The Changing Landscape
While U.S. auto sales continue to remain stable, the market is witnessing divergent trends in passenger cars and light truck segments, driven by shifting consumer preferences from sedans to SUVs and CUVs. More than 17.0 million light vehicles were sold in the U.S. in 2019, the fifth consecutive year when sales exceeded 17 million units. However, small and mid-sized car sales fell for the seventh consecutive year, while CUVs continued to grow, reaching an all-time high with a market share of 41%.(5) As the market is expected to witness soft demand in the next few years, new model launches and an optimal product mix will be critical for automakers to protect market share and grow the top line. In the U.S., manufacturers will continue to rely on the truck segment, including pickups, CUVs, and SUVs, which is expected to continue to dominate the market. However, as the segment becomes crowded, profitability may decline.
While FCA halted the production of sedans in the U.S. in 2017, the other two Detroit manufacturers, Ford and GM have announced plant closures and discontinuation of their sedan models by 2023. With the large domestic manufacturers focusing on light trucks, foreign brands like Honda and Toyota are likely to take a larger share of sedan sales in the U.S.
Despite significant differences in terms of new model launches across manufacturers, the product mix of all major global manufacturers is moving towards Crossovers and light trucks.