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Dealer Strategist Advises On Stocking Sedan Models

10K views 88 replies 35 participants last post by  ChrisNJ 
#1 ·
Wards Auto
October 2, 2019

Sitting on too much of the wrong inventory is becoming increasingly costly. The National Automobile Dealers Assn. reports new-vehicle holding expenses are the fastest growing item on dealers’ financial statements – up 142% in 2019 vs. 2018. This is driven by the fact that new-car inventories are up compared with last year, while retail sales are beginning to slide.

What’s unique about this year’s sell-down season is that there are an unusually high number of model year ’18 vehicles still collecting dust on dealers’ lots, while a lower percentage of ’20 vehicles have come through.

“This is probably the biggest carry-over problem we’ve seen in the last several years,” said Mike Maroone, a former president of AutoNation Inc., who owns dealerships in Colorado and Florida. “It has been very painful.”

What’s the best way to handle this situation if you’re a dealer representing a brand with an overabundance of current and prior model year vehicles?

Be bullish on trucks and SUVs, skittish on sedans. Consumer demand continues to shift away from cars. I recently noticed a Hyundai dealer with a 555 days’ supply of 2019 Sonatas and 196 days’ supply of Elantras. Both metrics on those cars are well above the overall market average.

This is trouble for two reasons: 1. Only three of every 10 new vehicle customers are looking for a sedan 2. Sedan customers are more likely to have a sedan as a trade, and your used-car manager would certainly prefer more CUVs.








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#2 ·
Be bullish on trucks and SUVs, skittish on sedans.
No news here...but the countdown to the end of the sedan is gaining strength. If dealers are told to ease up on stocking sedans, it will only raise the consumer transfer to the more popular CUV/SUV/Truck units...

GM's just released 3Q19 sales validate the thinking. It's amazing that the new XT6 outsold the ATS, CTS, CT6 and the XTS...COMBINED.

Or how about this sales report from VW...

Passat sedan sales, September 2018: 3,295
Passat sedan sales, September 2019: 314
Percentage Change: <90.47%>









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#3 ·
No news here...but the countdown to the end of the sedan is gaining strength. If dealers are told to ease up on stocking sedans, it will only raise the consumer transfer to the more popular CUV/SUV/Truck units...

GM's just released 3Q19 sales validate the thinking. It's amazing that the new XT6 outsold the ATS, CTS, CT6 and the XTS...COMBINED.


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It's not really amazing here in Florida. We live in a senior community and the vast majority of vehicles are small to medium SUV's. In the world outside our community, add trucks.
 
#8 · (Edited)
Anyone remotely interested in the industry has seen this coming.

What the sedan sales also dont tell you, are the level of incentives that are being used to move stock. Car makers are buying sales with lots of money on the hood. The market for sedans has absolutely collapsed. If I had sedans I would shift them to premium or performance. The only way that sedans may remain somewhat relevant is if more EV versions come online. As it stands there is no way I would sink a few billion on developing a next generation internal combustion mainstream sedan.
 
#11 ·
GM overestimated the love for SUV's. Chevy dealer by me still has 320 Equinoxes in stock (2019) but only 1 cruze and 3 Impalas. The sedan is not dead yet. While the Cruze may have a great deal of competition from Civic, Corolla, Sentra and Kia/Hyundai models, I don't see much competition in the large sedan market. Impala and LaCrosse should be kept around.
 
#12 ·
Impala and LaCrosse should be kept around.
There are plenty of pre-owned Impala and LaCrosse for anyone who wants one. Good bargains too - thanks to steep depreciation, these two models should be quite appealing to prospective customers who want a lot of "bang for the buck".
 
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#13 ·
GM doesn't have to worry about the sedans, they just gave the market to Honda, Toyota, Kia, Hyundai.
My kids are both looking at the new Corolla hatchback. One of them was considering the Cruze, but after seeing the new Corolla, there is no going back.
There are plenty of Civics, Corolla's and Sonatas around here.
This CUV this is another phase, it will pass like all the other ones.
 
#14 ·
IMO, sedans decline is due to them getting way too small for life, so of course it makes sense a somewhat bigger SUV on the same chassis will sell better.
For me, the older school big sedan is my favorite. Currently drive a 300S V8 RWD and it is my favorite of all time. I just noticed the Charger had some amazing increase in sales numbers for late spring, early summer. Maybe because of the exit of many?
What I don't understand is the local FCA dealer has all SUV's lined up to oblivion, and maybe 2-3 Chargers and 1 300 on the lot at any given time. So the average guy goes in to get a car, and probably leaves with a Grand Cherokee.
 
