Chevrolet Bets on Crossovers and Sedans
The shift of buyers from sedans to crossovers is an unmistakable trend that is a source of delight and consternation for the industry. The delight part is the popularity of crossover SUVs and the generally higher transaction prices they bring; the consternation is the slipping market position of sedans, in which the manufacturers are still heavily invested.
Some companies, like Fiat Chrysler Automobiles, are looking to back away from sedans (axing both the Chrysler 200 and Dodge Dart) in favor of crossovers and trucks. Not so Chevrolet. The company has devoted significant resources in remaking its car portfolio at a time it is also ramping up crossover SUV production. Steve Majoros, Chevy’s marketing director of cars and crossovers in in a unique position to not only track these changes, but also provide insight into why this trend is taking off.
Two trends in one
According to Majoros, there are actually two different factors that are contributing to the popularity of crossovers at the expense of sedans. “You have to separate the product side form the environmental side,” he explained. “On the environment side, you have a better economy, more access to financing, there’s more disposable income and you have an aging vehicle population that’s an average of 11 years old.” In addition to lower fuel prices, there are more choices available now and Majoros sees that people are willing to spend more on their next vehicle and are more open to trying something new.
This is where the product side comes in. “You might have a wandering eye and the old choice was a body-on-frame utility that was hard riding and not as fuel efficient as a car,” he noted. “That has fundamentally changed. You can walk into a Chevrolet showroom and get a pretty cool hatchback. Or maybe something with a little more ride height and all-wheel drive.” Better packaging, improved ride and better fuel efficiency have made car-based crossover SUVs an attractive option. “There’s never been a better time to be a consumer,”Majoros believes. “If I’m in a band of $25,000 to $29,000 a few years ago, I had maybe one choice, [a sedan], that’s not the same anymore.”
One of these car-based crossovers is the subcompact Trax, a vehicle that allows Chevy to compete in an all-new category. “Trax has gone from zero to 100,000 in about 18 months. We take Buick Encore and Trax together and we dominate the small SUV segment.” Majoros has similar high hopes for the redesigned 2018 Equinox that will roll out in the first half of next year. “Equinox has record sales years every year despite being six or seven years old and now we have a new one coming.”
While he expects big things from the truck side, Majoros isn’t giving up on traditional sedans, having launched an all-new Cruze and Cruze Hatchback and a larger, significantly redesigned Malibu. “The midsize and compact car market is still sizeable,” he said. “I think it is going to take a long time to displace the fundamentals of a 5-passenger 4-door sedan. There are still massive numbers. It took a long time for them to get where they are and they will take a long time to go away from that.
“If there is a progression from cars to crossovers, one of Chevrolet’s core strengths has always been people-hauling, utilitarian functional family-oriented products. Whichever way things pivot, we are able to react pretty quickly.” He concluded that “I wouldn’t trade our lineup for anything.”