This may be hard to believe, but it’s been almost two years since Ford announced their intention to stop making sedans and passenger cars. Later that year, GM followed suit. Since then, there’s been approximately 4,987 think pieces about how their strategic withdrawals will come back to haunt them. Critics wondered if American sedan owners would stick with their respective brands. Edmunds recently published a white paper that partially answers that question. Basically, the majority of Focus and Cruze owners are moving on to different automakers. But it’s more complicated than that.
The above chart succinctly sums up what’s happening when Focus and Cruze owners decide to trade in their cars. They’re largely moving on to different brands. But this chart doesn’t tell the whole story.
Perhaps Ford and GM aren’t as foolish as some people think. On one hand, more Focus owners are indeed gravitating a bit more towards compact sedans from Honda and Toyota. But a decent number of them are staying within the brand too. According to Edmunds, 33% of compact car owners buy another compact. Ford ultimately swayed at least 25.4% of Focus owners to stay within the brand. And take a look at the top two vehicles they bought. They’re exactly the type of vehicles Ford envisioned them buying.
GM did even better. The company convinced at least 41.5% of Cruze owners that staying within the fold was a good idea. Granted, both brands did lose some customers they might otherwise have kept if they stayed in the passenger car market, but the losses aren’t as dramatic as people thought. Ford and GM probably used similar data to make their decisions back in 2018.
We’re still in the early stages of this fundamental shift in the industry. Product will determine how Ford and GM compensate for the lack of passenger cars sales. And we are seeing that, in products like the Ford Ranger, Ford EcoSport, Chevy Blazer, and upcoming TrailBlazer. Given FCA’s success over the last several years, I expect Ford and GM will eventually shrug off any collateral damage from dropping cars and become more profitable once they strengthen their utility and truck lineups.
Are these reasonable assumptions, or am I missing a key fact about the current situation?