As An Auto Exec, Is The BEST Strategy Going Forward To Replace Poor Selling Sedans With Crossovers/SUVs?

In a word...YES.

A three-row Escape would be a good move for Ford for example.

It's in the works. It will follow the Focus closely to market in the USA.

Sorry Matt - but the answer is NO even if Crossover sales continue to expand - the BEST strategy for Manufacturers is to develop highly modifiable platforms from which they can develop lots of different vehicles - front- rear - or all wheel drive. The fewer platforms - the greater economies of scale - PLUS - the factories can adjust their production among the various vehicles that use these platforms much easier so they can address changes in demands from one of the vehicles to another on the fly.

With every manufacturer producing more and more Crossovers - they have become a commodity item - and the fact is - they are not that much different from each other. There may have been a time when competitors in a segment produced wildly different vehicles - but if you take off the Labels from cars today - most of them could have been produced by any volume manufacturer - and the public would not know it. But as a commodity item - unless STYLING is special (And none is right now) - it comes to dollars and cents - ie - who is offering more incentive to buy - right now it is Toyota - while GM has been using less incentives. This cuts into profits which is the reason why these companies exist.

In addition - it is not really the lowering of gas prices alone that has led to this - it is actually the stabilization of those prices - that allowed this. For a while gas prices often moved up and down wildly - and NOW - until production from fracking fields cuts in again - gas prices have risen about 20% this year. However - there is NO fear of loss of supply - we can replace foreign oil with domestic fracking production and be profitable at current prices - so we are not afraid that the prices will rise GREATLY - and so we can plan ahead for the prices. And since we can produce enough petroleum supplies to cover our domestic needs - we are not held in position of being held for ransom by foreign suppliers. That plus the government and prognosticators cannot any longer say that we are running out of supply - when supply is moving UP every day. When people are not worried about major supply problems and major price changes - they can buy less efficient vehicles.

Thank you for the essay @TomM, but you completely missed the point of the question.

Hitting the Jack Daniels again, are we?

The question was 100% about how to get volume.

If sedans are not selling robustly and a crossover would exceed that volume, you'd kill the sedan and build the crossover.

Sorry Matt - but YOU miss the point of the question completely- maybe its something YOU are smoking.


The purpose of the question was what a manufacturer should do to MAXIMIZE profits - not Volume. And by reducing costs and spreading economies of scale over more segments of their products - all of them are more profitable - AND THEY still have the ability to adjust to demand - easily as well. So - producing a small number of platforms that can easily be adjusted for both Sedan and Crossover use - they gain twice - through greater scale - and by being able to change production easily.

Since production runs in cycles - it is likely that eventually the sedans will sell better - BUT it is not as if they do not sell at all - they still command a huge amount of sales - and switching to Crosovers does nothing to maximize profits on the ones that do sell. But modern flexible platforms increases profit for BOTH.

And that weed is still against federal law!

Oh - Matt - the problem with the question may also be - WHY should GM or FORD want to make more Crossovers - when they make most of their money selling light trucks - by far.

It makes no sense switching from sedans to crossovers when Pick up trucks make even more money and sell in HUGE volumes as well. ANd of course -someone here will say that they cannot do that because eventually we will need small cars selling to meet MPG requirements (Either from the government OR from an economic dip).

The fact is - making ALL products more profitable - and creating flexibility to move between them easily is the best way. And by producing fewer platforms - and have more commonality of components - that is what you get.

@TomM TWO essays for the price of one trigger! And you're still missing the point. Popping popcorn now.

Gee Matt - I find it interesting that YOU do not even have basic knowledge of what a company does and why. In the past I have not have called you stupid - and I am not going to now - but clearly your expertise is NOT in corporate policy and profitability. ANd it is PROFIT that companies are in business for - NOT volume of sales. If you lose money on every sale - you can lead the world - and still go bankrupt. (Gm sold off such properties already)

Show me statistics that show that the current crossover market is heavily under supplied. If all the companies begin to oversupply the market - the prices will end up going down and being less profitable.

But then - you don't understand profit - why bother trying to explain to a person who cannot actually understand basic principles of economics -

Obviously - there must be something you put on the Popcorn that has effect you negatively!

@TomM

another essay
yet again you missed the point
it's not about under supply of crossovers
it's about volume
you build what sells and that isn't sedans
If Trabants were what would get the volume, you'd build Trabants
lay off the giggle water
have a blessed day

Sorry but YOU are still wrong. It is NOT ABOUT VOLUME - it is about making money. #1 priority is Profit - that is Economics 101 - did you ever go to school? ANyone who thinks volume is the purpose of a business NEVER went into business for themselves - that is a stupid mistake.