#53 ·
#17 · (Edited)
Crossovers can be anything, they can even look like sedans with the right profile...but not enough people want anything that looks like a sedan today. This really is a permanent evolution of the automobile to maximize efficiency, flexibility, utility, and style. I think people forget that the midsize sedan essentially turned into a boring commodity appliance, but now that it's going away they romanticize it. I'm old enough to have seen this cycle happen over and over again. The wagon is the biggest example of a romanticized dead segment that was once ridiculed like a minivan. Essentially it's been replaced by demonstrably more capable and varied crossover options. People are just stuck on nostalgia and want to rationalize something that isn't rational.

Sedans could remain as a niche, but the mainstream volume customers will always look for the best value and utility while others will look for style, luxury, performance, etc... Crossovers can still fill those segments too if people want. But the days of a 3-box profile are long behind us now. There is no turning back. I think we will eventually see crossovers with a more coupe-like sedan profile as people get bored by the 2-box SUV proportions, but right now people are still trying to get away from the the traditional car form factor.
 
#27 ·
This is mostly a California item. Florida is $2.30 to 2.45, even cheaper up the Atlantic seaboard to Virginia and over the panhandle through the gulf states to Texas. Cheaper winter gas is in the tanks now and will offset any Saudi anxiety for the rest of the year.

Plus my small crossover gets over 30 mpg combined, so the only mileage disadvantage is highway mileage compared to a small sedan like the Cruze.
 
#19 ·
I predicted the demise of the sedan way back in 2003 in my book "Horsepower War: Our Way of Life."

The real reason sedans are dying is that they suffer more stringent regulation. For examle, 'light trucks' never needed to add impact absorbing bumpers in the 70's like cars.

But the main regulatory leap is for CAFE regulations which still reward massive size with lower fuel economy requirements.

Government 'picking winners' has much more to do with this shift. You can offer 'more car' in the light truck form.
 
#30 · (Edited)
The ute trend got rolling with the MY 91 Explorer. It really gathered steam after the recession.
My uber-trendy cousin switched from Accords to the '91 Explorer and eventually to the Pious line, which she still drives. What's IN has a lot to do with a lot. People want to fit in, be liked, conform. Trendy. Yes we can.

“Five percent of the people think;
ten percent of the people think they think;
and the other eighty-five percent would rather die than think.”

― Thomas A. Edison


I for one find this fascination by the public with CUVs appalling.
Try to find a better way to spend your mental dollars.

Trucks are not crossovers. Crossovers and sedans are regulated the same way.

Everybody looking for any other reasons except the the real one, customer preferences.
Yup. This trend has been rolling for a while. Part of it is "trendiness" and once that ball gets rolling, it's rolling. People buy what they want or think they want.

Yep, disgusting. But people are back at a pre war outlook on automobiles. Practicality, more interior space, durability, safety, just like a 1940 Chevrolet Special Deluxe. Longer, lower, faster, sleeker just like how I like my sedans, isnt in anymore.:(
And what makes it worse is that I feel,none of them are any better than the sedans that are being killed off by them.

My mother's new Kona doesn't feel any more roomy or "practical" (God I hate that word)to use than my 92X Aero. Yeah it may sit a little higher (The Kona) to make it easier for old rickety butts to get in and out of,however other than that I don't see a real improvement over a sedan,hatch back, or wagon.

CUV's are in my eyes are sissy-mobiles (HR-V and Pathfinder I'm looking at you two). Then again ease of ingress and egress is probably is what all it takes these days cause it sure ain't there in looks for a lot of these CUVs.
How you feel is not fact-driven data.

Find interior space data for those two vehicles and that will answer your question.

Sissy-mobiles? :rolleyes: Great point of argument. :lmao:
 
#21 · (Edited)
Trucks are not crossovers. Crossovers and sedans are regulated the same way.
While trucks are not crossovers, crossovers can be classified as light trucks in the U.S.

The Bureau of Economic Analysis classifies ALL crossovers as light trucks. NHTSA, which is responsible for CAFE, classifies some crossovers as passenger cars and others as light trucks. Certain models can fall into both classifications, depending on equipment. For example, Honda CR-V with 2WD is considered a passenger car, while CR-V with AWD is a light truck.

