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The Agurban

#714 – What Kind of Vehicle Do Your Drive?

Nov 27, 2018


What Kind of Vehicle Do You Drive?

More and more of us are driving trucks, SUVs and crossovers. That simple fact is taking its toll on automobile manufacturing as General Motors announced yesterday that it would be shuttering five factories by the end of next year, four in the United States and one in Canada. The cost-cutting measure, which includes laying off 15-percent of its salaried staff and more than 6,300 hourly and salaried workers at its plants, for a total of 14,000 employees, is part of a long-term strategy “to strengthen its core business, capitalize on the future of personal mobility and drive significant cost-efficiencies.”

The closures will increase capacity utilization in the plants that remain and emphasize crossovers, SUVs and light trucks over sedans. The company will also double resources allocated to its electric and autonomous vehicle programs over the next two years.

According to an April 2018 CNBC article, by 2022, it is estimated that 84 percent of the vehicles General Motors sells in the U.S. market will be some kind of truck or SUV; Ford’s ratio of domestic SUV and truck sales will hit 90 percent; and Fiat Chrysler’s will hit 97 percent. Sedans are predicted to consist mostly of sports cars or niche vehicles favored by enthusiasts.

High gasoline prices during the recession in 2008 spurred investment is U.S. oil exploration, which effectively doubled the oil output in the decade since. The U.S. is producing the most oil it has since the 1970s. With more stable gasoline prices, consumers are more comfortable reconsidering the importance of fuel efficiency when buying vehicles.

But even if gas prices rise, U.S. consumers may never turn back to cars. Truck and SUV fuel efficiency is improving, and design and quality innovations are making them more competitive than cars.

Sources:
IndustryWeek-GM to Close 4 U.S. Plants, 1 in Canada

CNBC-The steadily disappearing American car