Auto Sales: Bigger is Better

For most of 2018, U.S. auto sales have been flat or slightly down from a year ago.  Rising interest rates are partially to blame, but a more noticeable factor is emerging---the swift decline in passenger sedans. Overall auto sales fell by about one percent in November compared with a year earlier, according to Edmunds.com.  However, another report says sales of compact and midsize cars were down 15-18 percent last month.  "People are transitioning to SUVs," says KTRH Car Pro Jerry Reynolds.  "This is a trend we've seen now for 2-3 years, and the automakers are jumping all over it."

Indeed, in response to surging demand for SUVs, pickups and crossovers, major car companies are increasing production of those vehicles and dropping smaller models.  This year, Ford has announced an end to production on the Fusion, Fiesta and Taurus, while General Motors is scrapping sales of the Chevy Cruze and Impala, among others. 

Despite the lukewarm overall auto sales in 2018 so far, Reynolds believes the industry is healthy--just in a transition phase.  "People are still buying, they're just buying something different....they're buying trucks and SUVs," he tells KTRH.  "With the fuel efficiency of SUVs today versus just five years ago, people are seeing that SUVs have a lot of advantages, and so they're making that transition."

The shift toward trucks and SUVs also means a buyer's market for traditional cars.  "For people who aren't going to make that leap to SUVs, there are some bargains out there right now on compacts and midsize sedans, because the incentives are huge," says Reynolds.

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