Why on Earth Are SUVs and Trucks Outselling Cars?

Ford sold over 70,000 F-Series pickups in March. Source: Ford Motor Co.

Here's an interesting trend: PIckup trucks and SUVs are outselling cars in the U.S.

That's been true for the last seven months, despite gas prices that seem to be permanently stuck well over $3 a gallon. 

And it's true despite the fact that automakers -- including formerly truck-heavy automakers like Ford (NYSE: F  )  -- are offering some of the best and most appealing cars they've ever built. 

What's behind that?

Does a rising economic tide make for bigger boats?
Edmunds.com's senior analyst Jessica Caldwell thinks it's a vote of confidence in the still-improving U.S. economy. Car shoppers are more comfortable spending a bit more on their rides -- both up front, and for gasoline over time.

That certainly seems like part of it. While gas prices remain high -- as of March 31, a gallon of regular unleaded cost an average of $3.579, according to U.S. government figures -- they've been high long enough that people seem to have gotten used to them. 

Not too many years ago, gas prices like we see today would have induced a national crisis. But now, people are accustomed to paying that much. And with the economy seemingly on an upswing, many consumers might be willing to pay a bit more every month to have a bigger vehicle.

Compact SUVs like Toyota's RAV4 are selling in big numbers. Source: Toyota.

There's more to this trend, though. Ford sales analyst Erich Merkle regularly points to rising sales of small SUVs and crossovers -- in contrast to falling sales of compact cars. Older, empty-nest couples are opting for compact SUVs like the Toyota (NYSE: TM  ) RAV4 and Ford Escape in surprisingly large numbers, analysts say. 

Why? The upright configuration of a compact SUV can make it easier for older people who may have mobility issues to get in and out, for one thing. And SUVs, like the station wagons that were popular a generation ago, have more room than compact cars, whether for extra passengers or extra stuff, while still getting decent fuel economy.

So, who benefits from this trend?
Automakers with strong SUV lineups, for starters.

Chrysler's Jeep brand posted a 47% sales increase in March. Jeep's gains were helped by a new model, the Cherokee, as well as by Chrysler's generous incentives offerings -- but it's still significant.

Chrysler also posted strong pickup sales, as did Ford. Toyota's RAV4 had its best-ever first-quarter sales total, the company said, and Toyota's Highlander and 4Runner SUVs were up 14% and 53%, respectively, in March.

Given that trucks and SUVs tend to be more profitable than small cars, automakers who excel in these segments could see boosts to their bottom lines. Jeep's Grand Cherokee (up 26% in March) is one of the company's most profitable products, as is Ford's F-Series pickup (which broke 70,000 monthly sales in March for only the fourth time in seven years).

One caveat for the automakers
In the bad old days of Detroit, strong SUV and pickup sales led American automakers to skimp on investments in cars. When gas prices rose suddenly and buyers started turning toward more fuel-efficient options, Detroit was caught unprepared -- and Toyota and the other import brands reaped the benefits.

That's unlikely to happen now. Ford's emphasis on a unified global model lineup means that it should always have good small cars to sell -- because that's what sells best in many other countries. 

But for a company like Chrysler and its parent Fiat (NASDAQOTH: FIATY  ) , which is stretching to upgrade its cars while relying on profits from Chrysler's trucks and SUVs in the U.S., there's a risk that it could be caught out if the market suddenly turns.

What do you think? Will your next "car" be a truck or an SUV? Why? Scroll down to leave a comment and let me know.

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  • Report this Comment On April 02, 2014, at 10:50 AM, pondee619 wrote:

    "Why on Earth Are SUVs and Trucks Outselling Cars?" Because gas prices are not yet high enough.

    Want more proof, check I-95 in Conneticuit each morning and afternoon rush. While on the road, look to the south and you will wee a perfectly good rail line running into the heart of NYC. Why do people drive instead of taking the train? Gas prices are not yet high enough to force people off the road.

    See also, the traffic on the George Washington Bridge (hey Fat Boy, a.k.a. Gov. Christie) the Lincoln and Holland Tunnels. Bus lines, train lines and the PATH system all available to take people into NYC. Why are cars clogging these roads? Gas prices are still too cheap and not forcing people to take mass transit. Even where there are alternatives to driving, people will spend on gas, pollute the air and complain about traffic. Gas prices are still too low.

    This is why people are still buying trucks and SUVs to drive to work.

  • Report this Comment On April 02, 2014, at 11:32 AM, JimNKate wrote:

    Actually, Pondee, I disagree strongly. You have a very narrow, provincial, middle-class NY City viewpoint. Only a small fraction of Americans can effectively use choices like your cited commuter rail, though I sure wish more of us could.

