Fullsize cars lose their luster

22 May 2012 Tom Libby

Non-luxury fullsize cars, once the mainstay of the US car business, are losing their luster in the eyes of the US consumer. This category's share of the US market has dropped by more than half over the last five years, and through the first three months of this year, it accounts for just 2.3% of all new vehicles sold. The number of fullsize models in dealer showrooms has declined dramatically as well, falling from 15 just five years ago to only seven now. The only large non-luxury cars now available are the Impala, 300, Charger, Taurus, Azera, Maxima and Avalon.

Fullsize Non-Luxury Car Segment Share of Industry

Rising gas prices, the discontinuation of makes (Pontiac, Mercury) and the obsolescence of select products (Crown Victoria, Grand Marquis) have contributed to this sales trend. Not coincidentally, more modestly-sized vehicles have gained ground. Midsize non-luxury cars now account for 16.7% of the industry, up from 13.4% five years ago, and the share of midsize crossovers has moved up more than three points to 7.6%. The midsize car segment, offering family vehicles which are much more fuel-efficient than their larger counterparts (including both hybrids and electric vehicles), is currently being flooded with all-new designs; these include the recently-launched Camry and Passat, and the soon-to-be-launched Fusion, Altima, Malibu and Accord.

Ironically, Polk's US automotive forecast indicates that several new or redesigned large cars will be launched in the next 12-18 months. These include the redesigned Chevrolet Impala and Toyota Avalon and an all-new Kia Cadenza (replacing the Amanti). A redesigned Hyundai Azera is arriving in showrooms now.

Despite these upcoming new product launches, the large car segment may not survive in the long run. If gas prices continue to shift consumers' preferences in the direction of midsize offerings, OEMs may at some point conclude it is not cost-effective to continue designing, engineering and assembling larger vehicles. It is noteworthy that the fullsize car segment right now is already about a third smaller than the minivan segment, a segment both GM and Ford exited years ago, and a segment from which Kia just announced a few days it would exit.

Posted by Tom Libby, Lead Analyst, North American Forecasting, Polk (05.23.2012)


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