If you want to make a profit in the world market - you will need not only a correct MIX of vehicles for the different needs of different countries - but you want the Flexibility to adjust from one type to another easily as demand grows and then ebbs in your production cycle. ANd making platforms that allow for production of MANY different vehicles off of a small number of platforms is the way to go - and by making ALL of your vehicle more profitable - you can survive.

GM sell more vehicles in China than they do here - right now. Ford,FCA, Toyota,VW, even Mercedes and Bmw sell more vehicles outside the USA. ANd the large portion of them are CARS. SO - as long as THEY must produce cars - they cannot JUST stop doing so - and produce SUVs - that would not sell in their major market.

Now - the question remains - are FORD cars selling less in the USA because people prefer SUVs or are because FORD stupidly decided to force European designs on American Buyers (It is probably both). Their cars tend to have less room - and be the smallest in their segment. The manufacturers are still selling in the vicinity of just over 6 Million new cars in the USA in 2017. Ignore the market and your buyers will not grow up in your brand - which does mean something

Another essay
still missing the point

I am holding out for a three row mini;)

There still is strong demand for fuel efficiency, purchase value, and performance which SUVs/Crossovers fall well short on.

What will be interesting is which brands abandon the traditional car models, like FCA has. Then remaining offerings can gain sales. Honda Civic has shown it can succeed and grow volume.

All the product money has gone to SUV's for many years...enough to turn the inherently flawed design into something that works OK, even if not fun to drive.

This is the last chance to either put money back into some engaged, fun, practical, function over form designs - or concede the whole thing to the logical end game of the crossover: the self-driving box.

I'm not so sure that there can just be a Yes or No answer to the question.

There are some manufacturers that have sufficient CUVs/SUVs in their lineup, so it would just be a matter of killing off a slow selling sedan. Some manufacturers would have to drastically improve their SUVs in order to make them viable alternatives to the sedan - Lexus LX and GX come to mind as alternatives to the GS.

Then there are situations where one platform can be used to provide variations on a product to increase sales. Not dissimilar to what BMW is doing with the 3 and 4 Series where they have the sedan, wagon, GT, Gran Coupe, convertible, coupe. Separately it appears the 3 Series' sales are down, but combined, they are still fairly healthy and easily leading the segment.

Then you have brands with multiple sedans that allow for overlap as they are very similar in size and powertrains. For example the Impala and Malibu, Camry and Avalon, Altima and Maxima. If Chevy, Toyota and Nissan did what Acura did when they combined the TSX and TL to the TLX, that would make sense.

Could it be sedans are not selling due to their designs ( looks) and quality. And that sales of suvs are so high because more of those are made and the advertising is making them so appealing. I would like to see more affordable coupes and sporty cars (BRZ types. Like a nissan 200sx, mazda mx-6/Ford Probe). Im all in for (better) choices.

When the SUV market exploded in huge sales gains, some of the automakers didn't react quick enough. Lexus is just now (?) bringing the LF-1 large luxury CUV? huh? didn't they see how well the GM's Traverse/Enclave/Outlook were doing? And I'm still wondering how the Sequoia isn't doing better.

I would say current sedan designs are either bland or overkill. the average consumer is very fickle. they want upscale sporty utility content all in 1 attractive package. SUV/CUV. there's only so much that can be done for sedans - the consumer wants too much but not pay for it.

There is undoubtedly an easy target for this post: the Acura RLX. Acura should look to offer a full-size luxury SUV in place of the this sedan. The full-size luxury SUV market is going to get pretty competitive again with the coming X7 and the new Navigator taking on the GLS and Escalade.

Another easy target is the Kia K900. Kia is already working on a full size SUV based on reports, but oddly, they are also working on a K900 redesign. The car has sold less than half of what even the RLX has sold so not sure why they would want to continue with it, unless they plan on reworking it as a larger Stinger to take on the CLS and A7.

i wonder if may of their un-sold inventory simply gets used as courtesy-cars for other K900 & Genesis owners. The dealers write-off the new car expense somehow, then sells the "used" K900 & G80's as lightly used CPO units - which command top pricing. Win-win.

On the other hand, aero needs have made sedans hugely inefficient for hauling anything other than groceries (and we know back seats are better for that than trunks anyway). Modern trunks are pretty inaccessible for pretty much anything.
So, for efficiency, one's looking at least as hatches. Raise ground clearance just a few inches, and you have something easier to get into and, BTW, a crossover i.e. the sweet spot of the market.
Old time sedans and coupes are rightly dying outside the luxury market.