    Your dreamed-of higher gas prices will only hurt those who can afford them least-- ordinary workers all across the country who rely on their old beater cars to get to an inconvenient workplace, and hopefully get the kids to baseball practice and the dentist. These people aren't buying $35-50K pickups and SUVs new, they're lucky to keep an older car on the road.

    The new-car buyer in the story is like most other well-off Americans, who have lots of resources to choose more space in their homes and cars, use more fuel and pollute the upper atmosphere with lavish vacations by air, etc. I'm not crying poverty here, I'll be OK, but this article points to the financial stratification that's happening all over our economy. And it's only going to get worse.

    Suburban New York City is NOT a microcosm of the nation or the world. Anyplace where people can afford to pay $1M for a tiny apartment is not a normal place. And commuters having to leave Manhattan to commute to where you can buy a house for half that aren't typical, and those well-heeled Connecticut suburbanites on the Gold Coast aren't even relatable. Get out of that monstrous city sometime and see how the country lives, and your trite and arrogant solutions may just melt away.

  • Report this Comment On April 02, 2014, at 11:37 AM, JimNKate wrote:

    One more thing: notice that those commuters are NOT all headed straight-line from a train station in Connecticut to a skyscraper in lower Manhattan. Most of them will be hopping off, and maybe back on, several times in a day. And that's in one of the most densely-populated metro areas in the world (thanks but no thanks-- I like to see things grow). Subtract from your calculus everyone dropping off kids to a daycare, workers who have to drive during the day for their work, those not living or working near a train station, teachers, students, etc. and your "proof" melts away.

  • Report this Comment On April 02, 2014, at 12:00 PM, TMFMarlowe wrote:

    I think both of you have a point. Pondee is saying that there's an easy commuter-rail option in his area that appears to be underutilized. JimNKate is saying that many areas in America don't have such options. No reason both can't be true.

    For what it's worth, in metrowest Boston where I live, the thing that keeps the commuter rail from being used by more folks is that parking is constrained at many of the suburban stations. It's not that the trains are full, it's that the parking lots are -- if you're not there by 6:45 or 7 or whatever, you've *got* to drive to work.

    John Rosevear

  • Report this Comment On April 02, 2014, at 12:22 PM, miteycasey wrote:

    "Why on Earth Are SUVs and Trucks Outselling Cars?" Because gas prices are not yet high enough.

    I disagree with this.

    It's because trucks and SUV's are getting 20-25MPG. Basically the same as the 10yo car they are trading-in.

  • Report this Comment On April 02, 2014, at 12:28 PM, miteycasey wrote:

    up to 22 city / 30 highway

    2014 Jeep Grand Cherokee, MPG

    16 City\18 Combined\22 Highway 2014 F150

    up to 20 city / 27 highway

    2004 Ford Taurus, MPG

    21 cty/ 31 highway

    2004 Honda Accord

    So the 2014 Jeep Grand Cherokee does better than the 2004 Ford Tauras and as good as the 2004 Honda Accord.

  • Report this Comment On April 02, 2014, at 12:48 PM, damilkman wrote:

    People want their car to do more. You can't fit a cubit meter of dirt in a car or move a couch much less pack the tent and sleeping bags for a vacation. Some of us who live on dirt roads that wash out appreciate the big tires. Lastly some are realizing that trucks and SUV's are safer. The higher clearance means being behind a truck is not a death sentence. The safest place for a child seat is the back seat of a pickup. Pickups are built to last as they are often a working vehicle. Lastly it is easier to get in and out. When I had a bad back spasm I could still get in my pickup. Utter agony trying to get in a car.

  • Report this Comment On April 02, 2014, at 12:52 PM, WhiteHatBobby wrote:

    Sadly, real SUV's are being replaced by the jacked up cars. The jacked-up cars are not designed to last as a real SUV is. And the fact a pickup and a pickup-based SUV (harder to find) are equally durable because of their job design. A ladder frame that has durability is easily better than the monocoques for fuel economy. Why do you think communities using the Chevrolet Tahoe are finding the police trucks are much better in resale value when sold at the auction following the EOL cycle in police use/

  • Report this Comment On April 02, 2014, at 2:03 PM, TMFMarlowe wrote:

    @miteycasey:

    2014 Ford Escape: 22/31

    2014 Ford Focus: 26/36

    But Ford folks seem to think they might be losing Focus sales to the Escape. It's true that today's SUVs and crossovers get way better mileage than the old ones -- and comparable mileage to some older cars -- but it's not the whole story, or even most of the story.

