Automakers Killing Off Small Models
Small passenger cars are taking a backseat to other models. According to an article in the Detroit Free Press, many automakers are stopping production on certain passenger cars due to falling gas prices and the increasing popularity of higher-riding crossovers.
In January, Fiat Chrysler announced its Dodge Dart compact and Chrysler 200 midsize sedan would stop production in the near future. More recently, Toyota said it would scrap its youth-oriented Scion brand, which targeted younger consumers with quirky, sometimes cube-shape vehicles. The Detroit Free Press reported Scion sales peaked at 173,000 in 2006, and aside from a modest resurgence in 2012, withered to 56,167 in 2015. Remaining stocks of Scion models will be sold as Toyotas for now.
According to the article, other manufacturers are shifting small and midsize car production to Mexico. Last year, Ford decided to stop building the Focus compact car and the C-Max hybrid and C-Max Energi plug-in hybrid at the Michigan Assembly Plant in 2018, and move it out of the United States, most likely to Mexico where it already builds the subcompact Fiesta and is consolidating all midsize Fusion production.
Sergio Marchionne, CEO of Fiat Chrysler, stated there has been a permanent shift toward SUVs and pickup trucks. This shift from compact and subcompact cars to SUVs and crossovers is accelerating. The paper reported in January, when Americans bought the same number of new vehicles as they did a year earlier, sales of small cars fell 11.3 percent while sales of sport wagons and crossovers rose 10.3 percent.
The article also stated that even General Motors, which will boost profit margins on its new Chevrolet Malibu and Cruze by about $1,500 per car because of a move to Mexico and some other factors, is closely watching the profitability of each model.