This Week in Car Buying: Ford to build more SUVs; What women and men want from SUVs; Vehicle Production Drops; Buyers look beyond dealers for loans
The redesign of its full-size lineup of SUVs is proving so popular that Ford is adding workers and bumping up production schedules by 20 percent to meet demand. The automaker announced that it will be hiring 550 employees at its Kentucky Truck Plant in Louisville to boost production of 2020 Ford Expedition and 2020 Lincoln Navigator models.
According to Ford, Expedition sales jumped 35 percent last year pushing the brand’s share of full-size SUVs to 5.6 percent. Average transaction prices grew by $11,700 to $62,700, while over at Lincoln, Navigator sales are up 70 percent.
“Kentucky Truck Plant is home to two of Ford and Lincoln’s most successful vehicles,” said John Savona, Ford vice president, North American manufacturing. “After seeing a continued increase in customer demand for Expedition and Navigator, we are boosting production for a second time to meet it.”
In addition to adding employees, Ford will be increasing the line speed at the plant and will make changes to the assembly process to enable the higher production rate. These changes will be implemented during the summer shutdown as the facility is retooled for the 2020 models.
The increase in full-size SUV production at Ford underscores the importance of these vehicles to all manufacturers in boosting overall sales. According to an SUV Segment Outlook Study by Cox Automotive (parent of Kelley Blue Book), the brands that have experienced the most growth over the past decade are those that have expanded their presence in the SUV market with all-new or redesigned models.
The biggest benefactor is Subaru, which has seen a 262-percent increase in sales from 2008 to 2018 thanks to a 640-percent increase in SUV volume. Kia, which has had a 196-percent increase in SUV activity has seen its overall sales increase by 132 percent. Hyundai has nearly doubled its SUV volume and has seen a corresponding 70 percent jump in sales. Volkswagen, which has added the Atlas and a new Tiguan to its product mix, has seen a 62 percent boost in sales by nearly doubling its SUV activity. Ford, which already had a heavy mix of crossovers and SUVs, still has experienced a 27 percent growth in sales over that decade thanks to increasing its SUV segment volume by 77 percent.
What women and men want from SUVs
Predictably a lot of the same things, according to that Cox Automotive SUV study. Women and men like the ease of entry and exit (44 to 40 percent men vs. women), high vantage point (36 to 33 percent) and increased interior space (42 to 43 percent) when considering SUVs.
Where they differ is on areas like utility/cargo space, safety and rugged looks. A total of 53 percent of the men in the study rank utility and cargo as important compared to 45 percent given by women. Safety, on the other hand, is a higher priority among women, with 34 percent citing that attribute to the 26 percent of men. When it comes to rugged looks and capability, 20 percent of men looked for that aspect compared to 14 percent of the women, while women put a higher priority on competitive pricing at 12 versus 8 percent of men.
Vehicle production drops
Predictions of a softening market were borne out by a drop in February sales and manufacturers are already responding by easing back on production schedules. So far this year, the U.S. industry has produced over 100,000 vehicles less year-over-year, according to Automotive News. For the first two months of the year, a total of 2,767,259 vehicles have been built compared to the 2,877,442 in 2018.
The lower production rate means that automakers are trying to keep their output in line with market demand rather than trying to capture share from rivals. As a result, buyers are likely to see fewer and less generous rebates if there is no oversupply to move. Another measure on how well production is matching up to market demand will be whether vehicle inventories rise or fall over the next several months. If manufacturers can keep those numbers in check, it will further reduce the pressure on offering big incentives.
Buyers look beyond dealers for loans
FICO, the credit scoring agency, has just released its Global Consumer Survey of Vehicle Finance Perceptions which shows that more buyers will be looking beyond dealers to furnish them with new vehicle loans. In its survey of people who had either bought or leased a vehicle over the past three years, FICO discovered that 63 percent of them said they obtained financing through the selling dealership last year. That number is down from 73 percent a year earlier.
However, on future purchases, only 40 percent of the sample said they would want the dealer to provide financing. A total of 32 percent said they would look to a bank or credit union to provide the money, while another 28 percent said they would apply for a loan online.
“There is currently a strong preference for dealership financing,” Ken Kertz, senior director of auto and motorized vehicles at FICO told Automotive News. “This may be ripe for a change…Customers would prefer simplicity and preapproved offers with rate subvention and incentives.”
According to the FICO study, the two most important factors among shoppers is the monthly loan payment and length of the contract. Interest rate considerations have declined from 94 to 87 percent over the past year, while the amount of money required up front is gaining in importance from 82 to 85 percent. The ability of consumers to compare multiple offers also declined slightly from 62 to 60 percent in the study.
Speaking of German SUVs, the 2019 BMW X7 has launched, the first true 3-row model of its type from BMW. We get behind the wheel of the new X7 in this First Review.
At the other end of the spectrum, Toyota has announced a new entry level LE trim level for its 2020 Toyota CH-R. We have more details including pricing in this First Look.
In the market for a new car? Explore these useful tips on how to get the best deal: