GM Will Back Out Of Passenger Car Business Too, Says Morgan Stanley
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First, Fiat-Chrysler Automobiles made a splash when it axed the Chrysler 200 and Dodge Dart. Ford made a cannonball announcement when the automaker said it will kill off all passenger cars in North America, save for the Mustang. General Motors? Its sedans are sticking around, but perhaps not for the long-haul.
Morgan Stanley analyst Adam Jonas told Bloomberg in a Friday report that the automaker will surely follow Ford and FCA. “We think that GM is going to follow” Fiat Chrysler and Ford, he said.
Thus far, GM has not made any explosive announcements surrounding its sedan lineup. Instead, CEO Mary Barra called the segment “significant” and told reporters GM will make decisions more carefully when investing in its passenger car lineup. Her comments didn’t come as exactly a vote of confidence.
Reports from last summer claimed GM has internally researched killing off numerous sedans from its brands. They included the Chevrolet Volt, Impala, Buick LaCrosse and Cadillac CT6. The automaker has not confirmed any of the nameplates’ deaths. The Chevrolet Sonic is reportedly nearing its end, but the small car will stick around for the 2019 model year, to our surprise.
Meanwhile, GM will invest tremendously in battery-electric cars and utility vehicles. The automaker has plans for 20 new EVs by 2023.
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It is pointless to build cars that sit on lots for years not months unsold. It is bad business.
GM has got some great cars but the issue is no one wants cars now and until the market changes there is no need to increase them.
Just recently shopping the Lacrosse and Impala for a family member I found unsold new 2016-2017 Lacrosse and ended up buying an 2017 loaded Premier Impala for $10K off sticker. It was amazing how many of these cars are still available.
I know some here will make an argument for cars based on MPG and price but today with the advent of the Crossover there is a wide enough selection to address just about any price and MPG segment of the auto lines.
I do not want to see the demise of the car but I put a higher priority of not seeing the demise of GM as they sit on large inventories of unsold cars as others move higher profit CUV models.
My wife has gone to CUV twice now and has no care for a car any more. the CUV just fits her needs much better as it can haul what she needs for work and she likes sitting up higher.
I am sure GM may keep a few smaller cars and a couple high end models but that is it. The CUV has ushered in a totally different market in historic proportions. It is not just a short lived trend but the result of the move to smaller cars people did not like and the mini van that just did not appeal to men. You take a car platform make it taller and more truck like with the utility and MPG of a mini van and it has something for everyone. We will soon see more performance variants of this formula too.
The market is making the call here and the companies are yielding to their demand if not they will die.
Gas prices will continue to climb plus GM must make cars for China that can easily be imported. Morgan Stanley has made other wack predictions in the past such as Cadillac being valued at 20 billion.
There is a market for “American” branded cars. Ford ending production plus the higher than average quality ranking of Chevrolet cars presents a good opportunity for GM. A refreshed Malibu should suck up a lot of Fusion buyers much like FCA benefited from other volume value brands retreating from both the minivan and RWD D-segment.
I never understood the charm of Fusion between the road noise and poor handling. In contrast, Malibu and the dead Chrysler 200 hug corners, are quiet.
A car market still exists. I’m a millennial and will always drive a sedan or coupe. If GM exits the market I’ll end up in a Mazda.
Steve gas prices matter little when CUV model get the same or similar mpg.
As for global market yes where appropriate and profitable cars will remain at GM just as wit Ford and Fiat Chrysler.
The market for all cars is thinning with all brands in a North America. You can stay in and fight it and lose money or you can move to the stronger segments that are making money.
Even the imported brands are moving to CUV models and not relying on Sedans like they used to. They too see the reality of it.
This is no longer built them and they will come.
No doubt the Malibu is a great car, I own one but it is out of step with today’s market be it if you are a boomer or millennial.
Like my passion for performance vehicles is great but the market is soft on them and profits are down.
The reality is in today’s markets development cost are higher than ever and just making money is no longer enough it is to maximize profits as on major platform failure can put an automaker in jeopardy.
Just look at Fords cars. They sold well but there was little money in return. Add to this they did not cut cost or invest in new technologies outside the trucks and you get an $11 stock price.
