Despite the wails of a President who seems unable to grasp the intricacies of international business beyond slapping a name on a tower, the American sedan has been on life support for some time. As The Economist points out:
“A big factor behind that gap is collapsing consumer demand for saloon cars, long a mainstay of the big car firms. Six years ago, annual sales of pickup trucks and sport-utility vehicles were roughly 7.5m in America, equivalent to sales of saloons. Now Americans buy over 12m pickups and SUVs each year, more than twice the sales of saloons. The plants that gm is winding down make the Buick LaCrosse, the Chevrolet Cruze and other saloons. Once buzzing with three shifts, these plants have been running just one shift of late.”
Demands to keep those plants open are equivalent to asking corporations to ignore change in favor of propping up the past, almost as if they should be providing some sort of job welfare scheme, not unlike attempts to shore up “beautiful, clean coal” when the world has moved on.
And moving on was a big part of this decision. GM needs to invest in electric and automated technologies. Volkswagen made a claim recently that its next generation of internal combustion engines will be its last, the future is in electrics. Certainly that will not be popular for the President either, as it does not rely on the venerable fossil fuel industry, but then the future can be a very frightening place.
And it isn’t like President Trump hasn’t had a hand in pushing GM to its breaking point. Both GM and Ford have estimated the impact on profits of Trump’s tariffs, particularly on steel and aluminum, at over $1B.
Still, the American auto industry does not lie blameless here. Just a few short years ago, it was caught flatfoot relying on SUVs and trucks when the bottom dropped out, requiring federal bailouts and the “cash for clunkers” program. Let’s hope the industry has gotten better at retooling, or we could see a repeat of auto executives with their hands out.
And let’s be clear about this here. Though outsold by its RAV4 crossover for the first time, the Toyota Camry is still the top selling car in America. The Avalon is not going anywhere. The Honda Accord remains a car of the year. Nissan’s refreshing the Altima. The Koreans and Germans aren’t giving up on sedans either.
What this stinks of, is giving up. Unrealistic sales expectations coupled with the inability to create a better mousetrap. Unable to compete in the sedan world, the U.S. auto industry is retreating to the SUV and truck market. Well, it has to do a better job there, too, because the imports are making inroads. They’ve got a ton of SUVs to rival the best the “Big Three” have to offer, and Tundras, Tacomas, Ridgelines, Frontiers and Titans, as well.
Meanwhile, for those of us who would rather “buy American,” but need rear doors, and don’t want an SUV or a truck, U.S. makers have said “sayonara” — our options are dwindling.
Make your next moves wisely, U.S. automakers, your very existence is on the line. No one is too big, or to important, to fail. Just ask Sears.