My son Ed, Alex Roy and Kirsten Korosec have recorded some 72 episodes of the Autonocast, with its focus on the rapidly evolving world of autonomy and related subjects. For podcast #73, the subject matter is the equally-rapidly evolving automobile market of the present, coming on the heels of Ford’s announcement to drop all sedans. And I was invited to bring a bit of historical perspective, and fill in for the vacationing Ms. Korosec. Two Niedermeyers for the price of one.
Thirty minutes of conversation with these two guys flies by like a flash during the recording, and afterwards one is inevitably left feeling that a few more key points didn’t make it in. If you’re interested, the link is here (embedding is not currently possible) , or you can find the Autonocast at itunes, Google and pretty much all other podcast download servers.
Nice, Paul! – It was like the discussion everyone here had last week when Ford dropped their bomb.
You’ve got some excellent pipes for radio, too!
Very interesting! I caught only part of podcast 73 just now, and it made me wonder what Honda, Toyota, et al will do about their sedans given what FCA and Ford have done. My belief is that they still sell their sedans (especially the compacts) by the boatload, so they will keep selling them for the foreseeable future. The key is whether they are the best at reading the market, or at setting the trend in the market. Time will tell!
They will be the last men standing in that segment of the market. They see the market changing too, but they still have the retail demand and production volume/scale to keep at it.
Toyota RAV4 outsold the Camry again this past month, April 2018.
Agree that “time will tell”.
I believe the CRV is outselling the Accord as well.
If Ford were just getting rid of sedans, I don’t think it would be that significant. After all, most late-model Focii and Fiestas I see are hatchbacks anyway. A Fusion 5 door would be a fine car. But even in California, Fusion sedans are pretty popular, including hybrids and plug-ins hybrids. I just don’t get it. Maybe they’ll just start importing those cars from Europe or Asia, where I’ll assume they’ll live on. I myself have only owned three sedans, all briefly, in 43 years of car ownership, and only two more cars (an Alfa Spyder and a Firebird) with trunks … everything else we’ve owned (and that includes my wife’s two cars that she owned before we met) has had a hatch, tailgate, or both. But not a single crossover.
Another bit of news today that affirms Ford’s decision to kill the Fusion: over one-third of Fusion sales in 2017 were fleet sales, with some 19% of the total sales going to rental fleets.
The only Fusions I see here are state and city fleet cars, and a few obvious rentals. Retail demand for Ford sedans on this part of the West Coast has been next to nil.Are you sure those aren’t fleet cars you’re seeing?
In my area, (mid-Hudson Valley, New York) Fusions are just as common as Camry and Accords. But that is probably the result of three long running Ford dealerships operating within a 30 mile radius of each other more than anything else. And they’re definitely not fleets.
Edward, I have no solid figures but here in Chicago the newer Accords and Camrys are relatively rare. The Japanese marque buyers seem to be moving fully to crossovers. Whereas the sedans you see are almost always fusions or sonatas. This kind of makes sense intuitively as I see more conservative buyers leading towards domestics and Koreans. (Heck, as I’ve said here before, my own 70s-aged mother just bought a Fusion 2 years ago.)
It will be interesting to see where the state, municipal, and rental fleets turn with the demise of the sedan. Earlier this week I told the fleet manager at work about Ford’s news and he was distinctly concerned.
With Honda, Toyota, Kia, Hyundai, and VW likely being the remaining players in this market, it’ll be interesting to see who, if anybody, picks up this slack. Hasn’t Honda been pretty strict about limiting fleet sales? If that remains the case, I can see the others going to whatever market is left. Frequently driving past both an Avis and an Enterprise lot tells me those last four are already hitters in the various rental fleets.
Looking at the Dodge website just now, there is a base V6 Charger available that might fill some of the void. Perhaps it’s already on the chopping block and I just haven’t heard about it.
Privately owned Fusions here are thick on the ground, but I’m also seeing a lot more of them with rental stickers.
The Escape S is about the same price as a base Fusion, so they could go there for their fleets. And if the next generation has a hybrid variant, which it most certainly will, that’s another option.