I agree there will be cars but they will be more limited in the market and scope. You will have some low end entry models and some high profit low volume high end.
But small SUV models will fill in these smal, car segments with high mileage models at similar pricing. The Trix and Encore are tall Sonic model platforms.
On the MS wack predictions:
Yup. Just like GM bringing out the Achates engine at the NAIAS. When it comes to the auto industry, MS seems to blow a lot of smoke! -I’m glad now that I don’t have any of my investments through that company!
I believe what Scott says, and certainly not because of Morgan Stanley!
It is all speculation as GM and the industry at this point and time are ever changing and changing fast.
Things are not as they once was and may never be again.
We are in a transition as significant as open body cars to closed body cars.
Companies can plan ten years ahead but can only really fulfill 5 years as it takes that long to get things from conception to market. And then we can see if the guessed right or not.
Like the Aluminum on the Ford trucks. 5 years ago it looked good but now with aluminum prices climbing it is hurting now.
A Camaro CUV?! FTW!
Meanwhile fuel prices are creeping up. This would be a bad time to abandon cars when the other big 2 have called it quits. Soak up that sweet market share.
If you’re already a Equinox diesel owner you’re getting nearly 40mpg with AWD on the highway, does it make any sense to trade it in for a FWD Cruze?
An Equinox diesel has a $33,200 MSRP; a regular FWD Cruze is literally half that.
They are not, remotely, in the same market.
If GM gets out of cars, they will cede a good portion of the entry level buyer to the Japanese, Koreans and potentially Chinese (if they enter the market). Beyond that, if a young buyer has a good experience with a Corolla or a Civic, their next vehicle is likely to stay in the family.
Then, I’m likely to wander around the used car market rather new one…
I want to let them on business, and it’s good that they’re making enough money for their livings. But, I am not a fan of Utility Sports, unless it’s smaller one or something cares about handling, sorry.
More importantly, I extremely hate that SUVs are eating away every varieties of automotive world. I am not a SUV hater actually, and I know they are important breadwinners, but if they are axing everything except themselves, then that’s what I loathe.
Sorry to write down such a unrealistic speech, I agree… 🙁
And people believe Morgan-Stanley’s saying is true? mmkay.
There are very few standout cars these days and the ones that do often stand out for the wrong reasons–namely bizarre styling. I love cars too, but *some* deserve to die. What do they call it, culling the herd?
I can say the same about SUVs and CUVs as well. I had to laugh the other day when I saw a Chevy Trax speed through a yellow arrow and nearly roll over in the process. Some future we’re moving towards.
The guy says “We think GM is going to follow Fiat Chrysler and Ford” maybe they should get confirmation out of GM before releasing this speculation and maybe making fools of themselves.
I will be very disappointed if GM axes all of the sedans. I have owned a 2005 Buick Park Avenue Ultra, 2009 Lucerne CXL-5, and two Lacrosses (2015 and 2018), and the only two cars that GM makes that would interest me in the future would be another Lacrosse or CT6. If GM discontinues these vehicles I will probably look at a Volvo S90 or an E400 Mercedes. I would not be happy about leaving GM and driving a foreign sedan, as I like to drive an American made vehicle from an American car company.
C’mon . . . I’m trying desperately to hang on to my youth here!
To be fair here the entire industry is looking a their car line ups and are considering killing many and keeping?
The car will not vanish but it will be a rare commodity as people moving vehicles are key globally and that will push more and more for the CUV to take over.
As for the MPG and gas prices that is a myth anymore. The price has less effect anymore as there are so many sizes and range of MPG that will match about any model sedan in MPG. In years past we had one SUV size and that was it.
As for styling most cars suck today. As for the CUV they are not fashion statements as people want the utility and styling as long as it is not Aztek offensive is not an issue anymore.
People and the markets have historically changes and we need to recognize this. The Automakers have.
I see GM keeping the EV cars, the lowest price cars and some higher priced cars in low volume. Outside of that not many others. If needed most CUV models are based on car platforms and they could be brought back very quickly if taste change.
