A new year brings with it much promise even if a measure of uncertainty remains. This past year was filled with its share of political and social turmoil, but one of the brightest spots was for the US auto industry as it completes its fifth consecutive year of increasing sales. Sales rarely go up year after year for as long as they have. That streak will end soon — if not in 2015, perhaps in 2016.
Sales, though, are only part of the story. Each car manufacturer brings its own energy to the market, therefore certain auto trends that have been gaining steam in the past few years will likely continue, such as consolation and cooperation between competing manufacturers. The following are the top auto trends we see unfolding this year and beyond.
New models, including this ATS Coupe, will help Cadillac rebound in 2015.
Cadillac on the Rebound
Brand sales for Cadillac were down 19 percent through Nov. 2014 in contrast to a segment where double-digit gains were common. Cadillac has a new president, Johan de Nysschen, who has instituted a level of discipline not seen there in decades. Indeed, as sales have fallen, Mr. de Nysschen has rallied the troops and helped usher in new models long planned before his arrival. Instead of panicking because of diminished sales, Cadillac has been holding the price line.
For 2015, new models such as the ATS Coupe, CTS V-Series and Escalade should help the brand begin a steady rebound. This April, in New York, Cadillac will unveil its flagship CT6 sedan, a model with a six-figure price tag. Likely, we should also hear during the year about additional new models planned, including a crossover slotted between the SRX and Escalade as well as an even smaller model to slot below the current ATS and designed to take on the Audi A3. That model would offer standard front-wheel drive and optional all-wheel drive.
Sentra sales have been a bright spot for the Nissan brand.
Nissan Overtakes Honda
At the beginning of 2014, Nissan held a healthy lead over Honda. By late summer that edge had evaporated and globally smaller Honda has once again finished ahead of Nissan as it has done most of the time over the past 40 years. Honda’s trifecta of Accord, Civic and CR-V have been difficult for Nissan to break, but there is one market where Nissan’s growth seems evident: full-size pickup trucks.
Yes, an all-new Nissan Titan will be unveiled at the North American International Auto Show in Detroit in a few weeks, the second generation of a model introduced in 2004. With a diesel option in the mix and additional body choices available, Titan sales should more than make up for an expected decline in EV Leaf demand. The Sentra is another model that has shone brightly for Nissan and together this automaker could place Honda in its rear view mirror, perhaps permanently.
Toyota Expands its Marketshare
New and refreshed models have helped Toyota remain one of the top three automakers in the US market. An all-new Tacoma pickup truck will help Toyota fend off GM in the midsize segment, the refreshed Camry will most likely end 2015 on top yet again, while the Corolla, RAV4, Highlander, 4Runner and Avalon should keep the world’s largest automaker strongly positioned for another year.
Toyota also has deep pockets with more than $60 billion in reserves according to CNN. Just as other manufacturers have faced costly recalls in 2014, Toyota has endured its own share of them. Yet, it is the healthiest of all manufacturers and in the best position to gain market share with its vigorous product line. Toyota, once notoriously conservative, may surprise us by giving Scion a much-needed boost, contrary to rumors that it would extinguish the sub-brand.
Jeep sales are booming, but CAFE challenges loom for FCA.
Chrysler Shows Signs of Cracking
Fiat Chrysler or FCA has been growing steadily since 2009. Its streak of month-over-month sales gains have passed the 55-month mark and show no signs of stopping. Lower fuel prices mean that even more people will buy profitable Rams and Jeeps, but increasing corporate average fuel economy (CAFE) thresholds will provide a day of reckoning.
Like all other manufacturers, FCA must find a way to deliver a fleet average of 54.5 mpg in just 10 years. Incremental increases must also be met or significant fines will be levied. FCA could restrict bigger vehicle production, but profits would then fall. Because FCA’s cash position is weak, any hiccup in the economy could slam sales and cause a ripple effect throughout the company. If Volkswagen comes courting, would FCA accept a merger proposal? A blockbuster merger of some sort seems possible in the auto industry.
Smaller Manufacturers May Get Hammered
A highly competitive automotive market is great for consumers. Six strong manufacturers and a robust cohort of middle-range companies as well as smaller, niche players give car shoppers numerous choices. That also means the quality bar is set quite high and no manufacturer has room to mess up. Moreover, new technologies continue to revolutionize the industry and are demanded by consumers.
Among the smaller players we have Mazda, Mitsubishi, Jaguar, Volvo and Land Rover. The premium and luxury makes have higher profit margins, while smaller mass-market brands such as Mazda and Mitsubishi have little room to maneuver.
I’ve been saying for the past few years that Mitsubishi’s tenure in the US is about over. Despite a near 30 percent boost in sales in 2014, the company is too small to stay on pace with the changes. Mazda, too, is vulnerable as it no longer has Ford to back it up. Mitsubishi may make it through 2015, but the next economic downturn and the introduction of Chinese-made cars could do it in. Mazda’s best hope for survival is to align itself closely with a big-time player through collaboration or an outright merger.
Possible Auto Trends
There are many other factors that may impact the US auto industry and in ways not foreseen. A botched product introduction, a pricing war, international conflict and weather calamities can shake the market. Changes in the economy would also impact consumer sentiment.
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Photos copyright Auto Trends Magazine.