We’re coming up on Labor Day 2020 and even in this pandemic, it means lots of new cars will be sold. And SUVs. But according to a recent survey, it seems more consumers will be looking for sedans than for an SUV. Wait, what? We thought the demand for sedans was so bad that GM and Ford have killed all of theirs? Meanwhile, Fiat Chrysler just keeps churning out its 15-year-old sedans without a new one in sight. So, what’s going on?
Ford no longer makes a sedan
Just last month Ford built its last sedan, a 2020 Fusion. Ford no longer makes a sedan. It says that’s because of “declining consumer demand and product profitability.” Ford CEO Jim Hackett doubled down saying, “We are committed to taking the appropriate actions to drive profitable growth and maximize the returns of our business over the long term. If appropriate returns are not on the horizon, we will shift that capital to where we can play and win.”
Now a survey from Cars.com flies in the face of a “declining consumer demand” future. It shows that while 41% of new car buyers this weekend will be looking for a sedan, only 39% are after an SUV or crossover. It also says that sedan searches on its website are up 14% in the second quarter of 2020.
Did both companies blow it?
Something has changed leaving Ford and GM flat-footed. Did both companies blow it? Maybe so, maybe not. But Ford is standing by its decision. “In 2019, SUVs outsold sedans two to one and this trend continues to grow,” a Ford spokesperson told FOX Business. “For comparison, cars were approximately 50% of all auto sales in the U.S. in 2012. This has now declined to approximately 25% of all sales.”
Beyond those numbers, Ford says it owns fully one-third of the pickup truck market with the F150. And Ford’s total share of vehicle manufacturing was up to 14.5%. Its biggest new product, the Bronco, won’t even be in production until 2021.
The Bronco “surpassed even our most optimistic initial projections”
Already, Ford says it has 165,000 pre-orders for the SUV. Hackett says that the reception to the Bronco “surpassed even our most optimistic initial projections.” As that relates to sedans he said, “When I see these products come to life, I feel better and better about our decision to reallocate capital spending from sedans to trucks and commercial vehicles and SUVs. And we have even more new products in the pipeline in areas where Ford is strong today and in these white spaces where we can earn stronger returns and grow share.”
So for now it looks like Ford made the right call. Once you kill a product you need to replace it with something else or sales drop. Ford has done that with the Mustang Mach E, Bronco, and Bronco Sport. Those are three models that didn’t exist before. None of them are in production yet, but when they are it will fill the gaps left by the Fusion, Taurus, and Fiesta sedans.