Leave it to Mark LaNeve, one of the industry’s straighter shooters, to highlight a dirty little secret associated with continually tanking car sales.
“By and large it’s a very favorable phenomenon,” Ford Motor Co.’s vice president of U.S. marketing, sales and service said Monday. Why? Because it means the Blue Oval and just about every other automaker sells more trucks and SUVs, fattening both the top and bottom lines.
Oh, the horror! Cue the hand-wringing from the environmental legion convinced this unmistakable, years-long trend away from traditional car segments is a harbinger of a return to the 1960s — all because American consumers refuse to cooperate and buy the kind of metal the smart set thinks they should.
“It’s industry-wide,” LaNeve says. “You could argue it’s structural because we’ve seen it for six years. Would I like to see all three segments up — cars, utilities and trucks? Sure. But if I had to pick, utilities and trucks are very positive in terms of our economics. If you think about it, that means revenue is up.”
Exactly. The automakers paid their post-bailout penance building the likes of extended-range electrics like the Chevrolet Volt and the Ford C-Max — small cars Obama’s Washington and its environmental allies wanted them to build. But comparatively few customers have cooperated, and the automakers now are reaping their own rewards.
General Motors Co. sold more Chevrolet Camaros last month (7,052, according to Autodata Corp.) than the extended-range Volt and electric Bolt combined (3,110). Ford peddled more Mustangs (9,120) than it did Fusion and C-Max hybrids (8,200). And sales of Toyota Motor Corp.’s segment trailblazer, the Prius hybrid, are off nearly 17 percent through the first quarter.
The hottest vehicles, month in and month out, are profit-rich pickups and SUVs of all sizes. And even as the industry is showing unmistakable signs of plateauing sales — albeit at a historically high level north of a 17 million-unit annual rate — the trend is expected to continue.
Credit gas prices closer to $2 a gallon than $4, thanks in part to booming U.S. energy production. Credit expanding lineups of smaller SUVs and crossovers, which give customers the flexibility of SUVs in more fuel-efficient packages. Credit still-competitive interest rates, which make the higher average transaction prices of trucks and SUVs easier for customers to carry.
Cynical outsiders undoubtedly see in these trends a return of the bad ol’ days, an unmistakable reversion to the historical mean. You know, the one that eschews safety and environmental controls, campaigns against federal fuel-economy rules, catalytic converters, even seat belts.
That industry doesn’t really exist anymore. Not in Detroit, and not in Tokyo or Stuttgart, among others. With the notable exception of Volkswagen AG and its “Dieselgate” scandal, the companies that two generations ago spent a lot of political capital lobbying against common-sense regulation are led by a different kind of CEO.
They generally understand the market necessity to being cleaner, greener and safer, no matter what’s hot in the marketplace. They know fielding clean and safe vehicles are the price of entry, that the competition with Silicon Valley over mobility services and self-driving cars is likely to transform the century-old industry.
They get that market growth is more likely to be had in places like China, where bureaucrats have have far more power than their American counterparts to steer their prodigious market to an electrified, zero-emissions future.
And if Big Auto wants to play in China, or in the European Union, they have to play the electric and self-driving game even as they field competitive sets of pickups and SUVs for the still-lucrative U.S. market. In the global marketplace, one size does not fit all.
“Customers are still interested in purchasing vehicles that are friendly to the environment,” LaNeve says, referring to hybrids and electric vehicles. “I hope there’ll be more demand. We’ll see. It still runs a very small percentage of the industry, and a lot of growth has to occur over the next 10 years.”
This is not an either/or proposition. It’s both. Meantime, expect the industry to keep cranking out trucks and SUVs of all sizes because that’s where the money is — and no one can afford to place bets on the future without making money.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.