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Open Diff: What killed the American car (part two)

Published in blog.hemmings.com

2019 Ford Fusion. Photo courtesy Ford Motor Company.

It began as a trickle: In 2016, FCA killed off the slow-selling Dodge Dart and Chrysler 200, leaving the Dodge Charger and Chrysler 300 as the sole remaining sedans in its lineup. In April 2018, Ford made the surprise announcement that it was dropping cars from its lineup entirely, excluding the Mustang, killing the Fiesta, Focus, Fusion, and Taurus with one stroke of the pen. Last month, GM announced it would end production of six automobiles, namely the Buick LaCrosse, Cadillac CT6 and XTS, and Chevrolet Cruze, Impala, and Volt.

“Americans don’t want automobiles, they want crossovers, SUVs, and trucks” is the unified rallying cry of the domestic Big Three automakers. At first glance that’s an easy position to defend. Automobile sales are indeed down compared to years past, and it would be hard to make a business case for continuing production of models like the Cadillac CT6, of which just 7,270 examples were sold in the first nine months of 2018. Ditto for the Chevrolet Volt, which amassed just 10,028 buyers through September, and even the Ford Taurus, which sold just 21,718 copies in the same time period.

But why does an automaker walk away from a model that generates sales in excess of 100,000 units per year? Even after announcing that the Focus would be dropped from the U.S. market, domestic dealers still sold 100,267 examples through September, while the Fusion added another 124,964 sales to the charts. Over at GM, the Cruze sold 109,662 copies in the first nine months of 2018, hardly an insignificant number. In the case of the Cruse and Focus, both are entry-level vehicles that could be positioned to attract new buyers to the brand.

“We can’t build cars at a profit,” would be the reply of the Big Three, who’ve become accustomed to the significantly larger margins delivered by fullsize trucks and SUVs, not to mention their currently staggering sales volume. Through September, GM sold 152,242 Sierra pickups and 82,719 Terrain SUVs, while at Chevrolet, 424,403 Silverado pickups and 106,998 Traverse SUVs went out the doors. Those numbers are impressive, but pale in comparison to Ford, which sold 679,018 F-Series pickups and 171,416 Explorers in the same period, not to mention another 210,050 Escapes.

Case closed. Or is it? Consider this: Human beings, by nature, are followers, and the importance of marketing has been well-known – and well-documented – for decades. Aside from the asinine, intelligence-depleting ads run by Chevrolet (featuring “average” Americans, confusing Chevrolets for luxury imports and swooning at the accolades amassed by the Bowtie brand), when was the last time you saw an ad for a domestic sedan? Scratch that – when was the last time you saw an ad for a domestic sedan that made you want to run – not walk – to the dealer for a test drive? It’s been a while, hasn’t it?

And then there’s the current age of the domestic offerings. The Ford Taurus’s last significant redesign came in 2009, and aside from a 2013 refresh, has been on the market in its current form for a decade. The Fusion was redesigned in 2012, but Honda has updated its Accord twice in the same time frame, while Toyota has done remakes of the Camry twice since 2011. Could falling demand for domestic automobiles be due – in part – to dated designs, or features and pricing that don’t stack up to the competition?

In the early 1970s, domestic automakers lost a significant portion of market share when gas prices spiked and consumers gravitated to compact and fuel-efficient imports. Gas is cheap now, but what happens when it suddenly isn’t (again)? When pickups and fullsize SUVs become the big-block muscle cars of a new generation, sold to used car lots for pennies on the dollar, who will supply sensible and fuel-efficient sedans and hatchbacks? That’s a rhetorical question, to which the correct answer is “the companies that continue to build them.”

Here in the Northeast, Subaru sells all the Crosstreks and Outbacks it can build, yet not one domestic automaker offers a comparable product (though Buick’s virtually unknown Regal TourX wagon could be an Outback fighter, if the company knew how to position it). Could it be that demand for automobiles does exist, but simply not in the form offered by the American Big Three?

So, to bring this discussion full-circle, here are the real questions: Are domestic automakers killing off cars because consumers don’t want them, or are they killing off cars because trucks are simply more profitable? Could Corporate Average Fuel Economy (CAFE) ratings be playing a role here, since trucks are viewed differently from automobiles? What happens when gasoline again hits $4 per gallon – and stays there?