Get Ready to Pay a Premium for Sedans as Automakers Favor SUVs

Forget luxury cars; people are about to pay more for everyday sedans. While automotive brands shift toward electric vehicles and SUVs, the regular economy sedan is at risk. Bloomberg says these no longer represent the most popular vehicle on the market, which means the family sedan could get left in the dust.

Automakers are moving away from inexpensive sedans for pricier alternatives

The price of sedans might go up while people gravitate toward SUVs
A gas station worker fills up a sedan | Costfoto/Future Publishing via Getty Images

According to a recent Bloomberg article, the price of regular vehicles is about to increase too. Automakers are no longer interested in making fuel-efficient family sedans. Even though the market has shifted toward SUVs and larger vehicles, the surge in gas prices could change that. But that doesn’t mean that automakers will willingly go along with this change.

While most brands are moving away from gasoline-powered cars, trucks, and SUVs altogether, the family sedan is being phased out. Not entirely, but Bloomberg suggests that the focus on family-centric vehicles is behind us. With that, the supply of such cars will start to shrink. Eventually, this will lead to a surge in sedan buying on the used car market.

The supply chain issue problems have already been compounding this issue. The demand for cars, trucks, and SUVs is high, but supply is low. This has pushed prices up over the last two years already.

SUVs and trucks are more profitable for carmakers than economy sedans

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Car manufacturers have started to focus on more expensive electric trucks and SUVs since this seems to be where the consensus is heading. Vehicles like the Ford F-150 Lightning electric truck, Rivian R1S electric SUV, and any Tesla options are all the rage right now. These are also pretty expensive, with Tesla just adding another price bump to the entire lineup.

“To the extent carmakers plan on ramping up production of gasoline-powered vehicles, it’s going to be mainly high-priced trucks and SUV’s, which are more profitable than sedans, and where there’s plenty of demand after two years of subdued production.”

Bloomberg

Some brands have already started sacrificing cheaper sedan options instead of a more expensive SUV option. Many cars priced under $20,000 are no longer available as automakers have decided to stop production. At the same time, most of these same brands have vowed to be full-electric sometime in the next 10-15 years.

You might be switching to an electric vehicle sooner than you think

Modern cars are made to last, but no car will last forever. Based on how many family sedans automakers are making right now, there won’t be enough to replace all used vehicles that come to the end of the line. Bloomberg says that assuming a sedan lasts 15 years on average, how does the production of sedans now compare to 15 years ago?

According to the Federal Reserve Bank of St. Louis, the production of sedans specifically was around $5.2 million in 2007. For 2022, the number is closer to $2 million. The number of sedans on the road is down by quite a bit. Bloomberg suggests this could lead to a shortage of gasoline-powered sedans in the near future.

Trucks and SUVs have plenty to offer, but these vehicles aren’t suitable for all situations. Those looking for an affordable sedan in the future might find a severe lack of options. That is one way to push people into an electric vehicle, though.

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