Monday, April 30, 2018

The American car isn’t dead yet

On April 26, 2018 Jane Genova blogged about the claimed Death of the American Car. She had seen an article by Robert Ferris at CNBC on that day titled Ford is basically giving up on US car business, and GM is not far behind. Based on superficial research Jane whined:

“It was obvious way before Ford and GM made their recent announcements about cutting back car production. Anyone could just look around the parking lots of even lower middle class apartment complexes. There would be no cars. Instead there were – and are – pickups, SUVs, and cross-overs. Yes, the American car had died. No one seemed to care.”

But if Jane had looked further she would have seen a very different picture. For example, at Bloomberg on January 16, 2018 there was an article titled The American sedan is dying. Long live the SUV which was subtitled Detroit executives are killing off their slow-selling cars in favor of SUVs. That article has a graph comparing actual and projected annual US vehicle sales for cars and trucks. In 2012 the mix was even at 50% trucks - 50% cars. In 2016 it had shifted to 60% trucks – 40% cars. In 2020 it would be 65% trucks – 35% cars. That article also said:

“American auto executives might be happy to see passenger cars go. For decades, they’ve struggled to make money selling sedans while raking in profits from SUVs and trucks.

…. Asian automakers that have come to dominate U.S. sedan segments over the last three decades aren’t going anywhere. The Toyota Camry remained the top-selling car in America last year, though it was outsold by the RAV4 crossover for the first time. Toyota recently revamped the Camry and debuted a redesigned Avalon sedan in Detroit, while Honda Motor Co. kicked off the show by accepting the North American Car of the Year award for its revamped Accord. Nissan Motor Co. is expected to roll out a refreshed Altima sedan soon.”

Another article at Automotive News on October 1, 2017 titled U.S. auto production undergoes a decade of transformation showed the percent share of North American light-vehicle production by automaker. For the first 8 months of 2017 three Japanese automakers contributed a total of 32.7% (almost a third): Toyota 11.5%, Honda 10.7%, and Nissan 10.5%. (Hyundai-Kia was 5.4% and VW Group was 3.5%). And a press release from Honda on March 6, 2018 said Honda builds its 25 millionth automobile in the U.S. (They started in Marysville, Ohio ~175 miles from Jane’s Youngstown location).

Jane continued about her childhood in Jersey City:

“….In a sense this era of The Big Vehicle returns us Baby Boomers to our youth. Back then there were no small cars. My father’s first was a boxy Buick. The whole extended family fit in. Eventually he and his fellow Italian immigrant buddies landed good enough jobs to move on up to the Cadillac. That, not the purchase of a single-family house, was their version of the American dream.”

I’m a Baby Boomer, and grew up in Pittsburgh. I do remember small cars like the Nash Rambler, which was the subject of the 1958 Beep Beep song by the Playmates. But the smallest, cheapest car was the two-seat King Midget – a microcar from Athens, Ohio featured in tiny ads in the back of Popular Mechanics magazine (and an article in the 1954 issue). Look at the March 12, 2016 article in USA Today titled Just Cool Cars: This 1954 King Midget was fit for a pauper.

Also Jane only got 2/5ths of the divisional marketing strategy cooked up for General Motors by Alfred P. Sloan back in the 1920s. An excerpt from the David Evans book Management Gurus says those divisions were (in order of increasing price): Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac. Oldsmobile was closed in 2004, and Pontiac in 2010.   

UPDATE May 1, 2018

On April 30, 2018 Jane Genova had another superficially researched blog post about how SUVs – Disaster. She noted that gas prices are ‘surging’ and referred to an AP article titled Get ready for the most expensive driving season in years which noted they had risen from $2.39 a year ago to $2.81 yesterday (although she mistakenly also said $2.81 for a year ago). Then she claimed:

“If the trend continues, Americans will find their commute to work increasingly expensive. The moment of truth could come: they will have to trade in their SUV for a, well, car. Otherwise they can’t afford to get to work, not any more. And my fuel-efficient sedan will be worth a king’s ransom. In fact, what could occur is that cars become the hot vehicle to steal.”
No, Jane, your sedan won’t be worth a king’s ransom. There were lots of other sedans sold in the U.S. in 2017 made by Toyota, Honda and Nissan. For Toyota there were 387,081 Camrys and 308,695 Corolla/Matrix. For Honda there were 322,655 Accords and 377,286 Civics. For Nissan there were 218,451 Sentras and 254,996 Altimas. Add those up and you get 1,869,164 cars. And, if you also include the 209,623 Ford Fusion and 158,385 Ford Focus you get 2,237,172 cars.  


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