America’s shift to SUVs seems to be here to stay
America’s shift from cars to SUVs is starting to look permanent, and automakers are scrambling to meet the demand.
Toyota, Ford, Subaru, Jeep and Volkswagen are all showing new SUVs at this week’s Los Angeles Auto Show. Even traditional luxury car makers like Jaguar and Alfa Romeo are debuting SUVs at the show, which opens to the public today.
Last week, General Motors reacted to the softening market for compact cars, including the locally made Chevrolet Cruze, by moving to eliminate the third shift at two plants. As a result, more than 1,200 jobs are expected to be cut at the General Motors Assembly Plant in Lordstown. The Detroit automaker said the hourly workers will be laid off effective Jan. 23, while 43 salaried employees will have the option to transfer to other facilities. More than 4,500 people work at the local plant that has made the Chevrolet Cruze exclusively since 2010.
GM said the move is necessary to more effectively match supply with demand as customers shift from wanting smaller cars to bigger vehicles.
The company also plans to cut the third shift at its Lansing Grand River Assembly Plant in Michigan, impacting 810 hourly and 29 salaried workers, effective Jan. 16. That plant employs 2,700 and makes the Cadillac ATS and CTS and Chevrolet Camaro.
Americans bought more SUVs than four-door cars for the first time last year, and the momentum is growing, according to registration data from IHS Markit. In the first nine months of this year, SUVs made up 39.5 percent of new-vehicle registrations; cars stood at 32 percent.
Unlike the previous SUV boom in the early 2000s — which fell victim to rising gas prices — this one is likely to stay. That’s because automakers are offering more small SUVs with better fuel economy. The country’s top-selling sedan, the Toyota Camry, gets 28 miles per gallon in combined city and highway driving. The top-selling small SUV, the Honda CR-V, gets 29 mpg.
“There’s no reason to not buy an SUV,” says Rebecca Lindland, a senior analyst with Kelley Blue Book. “I can’t imagine a lot of scenarios where this trend is going to change.”
Lordstown started making the Cruze in 2010, two years after the top-selling small car was launched. GM invested $250 million to retool Lordstown to manufacture the next-generation Cruze that went into production at the local plant in February.
GM reported that its top sellers in October were the Chevy Silverado 1500 and Chevy Equinox, with 49,768 and 19,664 deliveries, respectively, compared to 17,126 Cruzes.
As of Oct. 31, the Cruze had sold 155,138 units year-to-date, compared with 475,324 Silverados and 193,400 units of the Equinox.