The Twilight of the Sedans

…and Four More Automotive Observations

2018 US automotive sales data reveals significant trends and changes in the American market:

Crossovers are King, Sedans are Dead

The rise of crossovers isn’t news — and 2018 sales data suggests that these vehicles are here to stay.

Excluding the best-selling American trucks, the three most popular vehicles in 2018 were all crossovers: the Toyota RAV4, the Nissan Rogue, and the Honda CR-V. Ten years ago, the three most popular vehicles that weren’t trucks were all sedans: the Toyota Camry, the Toyota Corolla, and the Honda Accord. Times have changed.

Best-sellers in 2018
Best-sellers in 2009

Take a look at the change in sales figures for these six vehicles. While sales of the three sedans have remained stable, more or less, the three crossovers have had one hell of a run. For example, the Rogue has more than quadrupled its sales in the past ten years.

It’s important to note that these crossovers aren’t the giant body-on-frame gas-guzzling SUVs that were popular a decade ago. Today’s crossovers share more characteristics with tall cars (e.g., unibody frames, low ground clearance, smaller engines) than with trucks. If we group sales by EPA size classification, we see that small SUVs have dominated the last decade, almost tripling their sales, from 2.1 million in 2009 to 6.0 million in 2018.

Meanwhile, all cars, no matter their size, have suffered. Even though the overall U.S. market has grown by 68% in the past ten years, compact car sales have only grown by 18% — and compacts have performed best. Sales of mini-compact cars decreased by -13%, sales of subcompacts decreased by -29%, and sales of large cars decreased by -33%.

Finally, the number of crossovers sold by brands typically associated with sedans and sports cars illustrates the supremacy of crossovers. Although the Porsche 911, BMW M3, and Jaguar F-Type are all icons of their respective brands, these brands sell far more crossovers than their icons.

If engineers can hold the line on fuel efficiency and gas prices remain stable, I see few why reasons why this trend toward crossovers would change. In fact, it’s not even fair to call it a “trend” any longer. Crossovers, or, tall cars with offroad pretentions, are here to stay.

A Few Models Deliver Most Sales for Many Brands

Another remarkable fact about the American automotive market: for most brands, one or two models deliver the majority of sales.

Take Mazda. Though perhaps best known for the iconic MX-5 Miata, over 50% of Mazda’s sales come from the CX-5 crossover. The Miata, meanwhile, makes up 3% of Mazda’s total sales.

Many brands show the same dramatic split between one or two top-selling models and all the rest. Check out this graphic of the share of sales by model for luxury brands. Note, too, how crossovers dominate the product mix; only BMW, Infiniti, and Mercedes have cars among their top-sellers.

As sales slow down and if the private car market shrinks, car companies will have to face tough decisions about their model portfolios. Are low-volume models sustainable? Or will more and more manufacturers consolidate their products and focus on volume sales of best-selling models to eke out profitability?

American Brands Own Trucks

Ford made headlines in 2018 for their “bold” decision to drop sedans and coupes — except for the Mustang — from their North American lineup. It’s more accurate to say that Ford simply admitted to a truth that’s dawning on GM and that’s long been acknowledged by FCA: American brands don’t sell many sedans.

Ford leads the pack in truck sales with the venerable F-150, FCA moves more than its fair share of SUVs and vans, and it appears GM got religion on crossovers well before the other two American automakers. For all three, sedans and coupes account for less than 20% of their total sales.

In dramatic contrast, all other non-US brands sell many more sedans. At 45%, their share of sedan sales is nearly triple that of their American counterparts — in fact, non-US brands sold more cars (4.0m) than US brands sold crossovers (2.5m). Surprisingly, non-US brands also sell more crossovers than US brands. Meanwhile, nearly all the trucks, vans, and SUVs sold in the US wear an American badge.

The right model mix for automakers has shifted in the past ten years. Will US brands win by emphasizing their strengths in trucks and SUVs — and can those strengths translate to smaller, more efficient vehicles, if the market demands them? Are non-US brands behind the curve with their strong emphasis on car sales, or will their strengths in producing crossovers win the day? Time will tell.

Tesla Did Better than You Might Think

Tesla had more than its fair share of disasters last year — disasters that make the sales success of the Tesla Model 3 all the more remarkable. Granted, Model 3 build quality may be questionable and there’s no sign of the $35,000 base model, but when you give some context to the Model 3’s sales performance, you can’t help but be impressed.

The Tesla Model 3 was the best-selling luxury car in America in 2018. Full stop. By a mile. No disclaimers. The Model 3 beat the BMW 3-Series, the Mercedes C-Class, and the Lexus ES, growing from 1,770 sales in 2017 to 139,782 sales in 2018. Not bad.

It gets better. The Model 3 beat all luxury crossovers, too. Lexus RX? Audi Q5? Mercedes GLC? Take a seat.

Together with sales of the Model X and the Model S, Tesla moved a little more than 190,000 vehicles in 2018, just 30,000 vehicles shy of Audi’s tally and more metal than Acura, Cadillac, Volvo, or Porsche could muster. Year-on-year, Tesla increased its sales by 282% in 2018 — no other brand or manufacturer came close to that kind of growth.

2019 may be a rocky year for Tesla. The company opened the year with layoffs for 7% of its workforce and it faces impressive competitive products from Audi and Porsche, among others. Even if Tesla fails in the long-term, there’s no denying that Tesla has demonstrated, beyond a doubt, that electric cars are a real and viable product. The company has fundamentally transformed the automotive industry, and that’s amazing.

80 miles of range in 1998, 310 miles of range in 2018. Progress.

Strong Brands Had a Great Year

Some brands have grown every year for the past five years: Lamborghini, Land Rover, Mitsubishi, Subaru, RAM, and Porsche. Three others grew four of the last five years: Jeep, Volvo, and Jaguar. All these brands have something in common (except Mitsubishi: sorry, Mitsubishi) — they all have great design and strong, meaningful brands.

Meaningful: the spirit of the brand, what the brand stands for, is simple, clear, and attractive to buyers. Lamborghini: loud and outrageous hypercars. Land Rover: luxurious and capable British off-roading. Subaru: outdoorsy, dependable, and always four-wheel drive. RAM: trucks and proud of it. Porsche: timeless German performance and luxury. Jeep: outdoorsy and capable all-terrain vehicles. Volvo: industry-leading safety and understated Scandinavian luxury. Jaguar: romantic and modern British vehicles.

Strong: every model expresses these values, consistently, and they have for some time. All of the above brands meet this measure and buyers have rewarded them.

Meanwhile, sales for three brands decreased for four of the past five years: Dodge, Chrysler, and, notably, Cadillac. Cadillac has tried in earnest and in vain to establish a coherent, meaningful message for buyers over the past decade. Cadillac, home of enormous, ostentatious, prehistoric luxury SUVs. Cadillac, home of too-little-too-late crossovers. Cadillac, home of sedans that buyers don’t want even when well-made, well-designed, and festooned with oodles of performance equipment. It’s a muddled message, even if some of the product is quite convincing on its own.

Growth in today’s automotive market requires a strong, meaningful brand; there’s no other path forward. Growth in tomorrow’s market will likely depend even more on strong brands , especially when other options, like micromobility and car-sharing services, fulfill day-to-day transportation needs for users and private cars become pleasure cars for recreation and fun.

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Cities, mobility, and product leadership in New York City