Americans Are Flocking Back To SUVs

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Chris White Tech Reporter
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Sales for sports utility vehicles and light trucks have seen a dramatic increase as fuel prices tumble toward historic lows.

SUVs, pickups and vans sales climbed to 59 percent of U.S. auto sales in 2016 from 55 percent a year earlier, Bloomberg reported Thursday. Much of the gain in sales comes from highly profitable SUVs, and the shift shows no sign of slowing down.

“We don’t know what the ceiling for SUVs is,” Dietmar Exler, who runs Mercedes-Benz sales operations, said Tuesday. “Is it 60 percent? 65? We don’t know.”

Analysts said the trend bodes well for those producing SUVs, namely because the retention rates for vehicles like Toyota RAV 4s are so high.

Nearly 72 percent of people who bought an SUV decided, in the end, to stick with that vehicle class, senior analyst Jeremy Acevedo told reporters. SUV brand loyalty outperforms that of cars by 62 percent and very close to pick-up loyalty at 74 percent.

Bob Carter, who heads Toyota’s U.S. sales division, predicted in 2015 that the RAV4 would soon outperform the Toyota Camry sometime soon. Camry leads the RAV4 by a mere 40,000 sales; the SUV was outsold by Camry last year by more than 100,000.

“We saw this coming, but our crystal ball is not perfect,” Carter said. “The trend that we saw coming is there, but the acceleration of the trend is much faster than even we expected.”

The newfound love for the SUV market spells bad things for electric vehicle-makers like Tesla Motors and Toyota. Low fuel prices had a substantial impact on the electric vehicle sales during the past few years.

Consumers bought a mere 102,600 EVs in 2015, a 17 percent decrease from the previous year. The numbers are particularly bad for companies that entered the EV fad early — Nissan’s all-electric Leaf and Chevrolet’s Volt, for instance, sold 43 percent and 18 percent fewer vehicles, respectively, researcher Autodata reported in January.

Tesla, meanwhile, managed to meet its delivery mark in the third quarter of 2016, marking the first time in two years the California-based electric vehicle automaker managed such a mundane feat.

The company’s success, however, was marred by allegations it used trickery and a hall of mirrors to meet the mark.

“We found Tesla has been employing a deeper discounting formula to drive sales of inventory models, with all offers expiring this Friday, the last day of the quarter,” analyst Brad Erickson of Pacific Crest Securities wrote in a research note in September.

Erickson said he “detected aggressive Model S discounting at U.S. sales centers to maximize third-quarter deliveries.” Company deliveries for the third quarter will be about 22,000, or 90 percent higher than at the same time last year, he said.

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