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January 09, 2019 01:00 AM

Light trucks take a record 69% of U.S. market

David Muller, Automotive News
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    Jeep sales surged 18 percent last year as sales for the five largest brands faltered.

    DETROIT — Sales of light trucks — including SUVs and CUVS — grew 7.7 percent last year to nearly 12 million units, accounting for a record 69 percent of U.S. light vehicle sales, according to data compiled by Automotive News.

    Sales of traditional cars plunged 13 percent to 5.4 million units, the fewest sold since 1958, and would have dipped even further but for Tesla finally achieving decent production of its Model 3 sedan in the second half of the year.

    The car/light truck split was 36/64 in 2017 and 50/50 as recently as 2013, the data show.

    The split is expected to keep widening as both Ford Motor Co. and General Motors. Co. have announced plans to phase out most of their car nameplates in the next few years.

    Ford in April said it would stop selling sedans in North America. It had planned to import a Focus Active wagon to the U.S. from China but has reversed those plans because of tariffs.

    Ford's Ranger midsize pickup is slated to reach dealerships this month, followed this year by the redesigned Explorer and Escape and the new Lincoln Aviator.

    General Motors in November said it would end production in 2019 of six car nameplates, including the Chevrolet Cruze, Impala and Volt.

    U.S. sales for each of the five largest auto brands — Ford, Toyota, Chevrolet, Honda and Nissan — declined in 2018, while the No. 6 brand, Jeep, grew enough to keep the entire industry in the black for the year.

    Jeep's 18-percent surge propelled U.S. light-vehicle volume to 17.3 million, 0.6 percent more than in 2017 and the fourth-highest of all time.

    All together, auto companies sold about 96,000 more vehicles than the previous year. Jeep alone gained by nearly 145,000.

    "Clearly, Jeep's been killing it," said Charlie Chesbrough, senior economist at Cox Automotive. Mr. Chesbrough said Jeep, a brand synonymous with rugged utility, had the "right portfolio at the right time."

    Subaru of America, with its all-wheel-drive wagons and crossovers, also hit it big with a 5-percent sales increase. The Japanese auto maker leapfrogged Hyundai Motor Co. to rank seventh with a 10th consecutive year of record U.S. sales.

    Going into 2018, most analysts expected the market to soften, but healthy consumer confidence, low fuel prices and higher fleet deliveries helped push sales above 17 million vehicles for the fourth year in a row.

    FCA US led the way among major auto makers, with the Ram and Jeep brands contributing to an 8.4-percent gain.

    Only one other brand came close to Jeep's volume increase: Tesla, whose sales nearly quadrupled to an estimated 182,400. It, too, outgained the entire industry by itself.

    Looking ahead

    Sales are expected to continue to be relatively strong in early 2019, aided by cheap gasoline and low unemployment, among other positive economic factors.

    However, rising interest rates and new-vehicle prices have become headwinds. Transaction prices have climbed to all-time highs, and interest rates now average about 6 percent, according to Edmunds.

    Jack Hollis, group vice president and Toyota Division general manager at Toyota Motor North America, said he also is concerned about uncertainty surrounding trade, such as potential tariffs on foreign vehicles. Analysts have said news stories about tariffs may have caused some consumers to buy a vehicle sooner than planned, pulling ahead sales to 2018 from this year.

    Most forecasts for 2019 are calling for sales in the range of 16.8 million to 17 million. Jamie Albertine, senior analyst with Consumer Edge Research, is more bearish, calling for sales of 16.5 million. He said he doesn't expect a repeat of last year's fleet increase, with rental-car companies reducing inventories and commercial buyers unlikely to see a new tax benefit.

    Mr. Hollis said Toyota projects 2019 sales to be in the mid-to-upper 16 million range but isn't ruling out a fifth straight year of more than 17 million units for the industry, if auto makers have the right products to draw consumers into their dealerships.

    "We're in the exact same position we were in last year, going into this year," he said.

    Auto makers adjust

    FCA's strong year provides validation for former CEO Sergio Marchionne's move in 2016 to focus on Jeep and Ram while shying away from cars. Mr. Marchionne cited a "permanent shift" toward pickups and SUVs, saying fuel prices were not expected to "fundamentally change" as much as they had in the past.

    GM's U.S. sales fell 1.6 percent to 2.95 million in 2018, with declines across all four of its brands. GMC, Buick and Cadillac were among only eight brands that posted declining light-truck sales in 2018.

    GM began selling the new Cadillac XT4 and revived Chevrolet Blazer crossovers near the end of 2018. It's expected to reveal another Cadillac crossover, the XT6, on Sunday, Jan. 13, ahead of the Detroit auto show. And redesigns and freshenings of several crossover, pickup and SUV models are expected throughout 2019 and into 2020.

    Ford's sales declined 3.5 percent in 2018, including an 18-percent plunge in car deliveries, but it sold more than 900,000 F-series pickups for the first time since 2004.

    Ford's Ranger midsize pickup is slated to reach dealerships this month, followed this year by the redesigned Explorer and Escape and the new Lincoln Aviator.

    Toyota Motor North America sales dipped 0.3 percent on the year, with car sales off 12 percent and light-truck deliveries up 7.9 percent.

    American Honda Automobile Division's sales slid 2.2 percent, with the Honda brand off 2.8 percent but Acura rising 2.8 percent. Acura supplanted Cadillac as the fifth-largest luxury contender, beating the GM brand by 4,232 vehicles.

    Hyundai-Kia sales slipped 0.6 percent in 2018 after a 10-percent drop the previous year, and the auto maker said its light-truck mix reached an all-time high of 53 percent.

    Volkswagen Group of America sales were up 2 percent, while Nissan Group sales declined 6.2 percent.

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