SUVs Are Bumper-to-Bumper on Dealer Lots, With More on the Way
Sport-utility vehicles became big hits with Americans looking for roomier rides, prompting auto makers to roll out a range of models of different sizes and price points. Now, some dealers and analysts say car companies may have gone too far, and expect an overcrowded market to lead to deflated prices.
Sales of crossovers and SUVs are slowing, while models are sitting longer on dealership lots before being sold and companies are resorting to more sales promotions to keep inventory from piling up, analysts say and industry data shows. And yet, auto makers are getting ready to roll out even more sport-utility offerings in the next few years, further packing U.S. showrooms.
For customers, this could be a boon, resulting in a wider selection of vehicles and better deals. But, analysts say, it is also likely to dent profits for auto makers that have pivoted sharply from sedans in recent years and boosted output of more-lucrative SUVs. Some dealers say car makers are falling back on old habits of overbuilding to keep factories running and then turning to discounts when the demand doesn’t materialize.
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Many drivers say they prefer the elevated ride height and bigger cargo space. Auto manufacturers can charge a premium for the vehicles, which cost only slightly more to produce than similar-sized cars because they share much of the same engineering. For instance, the average price paid for a midsize SUV in May was $37,790, nearly $12,000 higher than a midsize sedan, according to sales data from Kelley Blue Book.
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https://www.wsj.com/articles/suvs-are-bumper-to-bumper-on-dealer-lots-with-more-on-the-way-11562491801 (paid subscription)
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