“Cars” are disappearing from the car market

The composition of the automotive market has changed dramatically in recent years. Vehicles have become significantly more expensive – partly because they are increasingly technology-intensive, but also because they are getting larger.

When we talk about buying a new “car” in 2024, that often actually means buying an SUV or a truck – technically not a car at all.

Most passenger vehicles are classified as either cars or light trucks, and SUVs and minivans fall into the latter category.

New data from car shopping website Edmunds shows that traditional cars make up just 19% of the total new car market – a record low – while SUV market share is at an all-time high (58%). For comparison, a decade ago, traditional cars accounted for 47% of the new car market.

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CNN reports that major American automakers have “virtually given up on the sedan market.” Ford’s only “traditional” car, for example, is the Mustang, while Chevrolet is down to zero after discontinuing the Malibu in November.

Meanwhile, the booming SUV market is becoming increasingly crowded. According to Kelley Blue Book (KBB), Americans can choose from more than six dozen SUV models on the market.

According to Pat Ryan, CEO of car shopping app CoPilot, automakers like to sell SUVs because they are more profitable than traditional cars. As manufacturers struggled with supply chain issues during the pandemic, they prioritized these moneymakers.

“Americans love large SUVs, and these have long been the most profitable,” says Ryan. “Therefore, when there were shortages during the COVID-19 crisis, building these products was certainly a natural incentive for manufacturers.”

They are also what Americans increasingly prefer, he says. Car buyers today want more height, cargo space and legroom and are willing to compromise on mileage, price and handling for the extra space.

Ryan attributes much of the rising popularity of SUVs to the rapidly growing popularity of “crossover” models, which are small SUVs built on more compact vehicle chassis. They offer more space than a sedan, but behave more like a car than a large SUV built on a truck frame. “Cars have really been replaced by the crossover,” he says. “That really happened.”

Another important factor in the transition from traditional automobiles to SUVs: American manufacturers previously produced passenger vehicles in part to reduce the average fuel consumption of their fleets and meet government requirements. Now they’re doing it with hybrid and electric vehicles instead, Ryan says.

As cars have fallen out of fashion, the popularity of pickup trucks has remained more or less the same, with market share fluctuating between 18% and 20% over the past five years. As a result, the largest vehicles – SUVs and trucks – now make up the majority of the new car market.

In short, according to the American consumer, bigger is always better. “Americans are bigger people: they like bigger houses and they like bigger cars. It’s part of the psychology of our country,” Ryan says.

However, research suggests that we tend to buy larger trucks than we really need. For example, over 60% of Ford F-150 full-size pickup truck owners rarely or never use their truck for towing, and only 28% of owners frequently use their vehicle to transport bulky or heavy items.

The trend towards oversizing our cars is one of the main reasons why new vehicles have become so expensive. Full-size SUVs typically cost over $70,000. Pickup trucks average nearly $60,000.

Overall, the average price of a new vehicle ($47,337) has increased 71% since 2004, according to Edmunds. But truck prices have risen 106% in that time. Meanwhile, average car prices rose 54% to $37,767.

If you’re just buying a vehicle to drive to work and grocery shop, you might be better off with a smaller, cheaper vehicle than a full-size truck or SUV. Despite the decline in the number of cars on the market, there are still many cars, especially from non-American manufacturers. Honda and Toyota are the leading manufacturers of sedans and compact cars, with models like the Accord and Camry, respectively. Other foreign car brands such as Hyundai, Kia and Nissan also offer relatively affordable options in this segment.

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