Foreign carmakers take on US sedan market as Detroit shifts to SUVs

Anyone who questions whether there’s a radical shift in the U.S. new car market just has to look at the November sales numbers.

On the whole, the market proved surprisingly solid. But a closer inspection reveals that while SUVs and crossover vehicles posted strong double-digit sales gains, demand for sedans fell by about the same amount.

Just a decade ago, sedans, coupes and other passenger cars accounted for more than half the new vehicle market. Through the end of November, that tumbled to just 30.5 percent with the shift expected to continue for at least several more years before leveling off, according to research firm IHS Markit.

That helps explain why General Motors last week announced it will abandon six once-popular sedans — shuttering three plants in the process. Rival Ford had already planned to abandon all passenger cars but its Mustang, while Fiat Chrysler has moved largely in the same direction. But might the Detroit Big Three be overreacting and, potentially worse, handing a gift to their foreign rivals as Honda, Nissan, Toyota, Audi and other foreign competitors all eye the U.S. sedan market.

The Los Angeles Auto Show last week offered some clues. While there are plenty of new SUVs, crossovers and pickups from both domestic and foreign-owned brands alike debuting at the annual show, there are also a number of new passenger cars, including the updated Nissan Maxima, a complete makeover of the Mazda3.

“We’re still bullish on sedans,” said Dietmar Exler, CEO of Mercedes-Benz USA, which is displaying a mix of new utility vehicles, like the midsize GLE, as well as sports cars and sedans.

There’s no question foreign carmakers are trying to expand their utility vehicle lines. Hyundai has suffered a sharp slip in sales over the last three years, in large part because it had only three utility vehicles in its mix. It has added three more this year, including the new Palisade. Debuting in Los Angeles, it’s the biggest SUV the Korean carmaker has ever offered.

“There’s no question about it. We’re in the SUV game big time,” said Brian Smith, Hyundai’s U.S. chief operating officer, during the Palisade’s unveiling last week. With yet another utility vehicle coming next year, Smith added, he expects light trucks to account for 55 percent of the company’s U.S. sales next year, up from 40 percent in 2016.