I think the rental guys will just switch to crossovers. I’m at the gate flying home from Denver where Avis “upgraded” my compact reservation to a Ford Flex, which I hated.
“Privately owned Fusions here are thick on the ground, but I’m also seeing a lot more of them with rental stickers.”
Par for the course as a model ages and new entries capture the buzz. I notice the same thing with the Focus around here (Burlington, VT).
Government vehicle fleets in our area were traditionally domestic branded vehicles, but this has changed. Fleets now have more Asian branded vehicles included. One of my brothers uses government fleet vehicles and they have a wider variety then ever before.
My work place has a small vehicle fleet, that for many years was almost exclusively Ford cars. In the last five years we have been buying more CUV’s to replace sedans, such as Ford Edges, but also expanded into other brands. While we used to be exclusively domestic branded vehicles, our second largest brand in our fleet is Toyota.
My guess here is that Hyundai, Kia and Nissan will become the new power players in fleet sedan sales. The Koreans seem to have a desire to run a sedan business, and a key part of that business will be fleets as we go forward. Also, the Korean companies’ growth rates seem to have slowed and business fleet sales would be a boon. They are already well represented in rentals.
In this area, Malibu is the fleet special, as least for non-rental fleets. For whatever reason, Chevy is the go-to brand for local government fleets.
I never really paid attention before, but have begun noticing that a fair percentage of Fusions that I see in this area are hybrids. Apparently (?), they are also popular as used cars, as a few Ford dealers here in North Florida have several late model Fusion hybrids on their used car lots.
I can understand why Ford is about to discontinue the Fiesta and Focus, a few dealers had new 2017 Fiestas on their lots in April. And after praying for the Focus ST and RS, enthusiasts are letting all Focuses sit even with substantial discounts/rebates.
It’s a shame, just as we enter a great age for car enthusiasts, car manufacturers are pulling the plug.
For me, it still comes down to cost. When I bought my last new car in 2016 (an Accord), I also looked at the CRV. However, the base model CRV did not have AWD which for me was the reason to get the CRV in the first place. And the sensing package (adaptive cruise control, brake, and steering assist) was not available with the base LX.
Ultimately, I ended up with a base Accord with sensing package for over $6,000 less than an AWD CRV with sensing package.
Always wondered how much accent you had left Paul 😉 .
It really does come out in some words, doesn’t it? It’s true for most people: you can never fully lose your accent. I had a substitute teacher in school who had the most generic Australian accent but there were just two words that sounded so strange. Turns out she’d moved from the UK as a kid, lost the accent entirely except for those two words.
I wonder how much of what I hear is squeezed by what I know? I hear the occasional Arnie words, some strong East Coast sound (which with the Germanic undertone ends up sounding slightly like the Bronx!), and marked West Coast overlay (“like, you know”). By no coincidence, I hear the history of the voice, but I strongly suspect that if I heard the voice out of the blue, I would hear nothing more identifiable than an American one that was unidentifiably intriguing.
There seems to be a cut-off of about 10 for accents to remain for life.
Sorry, Mr N, all sounds a bit intrusive! Isn’t meant to be. In these amazing times when someone whose “voice” one knows from reading is suddenly an actual voice, it does get one’s attention. I doubt I’m alone in being a bit fascinated thus.
Oh, and as others have said, they is fine pipes for broadcasting you have there.
I’m surprised the historical perspective didn’t talk more about height, the rightness of the ’49 Ford-57 Chevy package most closely matched by the CR-V/RAV4/Escape/Cherokee class among new cars and so on.
That was one of a number things that I had hoped to get in, but the time went so quickly.
Great dialogue. I didn’t realize Mitsubishi was also bringing back the Lancer name (on a crossover), but it’s true. I just saw my first Mitsubishi Eclipse crossover just this past weekend. I made me remember (lament) how much I liked the second-generation Diamond-Star coupes.
Paul, hearing your voice on the podcast took me back to the CC gathering in Detroit last June. Awesome.