Follow the money. Domestic manufacturers for years have been using truck and SUV profits to subsidize small/energy efficient car sales. The Big 3-1/2 smell blood in the water at the EPA, and see the opportunity to kill car lines that aren’t self-sustaining – because they won’t be needed much longer to balance CAFE numbers. If they aren’t *needed* for CAFE balance, why wee-wee away bottom line dollars to keep selling them? The challenge, going forward, will be pricing some entry level CUV’s at a point where some subsidized cars used to live, to maintain that first-new-car transaction with what they hope will be a life-long customer.
Chevrolet sells almost as many of their Equinox CUV as the Toyota Camry; but to give up the market segment that is being held by the Malibu which sells about 10,000 units would be a hard pill to swallow even if Equinox sales were to jump to 40 or 50,000 units while Malibu sales remains at about 10,000 units.
People aren’t buying cars, or not buying GM and Ford cars? As gas climbs cars will look better. It’s not the first time this has happened.
The biggest problem with passenger cars or sedans is who can fit in them anymore. Ever since Ford drop the Grand Marque, there is no other passenger car that can fit three people across. let alone have enough head room to get in one.
One day I was a Chevy dealer getting the oil changed on my Silverado. The lastest Impala (2016) was on the showroom floor. I have to say it is one of the nicest looking cars on the road BUT I could not get into it. I’m no light weight, 6’2′ 275 lbs. All cars are very low to the ground, The A pillar is rake’d so much, probably for crashworthiness, it makes the door small and the roof line low. The rear doors are also are very low probably for looks and aerodynamics. Now a family with a few kids, you are kidding if you think the sedan is a family vehicle.
My dad bought a 1957 Belair four door sedan and never a problem getting four kids in it plus mom and dad.
And the underlying point here is that people are getting fatter and more overweight.
This topic comes up again and again here and it’s so strange from my POV. I’ve owned CUV/MPV cars since the early 90s. The switch the country is making now I’ve already experienced via the Plymouth Colt Vista Wagon, Suzuki Vitara, Scion Xa, Nissan Cube, and now Buick Encore. So for me it isn’t “oh no why are sedans going away” as much as “why aren’t you driving a CUV?”
For example. The Chevy Cruze. My wife rented one and thought it was okay… but tight. I got in one afterwards and it’s very strange. Instead of being an egg in a shell (Trax) you’re an egg on toast. You feel very exposed to the road. As if it’s mere inches out your door. You can almost lick the windshield without leaning forward.
Yes, these may sound like exaggerations to you, but unless you’re a skinny as hell kid it’s very… disconcerting. A feeling that a Trax or even a Bolt sized situation ends.
Now a Trax is about four thousand more than Cruze. And I get that can be a dealbreaker for most. But how much does it cost GM to maintain a Cruze and a Sonic and a Spark when all of those roads eventually lead to a Trax like vehicle? I can see a world where people who can’t afford a Trax like vehicle will simply buy a used one of two years. And that CUVs will drop in price to compete…. especially if a GM no longer has to maintain smaller sedans and such.
(I sound like a Trax fan but really I’m a CUV fan and Trax is the topic at the moment.)
I believe what GM should do is ‘Buick Regal’ Trax. That the Trax would have slightly different designs simultaneously. One that looks more Jeepy (like the original concept of Trax) would be smart. So would a feminine gumdrop version of the Trax… akin to the Suzuki XBee. Not a duplicate but a car young women would ditch the VW bug for.
For too many decades America had this issue of cars being way too big and way too small. The fact that each end is being trimmed to a smarter middle is long overdue.
For those who wish to whine about handling — what can I tell you? Many of these CUV/Crossover things drive fine. To bend an industry for the six people actually driving race tracks or going off road? Yeahright
Why aren’t I driving a CUV? …why would I want one?
Style. I guess I’m just a car guy. I’ve always been drawn to coupe/sedan styling, and even an occasional station wagon. Hatchbacks, SUVS, vans, and trucks have never been on my radar. I’ve always preferred a bit of sport, and a bit of luxury in my cars. Lately, it has been skewing more towards the luxury side of things. Utility is not something I seek more of. I’ve been able to fit an over the range microwave, several trees and shrubs, dirt etc into my car without issue. My wife brought home a 60″ TV, and a stand for it in the back of her Sonic sedan. A Sonic hatch, or Trax would not have had the length required to do so behind the front seats with the liftgate closed.
