Demand for bigger vehicles spell bigger profits for carmakers

3 May 2017   Transportation, USA

Revenues and profits at carmakers have been boosted by a shift towards larger vehicles as low fuel prices and a flurry of new products convince motorists to ditch traditional saloon cars for sport utility vehicles. A barrage of results from some of the world’s biggest auto groups has confirmed that the trend towards SUVs is showing no signs of stopping. All-but one of the European or US carmakers that reported first-quarter trading figures last week noted a rise in “mix”, an industry term used to describe the type of vehicles being sold. Higher mix equates to larger vehicles, particularly SUVs. The demand for SUVs raises questions over the future of saloon vehicles, which are known as sedans in the US and much of the rest of the world. “There is a longstanding trend showing how the sedan body-type is slowly disappearing from the European roads,” said Felipe Munoz, global automotive analyst at JATO Dynamics. Ford booked an additional $428m of profit from rising “mix” in North America and Europe in its first-quarter results last week. Just over one in five vehicles sold by Ford in Europe, a market historically dominated by smaller cars and saloons, were SUVs, the company said.

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