SUVs, crossovers drive 2014 vehicle sales

Michael Wayland
The Detroit News

America rekindled its love affair with sport utility vehicles in 2014.

As gas prices dropped and automakers rolled out a slew of new and significantly redesigned SUVs, more than a million American buyers bypassed fuel-efficient hybrids and small cars in favor of larger, more capable SUVs.

Sale of SUVs in 2014 exceeded prerecession levels; when final 2014 figures are announced Monday, they should show SUV sales surpassed 1.5 million for the first time since 2007, when automakers sold 2.2 million. Sport utility sales, according to AutoData Corp., were up 64 percent from their low of fewer than 1 million in 2009; and they were up 7.6 percent compared to November 2013.

"All signs are really pointing to shoppers coming back to the market," said Jeremy Acevedo, Edmunds.com pricing analyst. "It's the entry-level SUVs in the regular segment and luxury that have seen tremendous growth."

Growth has been driven by lower gas prices, consumer confidence and new or substantially redesigned vehicles, including six new 2015 SUVs from General Motors Co.: the GMC Yukon and Yukon XL; Chevrolet Tahoe and Suburban; and Cadillac Escalade and Escalade ESV.

Ford Motor Co. also rolled out its updated 2015 Lincoln Navigator in 2014 and the Dearborn-based automaker recently unveiled its 2016 Ford Explorer that's due on dealer lots in 2015. Last year also marked the first full year of sales for Fiat Chrysler Automobiles' 2014 Dodge Durango and Jeep Cherokee SUVs. The Cherokee helped lead Jeep to a 44 percent boost in sales through November compared to 2013.

The resurrection of SUVs comes as the entire utility vehicle segment — which includes crossover utility vehicles — has grown significantly. May 2014 marked the first time that retail registrations of SUVs and crossovers surpassed sedans in the U.S., according to an analysis of vehicle retail registrations by IHS Automotive.

Utility vehicle sales for 2014, including crossovers, are expected to have topped 5 million for the first time. Through November, sales were nearly 4.9 million — already topping the previous high of 4.8 million in 2013.

Increased utility vehicle sales, while not necessarily a win for environmentalists and the government's upcoming fuel economy regulations, mean higher profits for automakers.

And the biggest winners are traditionally the Detroit automakers, which account for about 45 percent of all SUVs and crossovers sold in the U.S., according to auto research and analysis firms AutoTrader.com and Kelley Blue Book.

"For the Detroit Three, it's everything," said Michelle Krebs, AutoTrader.com senior analyst. "We are seeing very strong pricing on trucks and sport utilities. They generate the biggest chunk of the Detroit automakers' profits."

The Detroit automakers do particularly well on larger SUVs that yield a higher profit margin.

Edmunds.com reports the average transaction price for a large, mainstream SUV is $52,497 — $20,000 higher than a large sedan. That gap significantly widens when entering the luxury SUV market, which starts at $43,757 for entry-level and more than $82,900 for premium models such as a Cadillac Escalade.

In December, SUV sales were expected to continue strong, as gas prices lingered at $2 a gallon, down $1.34 from a year ago.

"It's just the icing on the cake," Krebs said of low gas prices. "It started with the small crossovers, and as the economy got better, new products came out and gas prices dropped, it expanded to the large utilities."

SUVs and crossovers represented 32.5 percent of the 15 million vehicles sold through November. That percentage is expected to continue, if not grow, in 2015 — albeit at a slower rate, as the overall growth of the automotive market slows down.

"These are still going to be the leaders in terms of growth next year," said Alec Gutierrez, Kelley Blue Book senior analyst.

Industry analysts speculate U.S. vehicle sales could increase a few percentage points this year to about 17 million, up 3 percent, or 500,000, from 2014's expectations of 16.5 million — marking the slowest growth since the industry started driving out of a 21.2 percent plunge in 2009.

Helping drive the growth of utility vehicles in 2014 were smaller models, such as the Honda CR-V, Ford Escape, GMC Terrain, Subaru Forester and Buick Encore. They, according to analysts, are expected to again be the largest growth segment for the overall U.S. auto industry in 2015.

"Those compact SUVs are coming on so strong," Acevedo said. "It's been fantastic. It has really rekindled Americans' love affair for utility vehicles."

Utility vehicles are expected to be in the spotlight of the 2015 North American International Auto Show at Cobo Center in Detroit this month. Appearing for the first time in Detroit, following debuts at the Los Angeles Auto Show in November, are utilities such as the 2016 Fiat 500X, 2016 Honda HR-V, 2016 Mazda CX-3 and 2016 Ford Explorer.