Morgan Stanley analyst Adam Jonas believes General Motors may follow Fiat Chrysler and Ford in trimming small passenger cars and sedans from its US vehicle lineup.
In an interview with Bloomberg, Jonas said “all three of the Detroit Three automakers have something in common: They’ve all been exiting the car business.” FCA was the first of the Big Three to make such a move, discontinuing the slow-selling Dodge Dart and Chrysler 200 in order to make way for more trucks and SUVs. Earlier this month, Ford said it would cease to sell small sedans and passenger cars in the US, continuing with just the Mustang the crossover-like Focus Active. An April report from The Wall Street Journal also indicated that GM will kill off the Sonic hatchback eventually as well.
As executives at Japanese automakers like Toyota look on at Detroit, all they are seeing is dollar signs. Toyota has no plans to discontinue its small and mid-size passengers cars in the United States and is hoping to scoop up the customers that FCA, Ford and GM may leave behind. It raises the question: do American consumers simply not want passenger cars, or are customers simply not happy with Detroit’s current offerings? After all, the Toyota Camry and Honda Accord are two beloved vehicles that don’t have much trouble finding buyers. And according to Toyota, mid-size and compact passenger cars can account for up to two million sales annually.
For Detroit, though, it’s not all about sales numbers. Domestic vehicle makers have had trouble making a profit on small cars like the Focus and Sonic, and seem to have been lured away from passenger car segments by profit-heavy pickups and SUVs. Americans seem to be buying up crossovers, pickups and large SUVs in droves, so it’s very possible that the Big Three’s gamble will pay off. They do risk forcing some domestic customers to go to a Toyota or Honda showroom if they want a solid passenger car, though – a risky play in a world of rising gas prices and strict emissions regulations.
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