Criteria used by NHTSA and EPA to classify a vehicle as a light truck:

(a) An automobile designed to perform at least one of the following functions:

(1) Transport more than 10 persons;

(2) Provide temporary living quarters;

(3) Transport property on an open bed;

(4) Provide, as sold to the first retail purchaser, greater cargo-carrying than passenger-carrying volume, such as in a cargo van; if a vehicle is sold with a second-row seat, its cargo-carrying volume is determined with that seat installed, regardless of whether the manufacturer has described that seat as optional; or

(5) Permit expanded use of the automobile for cargo-carrying purposes or other nonpassenger-carrying purposes through:

(i) For non-passenger automobiles manufactured prior to model year 2012, the removal of seats by means installed for that purpose by the automobile's manufacturer or with simple tools, such as screwdrivers and wrenches, so as to create a flat, floor level, surface extending from the forwardmost point of installation of those seats to the rear of the automobile's interior; or

(ii) For non-passenger automobiles manufactured in model year 2008 and beyond, for vehicles equipped with at least 3 rows of designated seating positions as standard equipment, permit expanded use of the automobile for cargo-carrying purposes or other nonpassenger-carrying purposes through the removal or stowing of foldable or pivoting seats so as to create a flat, leveled cargo surface extending from the forwardmost point of installation of those seats to the rear of the automobile's interior.

(b) An automobile capable of off-highway operation, as indicated by the fact that it:

(1)(i) Has 4-wheel drive; or

(ii) Is rated at more than 6,000 pounds gross vehicle weight; and

(2) Has at least four of the following characteristics calculated when the automobile is at curb weight, on a level surface, with the front wheels parallel to the automobile's longitudinal centerline, and the tires inflated to the manufacturer's recommended pressure—

(i) Approach angle of not less than 28 degrees.

(ii) Breakover angle of not less than 14 degrees.

(iii) Departure angle of not less than 20 degrees.

(iv) Running clearance of not less than 20 centimeters.

(v) Front and rear axle clearances of not less than 18 centimeters each.
 
#29 ·
It's not so much that the trunk of modern sedans is so small, it's the mail slot opening they give you due to the aerodynamic sloping back glass. A five door vehicle solves the problem and that is why a lot of people want crossovers.
 
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#32 ·
SUVs and CUVs have tremendous value compared to sedans, it's as simple as that. The modern four door sedan will become obsolete when SUVs/CUVs hit the showrooms with well developed, cost effective hybrid, possibly EV, powertrains. The new Rav4 hybrid is definitive proof that the sedan architecture is ancient technology, excluding luxury segments because it's fashion not value and economy.
 
#45 ·
I disagree with you, and I hope you're wrong.
For me, once the big sedans went away in the 90's, I went with trucks, as a lot did. Mostly to get big, V8, RWD.
To me, anything FWD is just a dressed up minivan. I don't even like AWD, but RWD based AWD is still better than FWD based AWD, to me.
I now find myself very happy indeed driving the 300 V8 RWD. I am also happy to see some manuf. going to RWD based vehicles (Ford Explorer). My whole family drives RWD based vehicles, 4 of them V8's.
There is something about enjoying the drive to me, and I do.
I had a theory a couple years ago, that after a lot of manuf. started dropping sedans, that if FCA kept the triplets going (contract to 2021), they would see an uptick in sales, and so far it looks to be happening, even with an old design. The latest figures I can get showed the Charger had some of best few months in the past 5 years.
Long live the V8 RWD sedan. My favorite.
 
#39 ·
My two local Chevrolet dealerships have 603 new Chevrolets in stock. A total of 46 of those are cars. 557 (92+%) are trucks/SUVs/CUVs. One of the dealerships is 97% "non-cars". That one has 1 frickin' new 'Malibu on the whole lot. One!

121 of the 603 total are new Equinoxes while only 10 are new Malibus! There are total of 255 new Silverado 1500s to be had in my mini-metro area.

It is nuts IMO. The Asians will get all the car sales.
 
#44 · (Edited)
I really don't care what other people drive, not even Prii fans. With the exception of the now defunct New Beetle. I always hated it for some reason. They took Uncle Adolf's original brilliant idea (his only one, it seems) and modernized, watered down, and sissified it. Yes, I said SISSIFIED it! What REAL MAN (such as myself) would drive a car that's accessorized with eyelashes on the headlights and a flower vase on the dash? That's what I thought.

Anyway, I'm through venting now. Which brings up another sore point that I won't get into. Much. I firmly believe the steam engine automobile was victimized by a collaboration of Dinosaur Juice and Electrical advocates way back in ought whatever. Sorta like poor old Preston Tucker's visionary vehicle.
 
#46 ·
Fuel economy will always dictate a necessity for sedans. As it was pointed out a few posts ago regardless of the advances in fuel efficiency made, sedans will always be substantially more efficient due to aerodynamics. What I really dont get is that there's a body type that offers the best of both worlds....the station wagon, but for some odd reason Americans just dont like em.

I would've definitely bought this if available...



 
#58 · (Edited)
I would've definitely bought this if available...
The Gen 1 Mazda 6 wagon was available here. No one bought it, so no 2nd chance.
Wagons are like manuals... people say they want one but don't pull the trigger.

I owned both manual and wagon versions of the Ford Mondeo.
This manual:



And this wagon:



Both of them were excellent cars.
 
