As U.S. carmakers quit sedans, others cash in

Passenger cars aren't relics for every automaker — look no further than what is expected to debut at the Detroit auto show this week.

Volkswagen AG will roll out a new Passat sedan. Hyundai Motor America is expected to debut an Elantra variant. Subaru will premiere a zippy new WRX STI. Lexus will unveil a new RCF track-edition. And Toyota is using the Detroit show to bring back the Supra.

And Detroit's Big Three? It's all trucks and SUVs, as General Motors, Ford and Fiat Chrysler increasingly abandon the sedan and small-car markets for what they see as more profitable, in-demand vehicles.

The market for sedans is shrinking, but the cars will still make up around 30 percent the U.S. new vehicle market once the dust settles, experts and analysts say. And industry leaders outside the U.S. are angling to scoop up buyers who decide they don't want a new crossover or SUV in their driveways.

"There's still a huge number of vehicles available to sell," said Jack Hollis, Toyota group vice president and general manager of the Toyota division of Toyota Motor North America. "We're picking up market share. You can pick up share when you have a great product."

The strongest sedans will survive, according to industry analysts. That's much in the same way the best minivans are still selling years after other automakers ditched the segment.

Multiple automakers, including Toyota, are using the diminished and final January edition of the North American International Auto Show to roll out brand-new cars even as a majority of U.S. buyers vote with their wallets for bigger, more expensive pickups and SUVs. 

"When you change your lineup, you do leave the opportunity for someone else to come in," said Stephanie Brinley, analyst with London-headquartered analysis company IHS Markit. "We don't see that the sedan market is going to go to zero."

The ongoing market shift in 2018 prompted both Ford Motor Co. and General Motors Co. to announce plans to trim sedans from lineups. That followed decisions in 2016 by Fiat Chrysler Automobiles NV leadership to ax most sedan models.

Ford will kill every car but the Mustang, though its overall lineup will grow by 2023 with new crossovers and SUVs the automaker plans to introduce. Ford executives have said they believe U.S. consumers' shift away from cars is permanent.

When Ford announced its decision in April, multiple GM officials said sedans would remain important pieces of the GM lineup. 

"With these car segments, yeah, we’ve seen a decrease, but you’ve also seen an industry that’s growing, and these (car) segments are still worth 2 million vehicles," Alan Batey, GM’s executive vice president and president of North America, told The Detroit News at a dealer event in Las Vegas then. "A 2-million-vehicle midsize car market in the U.S. is not a segment that you don’t want to be part of."

Said GM CEO Mary Barra: “We think there’s an opportunity (in sedans), because we’ve made the investments. We need to deploy little-to-no capital as we move forward. We have worked on each of our car lines over the last year to make sure that we’re driving efficiencies across all areas of the business that supports those ..."

But by November, GM had announced it would pull multiple car models out of U.S. factories, leaving them idle and effectively killing the Chevrolet Impala, Volt and Cruze. Also dead: the Buick LaCrosse and Cadillac CT6.

"We’ve made some changes and announcements around our car portfolio," Chevrolet’s U.S. vice president of Chevrolet Brian Sweeney said during a business update for the brand earlier this month, referring to General Motors Co.’s plans to stop production on the Chevrolet Impala, Volt and Cruze later this year. "However, we are still in the car business and cars still account for close to 4.6 million units annually."

GM will still make the Chevy Malibu. The automaker is also planning to launch new Cadillac sedans in the future.

GM will use the Detroit auto show to debut its all-new Cadillac XT6 crossover; Ford is flooding the floor with an all-new Explorer and all its variants, as well as a Shelby Mustang GT500 supercar; Fiat Chrysler is expected to roll out a behemoth heavy-duty Ram pickup. All of which signals Detroit's focus.

"It's not just the car today," said Karl Brauer, an auto analyst with Kelley Blue Book. "It's the planning and preparation for tomorrow. The market will continue to shrink, but it will never go away. Cars will always be a component of this market and of the new-vehicle market, but the question is how big will the market be, and how many models will support it."

Hollis, who's charged with getting the right Toyota products into U.S. buyers' driveways, said sedans are valuable for a few different reasons. They get first-time buyers in the door. They're cheaper to fuel, even though new technology has made trucks and SUVs more fuel-efficient. And they'll still represent a significant portion of the U.S. sales market, despite the decline.

Toyota sold more than 608,000 Corolla and Camry sedans last year, despite both of those vehicles seeing sales declines. The automaker also sold 427,170 RAV4 compact SUVs. Hollis said Toyota believes it doesn't have to cut cars to ride the SUV wave in the U.S.

It can make — and sell — both products.

"We do not buy that the claim that U.S. consumers don't want cars," Hollis said. "We believe they do want cars. Many people come into our brand through the sedan. We believe in the car market."

ithibodeau@detroitnews.com

Twitter: @Ian_Thibodeau

Staff Writer Nora Naughton contributed.