Why Detroit Autos Could Be in Trouble Soon. Hint: Saying Goodbye to Big Profits?
One aspect of the automotive industry that has held true for decades is that Americans love their trucks and SUVs – but there is an early alarm bell ringing with recent demand shifts.
Why Detroit Autos Could Be in Trouble Soon. Hint: Saying Goodbye to Big Profits?
Overview
Ford Motor Company (NYSE: F), General Motors (NYSE: GM), and Stellantis (NYSE: STLA) were all too glad to feed America's seemingly insatiable appetite for larger vehicles such as full-size trucks and SUVs. It's well known in the industry that these larger vehicles, often packed with technology and premium options, cost only marginally more to produce than a sedan but can generate much better margins. The market demand became so strong for such vehicles that Ford all but ended making sedans for the U.S. market, unless you count the iconic Mustang. The bad news, however, is that executives are growing concerned about the lucrative full-size truck and SUV segments -- but is it just a speed bump?
There are a couple of trends developing currently that won't favor Detroit automakers' bottom lines. The first is that fuel prices have surged because of the latest Middle East conflict, and while in the past it has taken roughly six months of prolonged high gas prices to really shift demand in favor of smaller, more efficient vehicles, it's happening more quickly this time.
Details
"I'm not going to sit here and say it's permanent yet," GM North America President Duncan Aldred said, according to Automotive News. "But we are seeing somewhat of a shrinking of pickup trucks, full-size utilities, and some of the heavier [vehicles] and an increase in the more affordable segments of the industry."
Source
Originally published at www.fool.com.