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#47 ·


I picked up this 2007 Outback for less then $4,000 in this condition, I love wagons and hate this SUV/CUV craze and can't wait for it to end. I remember the last time this happened suddenly they were discounting trucks and SUVs for as much as $15,000 to try and sell them when the market shifted last time.
 
#48 ·
View attachment 41917

I picked up this 2007 Outback for less then $4,000 in this condition, I love wagons and hate this SUV/CUV craze and can't wait for it to end. I remember the last time this happened suddenly they were discounting trucks and SUVs for as much as $15,000 to try and sell them when the market shifted last time.
I don't hate SUVs/CUVs but it is clear the marketing of these vehicles has worked very well. For a country that shunned hatchbacks at every turn? Now most are convinced a tall hatchback is the greatest thing going.
 
#49 ·
Part of the issue is that consumers have now been conditioned to just accept what is "new" without thinking it through of if this really makes sense. It is an appeal to novelty fallacy in which people do tend to come to the conclusion that something that is new is inevitable and as a result just accept it. Almost to the point of calling people who don't jump on right away a Luddite, DCT is a perfect example as some high end European performance cars have switched away from using a DCT however how many people view DCT as inevitable for high performance vehicles?. Another example of this is the view that every car is going to shift to a small turbocharged and directly injected engine. A huge part because they think that things like turbochargers are new and direct injection is new, certainly the way they are marketed that is given off. Also when a market leader (actual or perceived) does something everyone just expects everyone else to follow.

For example I like how Mazda was bucking the trend and came out with their skyactiv-G engines which were NA and used really high compression ratios to get the job done. They are releasing their skyactiv-X engine which is a rare case of innovation in the automotive industry today (there is just a lack of that lately).
 
#50 · (Edited)
A wagon cost the same as a Crossover while offering less utility. You have to convince people a wagon looks and drives better than a Crossover. Even the only surviving wagons from Subaru are jacked up to look like utilities with standard AWD. Subaru is also a very special case since it's something of an American cultural phenomenon, it's a little like Jeep. Hard to replicate because you miss the point if you try.

Wagons will return as a form of low-slung Crossover, but the wagonized-sedan is gone for good since the sedans are gone. Remember that's all a wagon ever was, a converted sedan, essentially a primitive Crossover. It's going to take awhile before we see more sedan-like profiles out of Crossovers since the market is still transitioning and sedans are the undesirable bargain bin products. Once sedans are mostly gone, Crossovers will evolve to fill their space. You also have to keep electrification in mind which is changing the architecture of a vehicle so it's hard to relate the future to the products we have today. Change is constant, but we aren't going back to anything, just moving onto the next thing.
 
#55 ·
The Subaru Outback was always sold as a all tarrian station wagon, this wasn't just something that was done recently. None of your post makes any sense what so ever, SUVs are not a new thing and wagons are not just a primitive crossover..... though this isn't the dumbest thing I have ever read on these forums. Everyone knows who that goes to.
 
#60 ·
So I'm curious...what does a "Dealer Strategist" typically pull in annually? Because I think I could do that job.
 
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#68 · (Edited)
I think the answer will be more like sleek five door hatchbacks
with slightly raised ride height and some plastic wheel arches

...but that plan would only work with other utilities once the
automaker's existing car fleet goes away, they're "near cars"
and they can't sell them and sell regular cars at the same time.
 
#79 ·
road & track has an article in this months "magazine" about the VW Golf sportwagon compared to the tiguan that is based on the Golf
and why the sportwagon is DOA
different look but makes sense
WE the car driver is NOT the manufacturer's "customer" the DEALER is and they BUY what is easy to sell and Dealers ORDER dull coloured SUVS because they are easy to sell then they PUSH the manufacturer to offer discounts on the easy to sell / well stocked models and voila a "feedback loop" and the stickshift sedan / hatch is history

the article also points out with discounts the Tiguan is CHEAPER to buy then the GOLF same for the Volvo estate VS XC90 SUV and AUDI Avant is 1/3 MORE per month then the SUV equivalent
 
#81 ·
I don't know if it is regulations or designers, or both, but modern sedans have very little utility. Remember when sedans used to fit 6 adults? Now people who need utility are forced to buy crossovers. Road conditions have also worsened, potholes never seem to be fixed and where I live roads get flooded often, so ground clearance have become a necessity.
 
#82 ·
I had a 6-passenger 2004 Impala. Since the mandatory coolness of a floor shift/console has changed design, no more 6-passenger sedans. Personally I'd take a column shifter over a pretend-stick-shift any day but cool is cool and trendy is trendy.

Have the potholes gotten worse since The Occupation started?
 
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