    John Rosevear

  • Report this Comment On April 02, 2014, at 2:28 PM, roguesisland wrote:

    I just went from a small SUV (2003 Jeep Liberty) that avg. 19 mpg for 11.5 years that was 90% highway miles (>245,000) to a [drumroll] 2014 Ford Focus hatchback and am happy to say I am seeing >37 mpg. (3 days all highway)

    I researched the new Cherokee [and the Escape] but I just couldn't get past the mileage on either. I expect[ed] that after almost twelve years that the mpg would have doubled. :-[. Where are the diesel hybrids in these SUV's?... seriously, I would have purchased one without a thought.

    I made the best choice for me. ;-]

  • Report this Comment On April 02, 2014, at 3:05 PM, dafusom wrote:

    Jeep is doing a good job staying ahead of the competition.

    I love my Jeep Wrangler. A smooth drive, cheap to fill up (thanks to GasBuddy), and never requires maintenance/repairs. In addition, it was recently named the cheapest car to insure. I’ve been driving a Jeep Wrangler for 5 years now and routinely change my insurance carriers to keep my rates low (to avoid rate increases). I’m usually able to get rates around the $25 to $30 a month range (I use 4AutoInsuranceQuote). The Wrangler is more than twice as cheap as my husband’s Escalade to insure. Could not be happier with it.

  • Report this Comment On April 02, 2014, at 3:40 PM, pondee619 wrote:

    Gee Jim,

    Can you make a point without being insulting? ("monstrous city", "trite and arrogant solutions")

    Should the price of gas go up, making it less affordable to communte by private auto, demand for mass transit would provide mass transit, said demand would provide for more parking (for driving to the train/bus). It is still the ease and low cost of personal autos preventing this from happening. The cost is still not to the point where we will give up our personal vehicles for mass transit, EVEN WHERE it exists NOW into and out of NYC, from all directions. The LIE is jammed running parallel to the LIRR. The GWB, Lincoln and Holland Tunnels are jammed each day while competing with NJ Transit and the PATH systems, I -95 in Conn is stop and go for hours while paralleling Merto North. All roads clogged with vehicles going to the same destination as mass transit. Mass transit shunned for the convenience of cheap personal transporation.

    " And commuters having to leave Manhattan to commute to where you can buy a house for half that aren't typical" If people leaving the city to find more affordable housing in the suburbs "aren't typical", who are crowding the roads into and out of the cities each day?

    Getting the same mileage for a truck that your got for your ten year old car doesn't cut it today when newer cars are getting better gas mileage than the trucks Americans seem to love. WE MUST DO BETTER. My drive commute is 3 miles. (Perhaps I should bike it, but I'm getting old) Where I park there are lots of SUVs and Pickups that have never hauled a "cubic meter of dirt" and don't live on dirt roads, etc. Wasted miles per gallon sacrificed to want. not need.

    If you have to drive because Mass Transit is not available, you have to drive. My point being that even if there is a good/very good Mass Transit system in place, people still drive, complain about the drive, clog the roads while driving and pollute the air. All un-necessarily. My thought was that the cost of driving is not yet high enough to cause/force people to take the option that already exists NOW. People aren't giving up their drive at today's cost. Maybe they won't until the gas pumps go dry permamently. Perhaps if the costs to drive were higher, people would take the viable alternative, currently available. Or maybe we are all just pigs and will continue to be pigs until everything is gone. I hope not.

    "Why on Earth Are SUVs and Trucks Outselling Cars?" BECAUSE PEOPLE WANT SUVs AND TRUCKS CAN AFFORD THEM! There is no other reason. Unless there are Fools that differ.

    John, your question, my answer.

  • Report this Comment On April 02, 2014, at 6:29 PM, ccbarry wrote:

    Vehicles meet the functional requirements of their owners. Trucks and SUVs provide owners with great flexibility to meet varying needs -- transporting 5-8 people or cargo. I for one have a load of grand kids at times or landscaping materials or the occasional big screen TV. In Spring and then again in Fall I tow a boat. I also have many relatives and friends who ask to borrow the truck for an errand. Like most households we also more than one vehicle, so we also have a have a traditional car. Buyers act to meet their requirements, which is as it should be. AWD and 4x4 vehicles prove their worth/ safety in the snowbelt where I happen to live.

  • Report this Comment On April 02, 2014, at 6:50 PM, EvereadyDrLove wrote:

    I didn't realize that it was up to car companies, oil companies, the government, et. al. to conspire to raise gas prices in order to "force" consumers to do anything. People buy SUVs and pickups because they are more useful and comfortable than smaller cars. You can carry bigger items and more than just dirt. Not to mention towing things. Whether people actually use these capabilities is irrelevant, what they purchase is the option to do so. Again I don't see where it's anyone's business to force consumers to fully utilize the capabilities of their vehicles. "BECAUSE PEOPLE WANT SUVs AND TRUCKS CAN AFFORD THEM!" Exactly. And there's nothing wrong with that.

