The U.S. auto industry sold a record 17.55 million light vehicles in 2016 thanks to an increasing consumer preference for larger vehicles such as trucks, SUVs and crossovers.
Though overall industry growth is small – just 71,000 units over 2015 – the performance of the light truck segment continued to show a fundamental change in the marketplace.
“Low gas prices have helped drive the shift to larger vehicles because it’s a tangible way for consumers to be able to see the dollars and cents saved immediately,” Eric Lyman, vice president of industry insights for auto price forecasting firm ALG, told Trucks.com.
Increased fuel efficiency in larger vehicles and safety features that make them easier to drive and park, have made trucks and SUVs “more livable” for the average consumer, Lyman said.
This is the second consecutive year consumers showed a clear preference for larger vehicles over passenger cars. Light trucks sales, which also includes crossovers and SUVs, grew at a rate of 7.2 percent and accounted for 59.5 percent of all vehicle sales last year, according to Autodata Corp. That’s a jump from market share of 55.8 percent a year earlier.
Pickup truck sales grew by 5.9 percent compared with the prior year to almost 2.7 million vehicles.
General Motors Co. sold the most. Between its Chevrolet and GMC brands, the automaker sold almost 943,000 full- and mid-size trucks.
But Ford had the top-selling pickup truck – and vehicle of any type. Ford Motor Co. sold 821,000 F-Series pickups. It was the 40th consecutive year that the pickup topped the truck market.
Fiat Chrysler Automobiles’ Ram brand was a distant third, selling just over 489,000 pickups, an 8.7 percent gain. That was the fastest growth among the major truck brands.
Nissan Motor Corp.’s full-size pickup sales rose 80 percent to almost 22,000 as it introduced new models of its Titan truck although it remains a minor player in the market. Another Japanese nameplate also lags its domestic competitors. Sales of Toyota Motor Corp.’s Tundra fell almost 3 percent last year to about 115,000 vehicles.
Mid-size trucks sales are growing at a much faster rate. Led by Toyota’s Tacoma and GMs newer models, the Chevrolet Colorado and the GMC Canyon, the segment grew by 25.5 percent to just over 448,000 vehicles.
The rise in pickup sales also reflects a strong U.S. economy as well as changing consumer tastes.
Households are more comfortable spending money on larger vehicles because jobs and wages are picking up and people feel richer, especially with the drop in gas prices, said Beth Ann Bovino, chief U.S. economist for Standard & Poors.
Consumers also might have rushed to purchase vehicles in an attempt to beat an anticipated rise in interest rates in 2017, said Scott Anderson, chief economist for Bank of the West.
Consumers can expect gradually rising interest rates this year signaling the Federal Reserve’s confidence in the economy, Anderson said.
Home construction also is pushing pickup sales.
“Builders need trucks for new projects,” Bovino said.
Housing starts reached a nine-year high of 1.34 million units in October and have stood above the one-million-unit monthly average for the year, according to the Commerce Department.
Expected infrastructure spending – a campaign promise by President-elect Donald Trump – also will increase demand for trucks, Bovino said.
The rapid growth in light truck sales, especially crossovers and SUVs, will continue this year, analysts said.
“Automakers will continue to work to increase supply of the utility vehicles that are in high demand, while also looking at ways to manage production of passenger cars,” said Stephanie Brinley, analyst for global market research firm IHS Markit.
Passenger car-centric automakers will have a harder time selling vehicles, which will put pressure on their profits, Brinley said.
“Automakers view crossovers as the No. 1 battleground for consumers and will push hard to market these vehicles and gain visibility of the segment,” Lyman said.