Why sedans are increasingly losing ground to SUVs

Advantages in terms of visibility, operation, and the ability to carry a lot of things make SUVs gradually replace sedans.

Automakers have had an unexpectedly successful year in the US market, as people bought more cars thanks to high demand, low fuel prices and low interest rates, the NYtimes reported. But despite record sales results, manufacturers need to continue to upgrade products and improve technology to maintain their current status.

At the end of 2015, the annual sales surpassed the record of 17.4 million vehicles in 2000. But compared to the previous record, the current market has changed, making the overall picture completely different from 15 years ago.

SUVs are gradually becoming the top choice of many Americans.

At that time, the big three Detroit automakers, GM, Ford, and DaimlerChrysler, had a combined 66 percent market share, according to Autodata. But while December sales have yet to be released, after 11 months, Detroit automakers have only had a 45 percent market share, demonstrating the rise of other automakers in the industry.

Offsetting the Detroit slump was growth from foreign automakers. Japan’s three largest automakers, Toyota, Honda and Nissan, all captured significant market shares. Other Korean rivals such as Hyundai and Kia also performed well, and even smaller players such as Subaru and BMW posted positive growth.

Industry experts say the growth of many companies in the industry is a sign of benefits for customers because they can comfortably choose cars from many companies within the same financial range.

According to Jack Nerad, senior analyst at Kelley Blue Book, the big change in market share is mainly due to the fact that American automakers cut their payrolls due to financial pressure during the crisis a few years ago. From personnel, product quantity to productivity all decreased significantly.

Honda Accord - one of the typical sedan lines.

GM and Chrysler declined to the point of bankruptcy in 2009, requiring government bailouts. Or Ford had to sell off its foreign brands such as Volvo, Jaguar and Land Rover to concentrate its finances. But the brands that were sold did not disappear, but instead thrived under new owners.

Meanwhile, GM and Ford are diversifying, now seeing China as their most promising growth market. At the same time, a leaner base in the US domestic market is gradually generating profits, improving consumer demand.

However, American automakers still rely heavily on large vehicles, such as pickup trucks. Ford makes the most money from the F-series. Although sales are up because of low fuel prices, automakers are still focusing on developing more economical models such as hybrids and electric vehicles to cope with rising fuel prices and tighter government regulations.

At dealerships, the mix of vehicles is changing. Midsize sedans used to dominate, but now crossovers, which offer the fuel economy, space of a car and versatility of an SUV, are taking over. Research firm Experian Automotive estimates that crossovers now account for 24 percent of the U.S. market, double their share a decade ago.

Small crossovers like the Honda CR-V, Ford Escape and Toyota RAV4 have surpassed their larger SUV predecessors to top the segment sales charts.

Jack Nerrad also said that companies are interested in crossovers so consumers have more choices, and they also choose this type of car because of its higher, wider view and the ability to carry more luggage.

Dana Castillo, a business owner, traded in her Cadillac sedan for a Hyundai Santa Fe. She liked the sedan, but the SUV was a better fit for her family. Her teenage son plays football, so he needed more space to accommodate all the gear he brings.

For older drivers, the extra space in a crossover is a big plus over a sedan. “I have arthritis, and this is easier for me to get in and out of than a sedan,” said Bobby Adams, a 64-year-old Michigan resident.

Manufacturers will expand their crossover lineups for 2016. GM, for example, will import the Buick Envision compact crossover from China to sell in the U.S. To meet the current trend of reducing fuel consumption, automakers are also trying to reduce the size of the vehicles they sell. Federal law in the U.S. requires that by 2025, each manufacturer must have an average fuel consumption of 4.3 liters per 100 km.

Sales have been rising since early 2015, thanks to a surge in demand after lockdowns, low fuel prices and incentives from automakers. However, Jack Nerad notes that there is no guarantee that the market won’t slow down again. The Federal Reserve could raise interest rates, which could directly impact the low-cost leasing model that automakers use to boost sales.

According to VnExpress