Detroit Auto Show Proves the Rising and Dominating Popularity of SUVs
People looking to invest in American automobile stocks need to realize the emerging dominance of SUVs.
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Success in stock trading and investing always comes with identifying the underlying and emerging trends in industries which could determine the success of failure of companies and their resultant stocks. As the 2018 Detroit Auto Show is avowing the public with concepts, design trends and upcoming production models, Bloomberg quotes experts pointing to an emerging trend in the US automobile scene. While SUVs and pickups have always been popular among American customers, industry experts believe the Big Three American manufacturers, Ford ($F), Fiat Chrysler ($FCAU) and General Motors ($GM) have been following a practice of discontinuing their dismally-selling passenger cars and putting their efforts behind SUVs instead. Fiat Chrysler Made Radical Moves towards SUVs, and It Worked Fiat Chrysler Automobiles NV started the trend. It discontinued its Chrysler 200 and Dodge Dart passenger cars to concentrate on its Ram pickup and Jeep models. When Fiat Chrysler CEO Sergio Marchionne initially started killing off some of the passenger cars, he was considered too much of a radical, even www.tradezero.co
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“mad”. But it helped in turning around the company and putting it on the path to profitability. And Marchionne feels that exploiting the Jeep brand help Fiat Chrysler to double its profits by 2022. While Marchionne claims there aren’t any other passenger car models it is looking to can, doubts persist over its iconic Chrysler 300. The rest of the industry is following suit. Ford is also channeling $7billion away from car development to develop SUVs. It seems to ponder the future of its Fusion passenger car while General Motors is doing the same with the Chevrolet Impala. GM is also considering what to do with some of its other Chevy cars as well as Cadillac and Buick cars, particularly the Buick LaCrosse. It also wants the Cadillac model lineup to be confined to only three nameplates. At Detroit we have a new pickup truck from GM too. Fuel Economy Much Better for SUVs Now The argument that is persistently used against having an all-out SUV approach is fuel economy. Analysts point out that in 2009 the industry was moving towards pickup trucks and SUVs, but that led to Chrysler and GM heading towards bankruptcy. The www.tradezero.co
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reason was consumers found the much lesser fuel mileage offered by SUVs too much to bear, particularly since gas prices then rose to over $4 per gallon. Now though, fuel is priced much cheaper at an average of $2.50 per gallon. So it isn’t nearly as much of a burden. Not only that, SUV engineering has gone through so many innovations that have made these vehicles lightweight and not as gas guzzling as before. As Ford’s North American operations head Raj Nair, reported by Bloomberg, says, the trade-off in fuel economy isn’t nearly as much as it once was. Ford clearly believes SUVs are the way to go. President Trump has vowed to relax the fuel economy rules, which should add further momentum to the SUV boom. Large American Sedans Losing Relevance as Mid-size Ones Match Them IHS Markit analyst Stephanie Brinley feels that the existence of large American sedans such as the Ford Taurus and Chevrolet Impala could become irrelevant since mid-size sedans such as the Ford Fusion and Chevrolet Malibu are getting bigger. The need for large family sedans seems to be decreasing, with www.tradezero.co
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families wanting more space than mid-size sedans preferring SUVs that not only offer more space, but also tremendous road presence, a distinct identity and the butch look outside with high-end sophistication inside. Japanese Manufacturers Will Keep Ruling the US Passenger Car Market But the passenger car isn’t going to die, far from it according to GM’s North American division president Alan Batey. But it’s just that Japanese manufacturers are grabbing that slice of the pie. And indeed, they have been dominating the segment for the past 30 years. Toyota’s Camry continues to be America’s top selling car. And at Detroit it unveiled the redesigned Avalon. Honda’s revamped Accord was awarded the North American Car of the Year, while Nissan’s revamped Altima sedan is on its way. However, Toyota saw its best-selling Camry passenger sedan being outsold by its own RAV4 crossover, which is further proof of what American consumers are gravitating to. It seems that Fiat Chrysler, Ford and GM all have SUV and pickup truck brands in place to capitalize on this desire of American consumers. That should put them in good stead – Fiat www.tradezero.co
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Chrysler has its iconic Jeep brands as well as the Dodge Ram models, Ford has its F-150 while GM has the Chevrolet Silverado plus a slew of other SUVs including the new truck launched at Detroit. These should put their respective stocks in enviable positions too.
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