The family car is in free fall - Mercedes Benz SLK Forum

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#1 Old 09-05-2016
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The family car is in free fall

Segment plunges 27% in August

Free fall
Midsize car sales have declined faster as the year goes on
Quarter YOY change
1st -3.40%
2nd -12%
3rd -22%
Source: Automotive News Data Center

The family sedan is dying, and the usual cure-all prescription -- cash on the hood -- isn't working.

In one of the U.S. auto industry's best years ever, with sales through August 0.5 percent ahead of last year's record pace, demand for midsize cars is at a five-year low.

The segment is fading faster with each passing month. Midsize car sales fell 3.4 percent in the first quarter, 13 percent in the second quarter and 21 percent so far in the third, compared with last year.

In August alone, sales of the Nissan Altima, Ford Fusion, Hyundai Sonata and Kia Optima all plunged more than 30 percent. Chrysler 200 sales fell by two thirds. Across all 16 midsize nameplates, the declines averaged 27 percent, a loss of more than 60,000 units.

Meanwhile, sales of compact and smaller cars fell just 3.6 percent last month, in line with the industry's overall decline of 3.5 percent, showing that the market's shift away from sedans isn't across the board. Some high-volume small cars, including the Chevrolet Cruze and Honda Civic, posted gains in August.

"That larger sedan buyer just sees more value in the SUVs or CUVs," said Mike DeSilva, co-owner of Liberty Hyundai in Mahwah, N.J. "That's just where the activity is. And heading into the end of summer and going into winter, we're really going to get into SUV season."

Midsize cars have been the industry's powerhouse segment for decades, even through the SUV boom of the 1990s and early 2000s. In each of the past four years, sales have topped 2.4 million.

But for 2016, compact crossovers are poised to take over as No. 1 for the first time, as midsize cars likely will fall to fourth. Since June, midsize cars have been less popular than full-size pickups and compact cars, too.

That's in spite of increasing discounts on midsize cars. Incentives last month on the top eight midsize nameplates were 7 percent, or $252, higher than in August 2015 and 11 percent above the industry average, according to Autodata.

"It doesn't matter how deep you discount the leisure suit and bell-bottoms -- nobody's going to buy them if they're not fashionable," said Eric Lyman, vice president of industry insights at TrueCar. "I don't think they're ever going to go away, but there's a lot more people who don't consider them anymore."

Last December, Bob Carter, Toyota's head of U.S. operations, predicted that the Camry, America's No. 1 car for 14 consecutive years, would be outsold by the company's own RAV4 within five years. The fizzling of the midsize car segment could make that happen much sooner.

In August, the Camry trailed the RAV4 for the first time, according to the Automotive News Data Center. The Camry fell short of the Honda CR-V and Nissan Rogue as well.

Aside from midsize cars, sales of everything else rose 0.4 percent last month. Analysts and automakers are divided on whether the year will end up ahead of 2015, when 17.47 million vehicles were sold. Last year included the strongest fourth quarter ever, so matching that will be a challenge.

The industry's seasonally adjusted, annualized selling rate fell to 16.97 million last month, from 17.86 million in July and 17.79 million a year ago. Still, sales have topped 1.5 million in each of the past six months, the longest such streak on record.

General Motors' chief economist, Mustafa Mohatarem, said healthy economic indicators "point toward a strong second half of the year and another potential record year for the industry." But Ford Motor Co. said sales have already reached a plateau, signaling that a second consecutive annual record might be slightly out of reach.

"We have a pretty high level of sales," said Bryan Bezold, Ford's senior U.S. economist. "It's just we're no longer in a period where we have a lot of pent-up demand coming out of the financial crisis."
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