It’s been well publicized for the past few years, but Americans are increasingly turning from the traditional “family car” to a larger vehicle. According to LMC Automotive, 84 percent of GM vehicles sold by 2022 in the U.S. market will be a truck or SUV, just like an estimated 90 and 97 percent from Ford and Fiat Chrysler respectively.
But a recent report from IHS Markit warns carmakers that not every group is warming to SUVs and crossovers at the same pace. IHS Markit says that, while preferences for SUVs have risen at a faster pace than they did five years ago, several factors seem to influence whether larger vehicles have strong appeal. These include:
- Age: According to the report, “During the April 2017-March 2018 time frame, the propensity to defect from sedan to SUV decreased as age increased.” IHS Markit says loyalty to sedans is almost 20 points higher in the oldest consumers than it is in the youngest. Failing to consider the buying power of older consumers could be a significant missed opportunity for carmakers, says the report.
- Income: As incomes rise, consumers are more likely to trade in a car for an SUV which suggests, according to the report, “the healthy U.S. economy itself is contributing to the flourishing SUV business.”
In the end, the report urges automakers to continue to target sedan marketing efforts to capitalize on the gaps in the SUV trend.
Another component to consider is the extent to which low gas prices have been hugely influential in the increase in SUV sales. While the past few years have been kind to consumers at the pump, it’s possible this factor may shift. The recently released 2018 Fuel Trend Report from Motus, a vehicle management platform, said that during the past seven months, fuel accounted for 25.6 percent of the total cost to own and operate a vehicle, which is the highest percentage in three years.
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