Used Car Lots In Detroit – Buyers can be lucky next year because the flood of new and lightweight SUVs creates deals on the most popular vehicles in America. The year 2019 could be a very profitable year for SUVs because of incentives for new models to go up and off-lease, the final model used by SUVs hit the market in unprecedented numbers. Smaller SUVs such as Ford Escape, Hyundai Santa Fe, Toyota RAV4, and Chevrolet Equinox must have very high supply
“This will be a very crowded market,” said IHS Markit senior analyst Stephanie Brinley. IHS projects sales of US SUVs will continue to grow from 7.4 million in 2015 to 10 million by 2025. That growth – and the fact that traditional car sales fall in line with the rise of SUVs – explains why almost every car manufacturer diverts its investment and development focus from cars.
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Fiat Chrysler has really left the compact and medium car segment. Ford is in the process of switching from traditional cars such as Focus, Fusion and Taurus to higher SUV types.
IHS predicts the number of SUV models sold in the US will increase from 116 in 2017 to 190 in 2025.
Don’t blame this only for U.S. trends. IHS said Chinese SUV sales will increase from 7 million in 2015 to 15 million by 2025.
That is a recipe for fierce competition, and a challenge for car makers, because train gravitas is slowing down for vehicles that have been profitable for years because supply struggles to catch up with demand.
This ratio will turn around in 2019, according to Zo Rahim, research manager at Cox Automotive.
That will be the first year when the number of SUVs out of a three-year lease exceeds passenger cars. Many of these vehicles will have similar looks and features to the new ʻ19 model, setting the stage for intense competition.
“There is an off-lease tsunami and is used, like new SUVs that are returning to the market in 2019 and ’20,” Rahim said.
“This is an SUV war because car makers are fighting with their own vehicles and all new models come in the next two or three years. The market will be far more competitive.
“This is good for consumers. Incentives tend to increase, and the supply of good used vehicles will increase. ”
Not the end of the explosion
This is not the end of the SUV boom. There is still a lot of money coming from SUVs, but car manufacturers have to work harder to sell them, Brinley said. This can cost $ 100 million just to teach new signboard customers there, the first baby step towards selling vehicles.
“The market will be more crowded and competitive,” Brinley said. “An SUV gives you more space and utility. People are willing to pay more for it, but how much they are willing to pay will shrink because the number of available SUVs increases. ”
Industry insiders say the average price for an SUV in the United States is around $ 8,000 more than a comparable sedan. That estimate includes everything from subcompact SUVs to $ 100,000-plus vehicles such as the Cadillac Escalade and Lincoln Navigator, so the extra margin on smaller smaller market SUVs is much smaller.
Car makers must improve their game design and technique to carve a niche in this crowded market.
“The compact and subcompact SUV segment is very competitive,” said Erich Merkle, US sales analyst at Ford. “Every car maker wants to have two or three entries there.”
That will lead to experimentation, because carmakers try new ideas to win business. The Nissan Kicks is an example. It looks vaguely like an SUV, but doesn’t offer all-wheel drive or some other common features to maintain its basic price of under $ 18,000.
Others are the upcoming Bronco, a small, off-road oriented SUV that will try to change the familiar name and off-road capabilities to be a place on the buyer’s shopping list. This will go on sale in 2020, when the competition will be frenzied.
Model requires identity
Over the past few years, new SUVs can rely on healthy sales. That will change when showrooms and parking lots are full of SUVs of every brand imaginable.
A new vehicle will have an advantage, but being new won’t be enough. Cars have to learn how to give SUV special characteristics like their cars first.
That would be easy for brands like Jeep and Land Rover, which have a history of off-road capabilities and military services. Other brands and new nameplates without inheritance will have tighter time.
Nonetheless, the SUV market will remain too big and too rich to be ignored by car makers.
Demographics will play a role. Merkle predicts baby boomers will want the height of the SUV and ease of entry as they grow older. Empty Nesters will keep the market for small SUVs humming.
At the same time, a larger millennium cohort of the population is approaching the first years of raising children.
“They are starting to see a three-line SUV to carry the family,” Merkle said. “In the next 5-10 years, millions of people will move to the market for such vehicles.
“We haven’t seen the peak sales or profitability for that vehicle. There is more growth that can be obtained. “
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