  • Report this Comment On April 02, 2014, at 6:56 PM, miteycasey wrote:

    But Ford folks seem to think they might be losing Focus sales to the Escape. It's true that today's SUVs and crossovers get way better mileage than the old ones -- and comparable mileage to some older cars -- but it's not the whole story, or even most of the story.

    John Rosevear

    Then what is the F'n story TMFMarlowe???

    You asked a question "Why on Earth are SUV's and Trucks outselling Cars"? I gave you an answer.

    People can get a larger car with the same on going costs than what they currently have.

    Would you rather pay $300k for a 1500sq/ft house or a 3000sq/ft house in the same neighborhood?

    People are buying the 'more luxurious' car when the ongoing costs are going to be comparable to what they currently own. People are stepping up from their starter home into adult homes.

    This is also this as to why people are buying the escape to the focus.

    https://autos.yahoo.com/news/study--women-most-attracted-to-...

    75% of women prefer men who drive Pickups, SUVs, or sports cars, not Ford Focus.

    Also if you can afford a $30K-$40K car the 3-4MGP isn't going to make a difference. You are going to purchase the 'slicker' car.

    If you want to know why the Escape is outselling the Focus, or SUV is outselling the cars, this is an answer.

    I personally will never drive a car, that's not a sports car, ever again after driving a 10yo Jeep Grand Cherokee for the last 5 years. The cargo it can carry, the room it provides for my kids, and the smoothness of the ride is way better than most cars.

  • Report this Comment On April 02, 2014, at 11:32 PM, singaporenick wrote:

    The problem is that fuel for cars is so cheap in the USA,probably the cheapest of any developed country in the world.

    The Gvt should tax gas much higher,bring it into line with prices in Europe,and encourage people to move away from gas guzzlers.

  • Report this Comment On April 03, 2014, at 11:13 AM, miteycasey wrote:

    And that's part of the problem...gas guzzlers don't exist any more...OKAY there are some, but 90% of the new cars on the road get above 20MPG as shown in this thread.

    People need to get it out of their mind that 'gas guzzlers' are still an issue. Engine technology has changed to the point where sports cars are getting 20MPG. The 2014 Corvette gets 17/29.

    Why is gasoline so cheap in the USA??? Supply and demand. The USA is one of the largest producers of oil in the world so of course the oil is going to be cheap. And government shouldn't tax more. They have their hand in everyone's pocket enough.

  • Report this Comment On April 03, 2014, at 2:26 PM, catoismymotor wrote:

    In my opinion sedans suck. Why? They are lower to the ground and harder to get out of as one reaches and exceeds middle age. And that age group is exactly who is buying the SUVs! SUVs also give superior road visibility. Most come with an AWD option that makes winters like we've had more manageable. They are also way more useful for a family than a sedan. Have you ever tried to bring home a clothes washer/dryer, refrigerator, dishwasher, enough material to build a fence in the back of a Carolla? Of course not! It can't be done. And it is still less costly to take the family on a road trip than to fly them somewhere and rent a car upon arrival. People need a multi-tasker. Sedans are one trick ponies.

  • Report this Comment On July 17, 2014, at 9:46 PM, JackDaniels1 wrote:

    A sedan can't fit a sleeping bag or a tent? Are you kidding? My Malibu fit 4 adults (2 over 6'0) in comfort with all camping/hiking gear for a 3 day trip to the Adirondacks. And with good tires, AWD is pointless.. Also cars come with AWD too, so that's not even valid anymore. The BOOMERS like to be gluttonous pigs hoarding all the money and keeping housing way overpriced, and they like to see above everyone in their road pig while blocking everyone else's view.. That's the real issue. Another issue is the CAFE regulations.. they are more strict on cars than they are on "light trucks", which lead to the demise of the large station wagon. Jack up an Accord 2 inches, and call it a "crosstour", and you have a "light truck" which is subject to MUCH lower fuel economy requirements.. It's stupid.. the rules designed to REDUCE fuel consumption actually made it worse. You couldn't pay me enough to drive a high centering elephant shaped kid hauler. But seriously, most midsize cars have as much or more interior space than midsize SUVs, and get at least 25% better fuel economy.. And if you can't fit your stuff in a 16 cubic foot trunk, then you have too much shet. If you need more room, get a wagon, not a stupid CUV/SUV.

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