Published on January 4th, 2019 |
by Steve Hanley
January 4th, 2019 by Steve Hanley
The talking heads in the US auto industry like to snicker up their sleeves at electric cars. “Nobody wants to buy an electric car!” they cry. Wrong, octane breath. What people don’t want to buy are conventional sedans with gasoline engines. The flight to SUVs and light trucks continued apace in December while sales of electric cars increased by a healthy margin, led of course by the Tesla Model 3.
Not surprisingly, sedan sales at Ford and General Motors were down significantly but what surprised people the most was the Toyota Corolla and Honda Civic — the perennial compact sedan sales leaders — both saw a significant drop in sales last month.
SUVs Continue To Rule
So-called SUVs continue to be the hottest sector in the new car market. But what is an SUV? The letters stand for “sport utility vehicle,” something that could fit two bicycles and a load of camping equipment inside while towing a boat to a pristine lake far from the nearest paved road. The first of them was the Ford Explorer, which was built on the Ranger pickup chassis. It was a runaway sales success and soon truck-based vehicles began arriving from other manufacturers. It didn’t hurt that the profit margins on the early SUV’s were double what they were for the pickup trucks they were based on.
But customers complained they rode like trucks (duh) and so automakers soon transitioned to unibody construction with suspensions borrowed from sedans. Then people complained they were too large to maneuver so the companies started making them smaller. The originals all featured 4-wheel drive and touted their offroad capability, but many of the vehicles called SUVs today are just taller versions of the front wheel drive sedans the companies have been making for decades. They only difference is they are far more profitable.
Unlike the behemoths of the past with their rock crushing suspensions and rugged tires, many of the offerings today are known as “crossover utility vehicles,” “cute utes,” or “soft roaders” and are more suitable for negotiating the parking lot of a Walmart than striking out across the tundra in search of adventure. Whatever their “sport utility” merits, they have become the must have vehicles of the 21st century and are rapidly supplanting the trusty family sedan as the vehicle of choice for modern families.
Sedans Take It On The Chin In December
December was just an awful month for sedans. Car sales at Ford were down 18%. That’s bad but not as bad as things at General Motors, where car sales took a 24% walloping. Even Toyota and Honda — two companies that continue to sell large numbers of basic sedans every year — saw sales fall off for their volume leaders, the Corolla and Civic. For the year, US car sales at Toyota were off 12% and down 16% at Honda.
Despite that bad news, total new vehicles posted a strong year over year sales gain of 2.2% in December led by — you guessed it — truck sales. Now, keep in mind the definition of “truck” is changing. If you used to think a truck was a Ford F 150, it’s time to update your vocabulary. Today a truck is anything that is not a sedan. A Honda HR-V, which is smaller than the CR-V, is a truck. A Toyota RAV 4 is a truck. A Lexus RX400 is a truck. Even the silly Buick Envision is a truck in today’s parlance.
“New vehicle sales were surprisingly strong in 2018 despite late cycle headwinds from higher interest rates and more nearly-new competition in the used market,” Cox Automotive chief economist Jonathan Smoke told Automotive News this week.
Hyundai had a strong close to 2018 thanks to rising sales of SUVs. “Hyundai-branded vehicle sales increased by 6 percent in December, in large part due to the highest SUV sales month in company history of 35,058 units sold, a 42 percent increase over December 2017. This was the fifth month in a row Hyundai established a new monthly SUV sales mark, while retail SUV sales mix reached an all-time high of 53 percent,” according to a company press release. In particular, the Hyundai Kona continues to shine with more than 8,000 sold last month.
Cars With Plugs Gain Ground
According to Inside EVs, December was a good month for cars with plugs, led by Tesla. It estimates about 48,000 electric cars were sold in the US last month. 3,250 of those were Model S sedans, 4,100 were Model X SUVs, and 22,250 were Model 3s.
GM sold 1,412 Chevy Bolts and 1,058 Chevy Volts. Combined, both models accounted for 11,275 sales in the fourth quarter. Nissan delivered 1,667 LEAFs last month, a solid gain after dismal sales in October and November. The Toyota Prius Prime has made up ground following a significant drop in sales in June and July. According to Toyota, Prius Prime deliveries in December totaled 2,759.
The big hit of the quarter for non-Tesla cars was the Honda Clarity PHEV. It has recorded sales of just under 2,000 a month since it was introduced but saw a nice boost in December to 2,787 sales. We drove a Clarity for a week last year and were impressed with its ample room inside and smooth operation. Several of our readers have bought one and pronounced themselves very satisfied with the car.
2019 promises lots of good news for EV fans. Both the Hyundai Kona Electric and Kia Niro Electric are scheduled to arrive in dealer showrooms during the year, Volkswagen may start producing the ID electric sedan this year, and Tesla says it may have an announcement about the Model Y sometime in the spring. It’s going to be an interesting year in the world of cars.
And here’s one last little tidbit for your consideration. Automotive News says the average transaction price for a new vehicle in America today is more than $37,000. Remember how we yearned for the day when EVs would reach price parity with conventional cars? Turns out that day is already here.
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