If there is an oil price spike or shortage, it will be October 1973 all over again.
Instead of confusing rebates and discounts, we will return the days of the late 70s, early 80s, when buying a Honda or hot Toyota mean paying “ADP” = Additonal Dealer Profit on top of the MSRP
Except this time GM and Ford are just another car company, not the massive number 1 and huge number 2 they were then.
If GM and Ford decide to reenter smaller cars, it will be MUCH costlier and harder than it would have been had they stayed in. Especially GM, since there is no longer an Opel to tap into for small car expertise. Let’s be honest, GM and Ford in North America have never come up with a small-car hit, have they? NO.
In any case, we live in a dynamic, interesting era. Thanks to China and Mexico, vehicle prices have risen considerably less than the additional features that have been added. As with most facets of life in the West today, particularly the USA, we are consuming more than we earn. It can’t go on forever.
Honda Motor Company is different animal compared to most large automakers. Who else makes motorcycles, gardening equipment, generators and jet aircraft!?
Starting with making piston rings, putting much of Asia on motorized wheels and making motorcycles accessible and socially acceptable to a generation of Americans, it was a slow progression to the top of the US car market. I remember the N600 car and was not impressed, but the Civic changed everything. Yes, BMW had somewhat similar history, but Honda did it best.
Looking at this from Austria with my usual bewilderment (Honda’s share of our market is… 0.7%).