Declining U.S. Market Ratchets Up Competition For SUV Sales | 6/29/2017 | Staff
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NEW YORK (Reuters) – Falling U.S. new vehicle sales through the rest of 2019 and into 2020 will bring more intense competition in the increasingly crowded market for SUVs and a continued decline in passenger car sales, executives and economists said at this week’s auto show in New York.

“There are more and more SUVs coming to market and I continue to see that market growing,” said Fred Diaz, chief executive of Japanese automaker Mitsubishi Motors Corp. “It’s hyper competitive.”

SUVs - Week - Auto - Show - Models

The new SUVs at this week’s auto show included models from Toyota Motor Corp, Ford Motor Co, Subaru Corp, Daimler AG’s Mercedes-Benz and Hyundai Motor Co.

After a long bull run, U.S. auto sales are expected to fall about 3 percent to 16.8 million units. That is still a respectable number, but the decline will increase competition for market share.

Decrease - Sales - Passenger - Cars - Percent

Much of the decrease will be driven by falling sedan sales. As recently as 2012, passenger cars made up more than 50 percent of U.S. new vehicle sales. But that number has dropped rapidly as American consumers have sought the greater comfort and space provided by larger pickup trucks and SUVs.

While those bigger vehicles are far more profitable for automakers, increased competition could lead to higher incentives in that segment that could squeeze profit margins just like with sedans over the years, industry officials said.

Executives - Auto - Interest - Rates - Cost

Executives also cited slowly climbing auto interest rates and the rising cost of new vehicles. Honda Senior Vice President Henio Arcangeli said uncertainty about the revised U.S. tax code also had an impact on sales.

In the first quarter, cars made up just over 30 percent of new vehicle sales.

Bob - Carter - Head - US

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