This Week in Car Buying: Car ownership up; BMW wants more crossovers; Acura, not so much; VW trims car production; GAC, PSA look to U.S. market
Conventional wisdom holds that traditional car ownership is on its way out as younger buyers opt for short term use, sharing or subscription services when it comes to filling their transportation needs. However, a recent study by the University of Michigan Transportation Research Institute is showing an increase in ownership of cars and light trucks, hitting their highest level since the downturn of 2008.
The report, issued by university researcher Michael Sivak, indicates that car ownership rose to 0.766 per person in 2016, up from 0.756 a year earlier. In other words, there is nearly one car for every American. Individual vehicle ownership rates have gone up now for four straight years. The per-household rate stood at 1.968 up from 1.95. That means that there are nearly two cars for every household and that rate has grown for three consecutive years.
Ownership rates peaked in 2006, when there were 0.79 cars for every person and 2.05 cars per household. While these numbers represent a recovery of the industry, the study shows that miles-driven-per-person are still down 5.3 percent from its peak of 9,314 miles in 2004 and household miles-driven is down some 7 percent from a high of 24,349 miles.
BMW wants more crossovers
Fresh off its launch of the 2018 BMW X2 xDrive28i crossover SUV at the North American International Auto Show, the German auto maker said it would follow up with a front-drive variant called the sDrive28i. The X2 is positioned between the X1 and X3 in the BMW SUV lineup, offering a sportier take on the genre than its boxier siblings.
The addition of the X2, including the newly announced front-drive variant, underscores BMW’s commitment to expanding its range of X-badged SUVs. Earlier, it introduced the X4 compact crossover and an all-new X5 SUV. BMW will further expand the lineup with a new range topping X7, which is expected later this year as a 2019 model.
While BMW’s overall sales have dropped the past two years, (2016 saw a 9.5 percent drop, 2017 declined only 2.4 percent), its volume mix is shifting in favor of its truck lineup and as a result, the company is counting on the new SUV models to help lift overall sales this year. The X models are so popular that the company has struggled to keep up with demand, while also looking to satisfy buyers in other global markets who are also jumping on the SUV bandwagon.
BMW Group finance chief Nicolas Peter told Automotive News that “We believe we are in a very strong position in the U.S. This growth in the U.S. will be very much supported by the launch of new X models.”
Acura, not so much
While other luxury manufacturers are rapidly expanding their truck lineups, Acura is taking a more conservative approach, even as it launches its all-new 2019 Acura RDX, which will for the first time be on a platform dedicated to Honda’s upscale division.
Acura chief Jon Ikeda said that rather than offering a third crossover in the lineup, he is looking to expand the model offerings of both MDX and RDX with A-Spec versions. In addition, RDX will again offer Super-Handling All-Wheel Drive after dropping the feature on previous models. This widens the number of trim levels within the RDX model range and will appeal to a broader slice of the segment. These new upscale additions to the line will also help bridge the gap between the RDX and MDX in the marketplace and eliminate the need for a model positioned between the two.
VW trims car production
Last week, we reported that the Volkswagen brand had the industry’s biggest stocks at 146 days’ worth of inventory. The days’ supply figure is the number of days it would take to clear out all the units at the current sales rate. As a result, VW is taking steps to reduce that backlog by trimming sedan production.
According to Automotive News, VW has 94,600 cars in inventory and 75,900 crossover SUVs. “We are adjusting production,” Derrick Hatami, head of VW’s U.S. sales told the trade paper. “We’ve got some oversupply with passenger cars—with midsize and compact cars. We’re working through that.”
VW is currently pushing lease deals on Jetta and Passat. Through the end of the month, a 2017 Jetta S manual can be leased for $159 per month for 36 months with $1,999 down, while the same model with an automatic transmission is $169 per month. The 2017 Passat 1.8T S model can be leased for $269 per month with $1,999 for three years, while the 2018 2.0 S is $199 per month with $2,349 down for three years. All leases have a 12,000-mile per year cap.
GAC, PSA look to U.S. market
The competitive landscape in the U.S. auto industry will become more intense within a couple of years with new and not-so-new players coming from both China and Europe. GAC (the acronym for China’s Guangzhou Automobile Group) showed a concept crossover and the GS4 sedan at the North American International Auto Show in Detroit and while it will bring neither stateside, it has announced it will bring its GS8 SUV perhaps as soon as late 2019. GAC is expected to be at the National Automobile Dealers Association (NADA) meeting in Las Vegas this year to recruit a franchised dealer network.
Meanwhile, France’s PSA Group, which recently bought Opel from General Motors, is looking at returning to the U.S. market after a 25-year absence. PSA builds Peugeot, Citroen and DS vehicles. It will be offering car hailing services through its Free2Move app and later is promising to incorporate its vehicles in the ride service’s fleet before beginning full-fledged retail sales. It has not announced which brands from its portfolio that it plans to bring here, but revealed that the North American operation will be based in Atlanta, which is also the home of the U.S. units for Mercedes-Benz, Porsche and Lotus.
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