It seems that a major piece of the pie isn’t being discussed. Much talk about private sales vs. fleet sales but no mention of leases. There is someone in everyone’s life who talks a big game, but you still scratch your head and wonder, “How the hell is he able to afford that?” The fact is that he can’t on a retail level but he can on a lease. I was talking to a car salesman less than a year ago while buying my recent ride, and while waiting for paperwork to be approved, the conversation shifted to the car business and the salesman told me, in an “O my God” sort of way that over half of the vehicles that go out of here do so on a lease.
As I said above, a number of significant things didn’t make it in, regrettably. If it was just two of us, and we had worked out an outline with key points in advance, that might have been better. But all I knew was the general topic and then we just launched into it.
Great to hear the podcast, hope there can be a west coast CC gathering where we can discuss these topics … and classic cars … in person, and over some good west coast beer and/or coffee. One of the things I’m taking away from your insights, are that the economies of scale (production and development costs) in today’s auto industry are impacting the affordable “enthusiast” automobile (and today, I see Porsche’s, BMWs and Verraris as fashion statements more than enthusiast cars). In my opinion, the only affordable enthusiast vehicles left on the market (after the demise of the Focus ST and RS) will be the Camaro, Mustang, GTI, Wrangler Rubicon, Chevy Colorado ZR2 and Tacoma TRD OffRoad. By contrast, the performance motorcycle and high end bicycle markets are still booming with consumer choice.
Very interesting and enjoyable – could listen to Paul for hours. What amazes me is that Hyundai/Kia continue to turn out such an enormous range of models, including sedans. They sell reasonably well here in SoCal; at least I see them on the streets and freeways. OTOH, I barely know what a Fusion looks like. Of course this Westside/Santa Monica market I’m in is pretty rarefied and upscale so BMW, Audi, M-B, Range Rover, Porsche, et al, predominate.
Next time you’re in Eugene I’ll talk your ears off. 🙂
Great to hear the podcast! I have been on the road much of the day so it was great to get my CC fix while driving. The topic of vehicle brands and they value they carry is hugely important in todays market. I have long attested that one’s car is a person’s largest and most expensive fashion accessory. The pickup branding in particular has always fascinated me. Much like in Paul’s area, many people around here are devout Asian car buyers and would never consider a domestic brand cars. Yet, they will when it comes to pick-ups, in particular Fords.
It’s interesting the Tundra isn’t considered more by Toyota loyalists, although Toyota has let it grow old on the vine without any real updates in 10 years. Fuel economy ratings really hurt it, although the real world difference isn’t as big as one might think. Even when it was brand new in 2007, and arguably at the top of it’s class, there were tons of people around here who’d never consider a Japanese fullsize pickup. I honestly don’t know if it is possible for the Japanese brands to be able to change their brand image enough to make serious inroads in that market. Which Is probably why Toyota has done little to update their Tundra, producing 100K per year, no doubt with significant margins though.
My understanding was that the Tundra market was pretty much defined by people that were absolutely, positively going to buy a Toyota, and happened to need a full size pickup. My suspicion Toyota (and Nissan, & Honda) haven’t cracked the code on the pickup market is simply because there wasn’t a throng of disappointed domestic pickup owners looking for a better alternative. The pickups pretty much dodged the “malaise” era.
I think that’s a good theory. If you’ve had plenty of luck with your Ford/Ram/Chevy/GMCs in the past, why bother trying something new?
Except it doesn’t explain all those new pickup owners out there that have driven Asian brand cars for years and now have a pickup as a second vehicle. This is what I was focussing on. If Toyotas can’t even win these buyers, good luck getting the diehard domestic loyalists. FWIW, every Tundra owner I know, had a domestic truck before they bought the Tundra. Saying they are only bought by Toyota diehards is inaccurate (at least from what I have seen).
While some pickup owners I know are brand loyalists, there are also many that switch between brands. They will just buy the one with the best price and features for their needs.
As I said in a comment further up, I think loyal F-Series owners are quite happy to buy a Toyota (or such) as the second car/CUV, but they see no reason to switch trucks. And the Tundra has fallen behind some.
