Sedan, and Detroit vs. the World, in a Fight for the Future

[DaLveN @CSBD]

The humble family sedan was once inseparable from American culture, the prime mover of suburban commutes and summer road trips. But most Detroit automakers are ridding their lineups of sedans and diverting investment to S.U.V.s and crossovers, not to mention electric vehicles and self-driving tech. Detroit’s Asian and European rivals see things differently. They’re continuing to invest in smaller cars, in part as a hedge against changing consumer tastes or soaring fuel prices. The outcome of these bets could help determine the competitive fates of automakers in America. For Detroit companies especially, the PowerPoint is on the wall: For years, their car lineups have consistently lost money, with sport utility vehicles and pickups delivering virtually all their profits. That situation was already bad in the recessionary depths of 2009, when cars outsold so-called light trucks — S.U.V.s, pickups and minivans — for the last time. Since then, Americans have gone even more crazy for S.U.V.s and pickups.

In 2019, S.U.V.s and pickups are grabbing a record 70 percent of the market, with 5.9 million sales through June versus 2.5 million for cars. Sales of midsize sedans have nose-dived, from 3 million in 2012 to 1.9 million last year. One of every five cars sold was a midsize sedan in 2012; today it’s barely one in 10. As a result, Ford and Fiat Chrysler have decided to stop making conventional family sedans and compact cars almost entirely. Exceptions are made for enduringly po[CENSORED]r muscle cars like the Ford Mustang and Dodge Challenger. General Motors hasn’t said it will abandon the car market, but it is killing off several money-losing sedans and hatchbacks, including the plug-in hybrid Chevrolet Volt. Kumar Galhotra, Ford’s president for North America, said that in this brutally capital-intensive business, it was time to make hard choices: to invest where Ford sees growth and competitive strength, and to shed shrinking or money-losing segments.

Ford’s lineup casualties include the Fusion, once among the nation’s most po[CENSORED]r family sedans, and the Focus, the compact sedan and hatchback that helped prove Detroit could compete against Japanese blue-chippers like Honda’s Civic and Toyota’s Corolla. Instead, Ford will expand its S.U.V. and pickup portfolio, and pour $11 billion into 40 electrified models by 2022. Those include an electric version of its F-Series pickup, America’s perennially best-selling vehicle, and a “Mustang-inspired” electric vehicle — in fact, another crossover S.U.V. — that’s expected in 2020. Ford is also investing heavily in self-driving technology, through its Argo AI unit. Those are “all better businesses than traditional sedans,” Mr. Galhotra said. “We’re providing the vehicles that consumers want, and playing to the strength of the company.” Mr. Galhotra, like many analysts and industry executives, said the shift to S.U.V.s appeared to be permanent. He gave familiar reasons for this: the tall stance and “command seating,” which afford better views, make climbing in or out a breeze and make owners feel safer, and the yawning liftgates and cargo holds, which no sedan trunk can match. Even the world’s leading luxury marques, which once scoffed at S.U.V.s, have learned that resistance is futile: Porsche, Rolls-Royce, Bentley, Lamborghini and Maserati all offer S.U.V.s, which reliably become their best-selling models in America and globally, with Ferrari and Aston Martin to follow. Yet every mainstream foreign automaker, including Toyota, Honda, Hyundai, Nissan, Subaru and Volkswagen, continues to send new cars to showrooms, despite flagging sales. Brian Smith, chief operating officer of Hyundai Motor America, feels that Ford and Fiat Chrysler’s strategies are shortsighted.