Truck and SUV sales have steadily increased since the end of the Great Recession. Passenger cars, on the other hand, have been declining since 2014.
In fact, 2013 saw thehighest U.S. truck sales since 2005.
This big spike in sales is forcing automakers to make big changes. Take General Motors, for example.
GM announced in November 2018 that it was stopping production on six of its sedan models.
Instead, it’s going to focus on making more pickup trucks and SUVs.
General Motors is going to close down at least three of its assembly plants by the end of next year, cutting nearly 15000 jobs.
You’re looking at a company here that is not waiting until it is forced to close plants.
It’s trying to get ahead of the curve a little bit because the sales of cars is just not there.
GM is late to the party. Ford and Chrysler have already done that.
Michael Ward, an auto analyst at Williams Trading.
He’s been following the auto industry for over 35 years.
GM is a little bit late to it in part because it had strong positions in some of those vehicles and long legacies like at Lordstown.
It’s been a good place for them for decades.
The three plants that GM is closing all produce passenger sedans.
The Lordstown, Ohio plant manufactured the Chevy Cruze.
Oshawa, Ontario primarily produced the Chevy Impala.
and the Detroit, Hamtramck location turned out the Chevy Volt, Buick LaCrosse and Cadillac CT6. They’ll find a vehicle that they can produce at Hamtramck.
Lordstown is another issue.
But Lordstown is a very big plant. At its peak it produced 400,000 units.
Again, one of the hardest things for the auto industry to find is a talented workforce.
They do have a talented workforce in the Lordstown area.
Ford, the second largest automaker in the U.S., is also gearing up for more SUV production.
Ford’s profits took a dip in 2017.
Some experts say the company wasn’t meeting demand for SUVs and crossovers.
But it’s not just American companies jumping on the trend. Even luxury carmakers like Ferrari, Jaguar and Maserati have been getting into the SUV business.
So why are American consumers falling in love with bigger cars?
It comes down to three things:
Better mileage, higher profit, and consumer need.
Some experts think low gas prices make SUVs and trucks more affordable.
On top of the falling prices, these SUVs aren’t the gas guzzling behemoths of the early 2000s, Built Ford Tough, The rules have changed Ford Expedition. The only way to get there The typical millennial spends more at Starbucks in a given year than the average consumer spends on gasoline in their car.
It gets a lot of headlines with gasoline, but at the end of the day, people look at spending one or two hundred dollars a month on gasoline. It really doesn’t change much depending on the vehicle you have.
Chevy Suburban today gets 20 miles to the gallon.
It seems that one thing that hasn’t changed since the early 2000s is that Americans really like having a large family vehicle.
Most consumers buy a vehicle for their needs and whether it’s to move a family aroundmove goods around and they balance out the costs of operating, including fuel costs.
The growing demand for trucks seems like a gift to automakers at least in the short term.
SUVs, trucks and crossovers have proven much more profitable than electric and hybrid vehicles.
The average price of a car in the United States what consumers spend is about $25,000. For a truck, which would include the sport utility vehicles, it’s $12,000 higher. It’s $37,000.
Companies may be closing plants and laying off workers, but that doesn’t mean the auto industry is in trouble.
Over the last decade you’ve seen the auto industry and
the technology industry coming together. There’s been a convergence.
2019 will be the year that we see the best biggest example of that convergence.
You’re going to Uber go public., Lyft go public. GM might spin off its cruise automation unit.
We could see Waymo doing something. That’s almost a half a trillion dollars in market cap potential from those four companies alone America’s love affair with trucks and SUVs isn’t showing any sign of dying down That means an all-electric truck might be here sooner than we think.