I do think that a substantial percentage of Tundras have been sold to previous owners of Tacomas, T100s and the older mid-sized Tundra. I know several folks around here in that category.
Toyota pickups have a very long and deep presence here, and if someone needs or wants a big truck (many prefer the compact size) they will typically by a Tundra, with few exceptions.
Perhaps in other parts of the country where Toyota pickups didn’t already have such a loyal following, some buyers might well have been lured to the Tundra.
But I think it’s falling behind a bit. Even myself, if I had reason to buy a full sized truck, I’d give the Ford (or GM or Ram) serious consideration.
I think that’s the difference between your area in my area. Toyota trucks don’t really have much of a following or history here other than with a select few. The T100 was never popular here and the first generation Tundra was marginally better. The second generation Tundra was the first one to make any inroads, particularly with traditional domestic truck buyers.
Like you though I have also seen Ford loyalists buy Toyota cars, crossovers and minivans. I’d say the Tundra is out of date by a significant margin. I would still consider one if I were buying a new truck mostly for its superior reliability history. However, the poor fuel economy is a massive draw back for me.
Yeah, the Tundra is a full generation or more behind the others at this point. Tacoma is also archaic. They sell more on reputation than anything else, which I don’t think is quite as deserved as it used to be.
I honestly wonder if Toyota wouldn’t do better selling the Dyna/Toyoace in the US instead of the Tundra. It’s a tilt cab, pure work truck similar to the Isuzu and Mitsubishi Fuso offerings but in Class 1-2 versions and would be really something different instead of a store brand copy.
If anything, Toyota needs to be more like the domestic brands, not less. Private buyers won’t buy that truck for personal light use.
Those are already being sold here, under the Hino brand: http://www.hino.com/hino-trucks-hino-155.html
That’s a totally different market than the Tundra’s.
It’s interesting the Tundra isn’t considered more by Toyota loyalists
I think that most of its sales do come from Toyota loyalists. It’s more the other way around: a lot of Toyota car and CUV sales come from F-Series loyalists. But F-Series loyalists are not about to give up their Ford trucks so readily.
And FWIW, I actually have some Toyota car households in my neighborhood splash out for a new F150. There’s a house down the street that has a somewhat older Prius and a brand new F150.
It’d be interesting to see the stats. In my area and my social circle though it isn’t Toyota loyalists buying these trucks. Most often it’s someone who got burnt by a bad truck of a different brand and is banking on Toyota reliability.
Like I said, I know of several people that have never bought domestic cars ever but now have an F150 as their first truck. So while I am sure their are many Toyota loyalists who buy Tundras there are also many that are buying Fords for the first time. Of course this is all anecdotal. However, what is clear is that the Ford F150 has a very strong brand in the pickup field enough so to make Toyota loyalist stay. While the Tundra brand is very weak in the world of trucks.
I was speaking with the owner of a well-regarded local independent Japanese car repair shop, that specializes in Toyota. He had just bought an Eco-Boost F150 for personal use.
Paul, that was a pleasure to listen to and you have a good voice for podcasting. If you ever find some spare time – not likely, given your hectic life! – you should consider podcasting. It was refreshing just listening to you casually talk to a topic, even if I’d already read much of what you had to say here on CC.
Also, what are the odds of having two car enthusiasts in a family! I’ve never encountered that before.
Well, I’m game, possibly. How should we do it? Maybe with each of our contributors, so folks can get to know them better? Or a rotating set of regulars?
Let me mull that over some.
Most interesting discussion, a lot of it aired here by Paul before.
Seems to me that a lot of what is occurring in the auto industry decisions are driven by unrealistic – to me, greedy – expectations of profit levels. Tech companies, the current darling as mines or oil or tulips or cars themselves once were, give outsize returns. The expectation then becomes, “Well, why aren’t YOU, GM/Ford/Chrysler, doing the same? Where’s my 17%?” Forgetting that the business is dauntingly complex, has long lead times, and in the process of producing a useable, actual hardware which real humans get into, must necessarily employ many people. The actual product we all use is not an emphemera, a marketing promise, a wank, a virtual thing. It is utterly real, dangerous, immensely mature and complex technology.
