Automakers Are Learning A Painful SUV Lesson

Jul. 16, 2019 10:58 AM ET by Gabe Beita Kiser / 4 Comments

Could this be the sedan's opportunity for redemption?

The story of the auto market has lately been that of the dying sedan and the stunning popularity of the SUV. It's an account so often told that it almost seemed as if Americans had woken up from the recession to find that gas prices had plummeted and sowed the seeds that would lead to the demise of the sedan.

And now, a little more than a decade into that trend, any automaker that's not profitable and wants to become so is told to do two things: cut the sedans and coupes out of its lineup, then get started building a slew of SUVs. But that narrative conveniently overlooks one crucial reality: that people still buy sedans and coupes, just not as often as they did before.

Lincoln

It's a fact that's easy to miss given constant news about the death of one sedan or another and the revival of SUV badges that had died decades ago. And as it so happens, automakers seem to have missed the memo too, as Automotive News reports.

According to AN, the mad dash to produce as many trucks and SUVs as possible has left dealerships with too many of them in inventory. As a result, dealers are whittling down their stockpiles of passenger cars in order to keep customers supplied while they wait for car companies to resupply them. The lull in sedan creation has led inventory numbers to drop to their lowest point since November of 2011. Meanwhile, truck and SUV stores have grown as automakers seem to have swung slightly too far in the direction of building more of them to keep up with demand.

Hyundai

At the beginning of this month, there were a little more than 4,004,700 vehicles yet to be sold, which is considered a 69-day supply and was higher than the 3,992,100 units left unsold at the beginning of June. In order to more clearly see the SUV glut, it's important to look at which vehicles make up what's in inventory.

Of the more than 4 million unsold vehicles that dealerships have come into this month with, only 1,008,000 of them are passenger cars. That's around 25%, meaning the rest of the vehicles on the overflow lot are mainly trucks and SUVs. That's a tad too high, as passenger cars made up 29.4% of total vehicle sales in the US during the first two quarters of the year. Looks like Hyundai and Nissan's bet that the passenger sedan still has some life left in it is going well.

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Automakers Are Learning A Painful SUV Lesson

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Automakers Are Learning A Painful SUV Lesson

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