SUVs outsell small cars 2-to-1 in Canada – Just a detour, or the new status quo?
Conventional wisdom would suggest that in this era of rising gas prices, environmental consciousness, and a millennial-dominated customer base, small cars would dominate car sales statistics. On a global scale, that’s true: small cars continue to outsell light trucks, sport utility vehicles, and crossovers in 2018. But, if you’re like most car dealers and sales managers in North America, you’ll know that conventional wisdom is getting crushed beneath SUV tires as they roll off your lot.
If trends in SUV and light-truck sales continue their upward trajectory, vehicles like the Toyota Corolla, Honda Civic, and Volkswagen Golf will no longer rule global vehicle sales. They will be dethroned, as they have been in Canada, by vehicles like Ford F-Series light-duty pickup trucks, Toyota RAV-4s, and Ford Escape SUVs.
Dealers need to identify the right inventory mix of utility vehicles, trucks, vans, and cars for their local market. Historical trends are one indicator. However, online tools, such as CarGurus’ Market Analysis tool available to paying dealers, can also provide profound insight into in-demand vehicles in a local area.
Is it time to put compacts and sedans on the endangered species list?
Consumer preferences for larger vehicles have compelled vehicle manufacturers to discontinue many of the car models they’ve been building for years, and in a few cases, decades. Ford recently announced it was phasing out most of its car lines, except for the legendary Mustang, and a new Focus model. GM and Chrysler have dropped car lines of their own, but haven’t phased out as many nameplates as Ford.
In 2017, nearly 69% of vehicle sales were SUVs, light trucks, and vans—an increase of about 10% from 2016. Baby Boomers with empty nests are opting for crossovers and SUVs instead of sedans. Millennials are buying mid-sized to larger SUVs, as they need room for growing children and teens, and transporting materials to renovate their homes in the suburbs. These factors have combined to create significant growth in the SUV market.
Dealers should invest time in researching what consumers are buying in their area before stocking their inventory with particular body styles and models.
Larger vehicles, but with improved fuel economy
Fuel economy across SUV and truck models has improved with the advent of technology like hybrid and variable displacement engines. Manufacturers have released a broad range of crossover models like the Nissan Juke and Chevrolet Equinox. Consumers have responded by upgrading from “pocket rockets” and small sedans to SUVs and small trucks.
In Canada, the often-harsh winters are a strong motivation for drivers who need better traction, a higher ride, and better sight lines for their travels. SUVs are now available in hybrid models, or come equipped with four or six-cylinder engines, and offer far better fuel economy than the V8 gas-guzzlers which dominated early SUV model lines like the Chevy Suburban and Ford Expedition.
In large cities like Toronto, Vancouver, Calgary, and Ottawa, high occupancy vehicle lanes have been built to encourage carpool commuting. Toll highways and carpool parking spots are other popular incentives for drivers to share the driving experience with friends and coworkers. And there’s no doubt that riding to work in a spacious SUV is a much better experience than packing fellow carpoolers into a small sedan or hatchback.
Pickup trucks + more passenger room = ideal family vehicle
According to a CarGurus survey, when it comes to buying a car, Canadians prioritize function over flash, or the steak over the sizzle. Similarly, the availability of extended cab and crew cab trucks has led to increased car sales to both men and women looking for a functional, flexible family vehicle with room for sports equipment, the family dog, and the kids.
Are consumers in your dealership’s territory following the trends, and buying more SUVs and trucks, or are they opting for smaller cars? What will vehicle buyers in your area be buying in the years ahead?
Make sure you’re getting a deeper understanding of your prospects’ and customers’ needs through in-depth sales discovery conversations, and by analyzing your local market.