Given that stock raising is the accepted way of getting capital, perhaps there needs to be two stockmarkets, one the existing set-up, the second being one where 5% is the upper level of performance but where one’s investment has guaranteed investment in employment and the long term. In other words, a low return with a social contract.
This isn’t entirely fantasy. VW, with large stockholdings from the local government and board representation of workers, makes a really small return on many of it’s lines but because of these ties, is not about to slide into the abyss. The labyrinthine Japanese system with MITI at the centre has some similarites in another form.
Good lord, even old Henry F himself saw the benefits of social investment beyond his own profit. (Albeit, his approach was a bit Stalinist for my taste, but I digress).
Food for thought, maybe.
Those low-profit margin times are over for VW too. Their profit margin in 2017 was 7.4%, their projected margin for 2018 is 7-8%, and their stated goal within a few years is 10%.
As others have said, interesting discussion and Paul has a great radio/podcast voice. I am impressed you were able to keep the dialogue so fluid only knowing the basic topic ahead of time.
I’m not convinced Ford is making the right decision. If gas prices spike they will be out of business. Also not sure how they think they are going to meet upcoming CAFE standards with no cars, seems as though they are relying on those to be rolled back which is a pretty big gamble. All in all it looks like a short term cash grab, as though they have learned absolutely nothing from the past.
Chrysler makes more sense because they are positioning themselves for sale.
Stopped working on my to-do list early this morning to listen.
Very informative with some opinions that made me stop and think about the current situation involving the big three. Paul you were well spoken and provided good insight into what was discussed.
A lot of Focus and Fusion models on the streets up here. And plenty of full-size pickup trucks too. The recent spike in gas prices might see truck sales cool off this spring and summer. We’re at $1.23 a litre where I live near Edmonton. In Vancouver they’re paying $1.50 a litre. Small car sales likely to rise there very soon.
I’m wondering if perhaps our expectations for continuity in Ford’s product line, focus (hah) or even existence (and, by extension, the auto industry as a whole) are based on looking through a narrow lens. The company is over 100 years old. It’s older than Boeing, IBM, or Toyota, let alone Apple or Facebook. IBM has hugely changed their product line and business model, and remains quite successful. They (arguably) invented the PC, yet abandoned that market, perhaps declining but still huge, to lower cost competitors … a pretty close analog to Ford’s history, first with the Model T and then this announcement. It seems unreasonable for Ford to continue cranking out sedans just because they did so for 90 years. I doubt Apple, not to mention Facebook, will even exist 100 years from now, let alone have similar products to today’s.
Just finally got the chance to listen to this…kudos Paul on your “radio” debut!
One point I heard which I didn’t see commented on here is Alex and Ed’s assumption that young people will soon stop buying low-end cars and use shared autonomous cars instead. I have some understanding of the technology as a long-career computer engineer and I really don’t think autonomous cars will be everywhere anytime soon.
MIT professor Rodney Brooks, former head of their artificial intelligence lab and co-founder of iRobot (the Roomba outfit) writes “The Big Problem With Self-Driving Cars Is People…and we’ll go out of our way to make the problem worse“. You really should follow the link above and read the article, you’ll enjoy it.
Here’s just one of many human-caused problems he poses in the article: “Even in good weather, an intersection could vex a robotic car. Let’s say the car is stopped at a stop sign on a side street and identifies two people standing at the corner. These folks might be about to cross, but then again, they could just be chatting. Or maybe it’s a parent and child waiting for the school bus. A human driver would assess the situation effortlessly. How long should the driverless car wait? And won’t some bored jerks try to spoof such cars by standing at the side of the road and gesticulating as though they’re about to jump off the curb? People don’t try that with human drivers because there would be repercussions. Driverless cars, on the other hand, wouldn’t be allowed to try to retaliate.”
Brooks’ conclusion: “The day of the robocar is inevitable, but that day will not come soon.”
As for the low-end car market, it clearly belongs to East Asian producers, at least for the forseeable future.