Analysis
6 Jun 19

Shrinking US market prefers Korean, premium and (sub)compact crossovers

American light vehicle sales have been declining for five months in a row, posting a negative growth of 2.4% year-to-date. The SAAR has fallen below 17 million units three months this year, indicating the US market continues to contract after four years of sales above this number.

While retail sales continue to slip, higher fleet shipments appeared to boost some automakers last month, Automotive News reports. Fleet volume is expected to account for 21% of total light-vehicle sales, up 0.8 percentage points from last year, J.D. Power reckons.

Looking at the YTD sales statistics, the winners and the losers are obvious. Apart from Mercedes and Audi, OEMs in the premium segment are generally thriving, and so are the Korean brands. Also, smaller crossovers are increasingly popular – especially those brands that have them in their line-up seem to progress, with FCA as a notable exception. It owes its relative status quo (-2.50%) entirely to the prospering Ram, a maker of big pick-up trucks. All its other brands are on a slippery slope.

Click here to view the sales numbers provided by Automotive News.

Premium on the rise

In the premium segment, most OEMs are faring well. Home brands Lincoln (+3.50%) and especially Tesla (+16.90%) are in good shape. The Asian luxury car brands Acura (+6.00%), Lexus (+1.30%) and newcomer Genesis (+25.60%) have increased their grip on the market, whereas Infiniti is losing ground, giving away 13.40%.

Of the European premium brands, Mini and Alfa Romeo are underperforming dramatically, with a drop of -22.40% and -25.70%, respectively. BMW outperforms the market with a 0.70% growth, which is far better than Mercedes-Benz (-8.50%) and Audi (-7.30%). It is however British OEM Jaguar Land Rover that gains the most ground: Jaguar went up 15.70%, Land Rover 7.40%. Interestingly, Porsche grew by 2.1% and sold twice as many cars as the former, whereas Swedish carmaker Volvo sold 6.40% more cars, thereby equalling Tesla and Land Rover in terms of volume (i.e. 38,000 units YTD).

Even though it is losing territory, the biggest premium marque is still Mercedes, followed by BMW and Lexus.

Korean brands and compact crossovers grow

General Motors remains the biggest automotive group in the USA in terms of unit sales (1.217 million, -4.90%), with Ford in second position (1.042 million, -2.80%) and FCA taking third place (918k, +0.30%).

Toyota’s overall car sales went up 0.4% in May on a 21% increase in Camry demand, but the biggest Japanese OEM still lost 3.60% YTD. Light truck sales climbed 4.9%, Autonews reports. Nissan (excluding Infiniti) shrank 5.90% compared to the same period last year, while Mazda lost 15.50%. Honda posted -0.60%, whereas Hyundai-Kia is closing in volume-wise, posting a 3.40% increase. Subaru even managed to grow 5.70%.

That is the direct consequence of the fact that these brands have attractive small and compact crossovers in their portfolio. Hyundai, for instance, is selling Kona’s like hot cookies and will be launching a US-only baby-brother to the latter, called Venue. Kia has the Niro and Sportage to thank for its ongoing success and has just added the Soul to its cross-over portfolio.  

Downsizing and electrifying trend

In 2015, there were 10 subcompact crossover nameplates in the US, good for 411,774 sales, or 2.4% of the market. Last year, subcompact crossover segment comprised 16 nameplates and 784,073 sales, i.e. 12% of the U.S. crossover market and 4.5 percent of overall U.S. light-vehicle deliveries, according to the Automotive News Data Center.

The subcompact crossovers mainly appeal to entry-level buyers and people who are downsizing, says IHS Market. Domestic newcomers on the market that are likely to hit the bull’s eye in the U.S. are the 2021 Chevrolet Trailblazer and the 2021 Ford 'baby-Bronco', which could be based on the European Puma.  

Even though emission reduction is no longer high up the American agenda, OEMs will still be offering ever more hybrid and full-electric models, mainly because they have to if they want to continue selling cars elsewhere in the world and in environmentally conscious states such as California.

Authored by: Dieter Quartier
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