I mostly use my car for commuting to work, followed by road trips two or three times a year. I don’t care to have to heat/cool down all that additional space behind the back seat after my vehicle has been sitting out at work in the brutal cold or blistering sun all day. If I can even fit a crossover into my garage, I definitely don’t have the height required to open the rear hatch inside. Why would I want a vehicle that I can’t load/unload inside my own garage? I also value having a separate enclosed trunk to hide things in.
I’ve driven quite a few “alternative” vehicles, and some make me feel exposed and vulnerable sitting up so high after being quite used to driving in regular cars.
A car will always be what I’m looking to drive. Anything else is a compromise of my own style, for a lifestyle I don’t live. I don’t have kids, not taking dogs to the park, don’t do anything that requires any kind of athletic gear, and not even pretending that I might go offroading. Anything that I can imagine purchasing at the store, or taking with me on vacation fits just fine in the trunk of my sedan.
That’s so funny. You were making one great point after another… one paragraph after another… and then you said this: “I don’t have kids, not taking dogs to the park, don’t do anything that requires any kind of athletic gear, and not even pretending that I might go offroading.”
This describes EVERY Encore owner I’ve met. A couple with no kids, no this, no that. Which means the backseat is a nice gesture for the rare guests. Therefore — “If I can even fit a crossover into my garage” —
You can fit any CUV in any normal garage.
A CUV may fit into any normal garage, which would include a 7′-0″ height garage door. My house has a 6′-6″ height garage door though, which is extremely common in this area of western PA. On top of that, there is a beam running the width of the garage, which forces the door to stop at approx. 6′-0″. It was never a big deal, and a non-issue when I bought the house five years ago, as I never intended to buy anything other than sedans forever. Now it appears that those days may be numbered despite my personal preference. I even had to remove the roof mounted stinger antenna from my wife’s Sonic, and purchase an aftermarket sharkfin antenna so that it would fit under the garage door. We’ve looked into options for a side mounted garage door opener that would allow the extra few inches the door needs to fully open, but even then there is no way we could open the hatch inside. It’s also a pricey upgrade that we otherwise don’t need -especially because the previous owners upgraded the door and opener shortly before we bought the place.
The “big” 3 have the attention span of a gnat. They have correctly assessed that lardass Americans neither know how to drive nor care about driving, but the next downturn in the economy is just around the corner and people won’t be able to afford their grotesque monstrosities anymore. That was the excuse GM used they whined for the bailout, not enough time to switch to fuel efficient, smaller vehicles , blah, blah.
The real problem is they priced themselves out of the market. Who in their right mind would cross shop a hoopty from GM when they can realistically get a real car from BMW, Toyota, etc. for the same amount of coin? Price was the only reason to buy one, they took that argument away themselves….
Ok went is gm planed on do this? I will what?? BMW, MB, Toyota, Honda, etc sedan’s aren’t selling no more these anybody else is. Gm is not leaving these sedan market.
I think it’s more about the ridiculous monster trucks on the road today. When we are eye level with their bumper, it’s intimidating and clearly dangerous, no way to see past when you can’t even see over their hood. Just try to pull out of a side street with one parked in the way.
Insecure men feeling on top of the world! Ya that ain’t changing anytime soon. So the rest of us need to get taller too, the only way to get their new HID lights out of our mirror.
You guys keep talking when gas prices go up this will change! The answer is it won’t. The wife went from a Cruze that got around 30 mpgs on average to a 2018 equinox that gets 29 according to onboard computer. She wouldn’t trade a few MPG’s for a low sitting car again even if gas prices rise. The gas guzzler is non existent in small-mid size suv’s.
So long as there is a back up plan for both Ford and GM to sustain employment opportunities for thousands of people working at the plants that may be proposed for permanent closure, then I’m on board with this idea, though the Mustang, GT, Corvette, Camaro, Cruze, Bolt, Challenger and Charger many have bright futures ahead of them in terms of “Staying Power” along with a more brighter future for Trucks and SUV’s. GM plans to take another chance with a Silverado and Sierra Hybrid by 2019 or close to 2020, depending on the powertrain setup and the EPA numbers, I just might venture into that uncharted territory.
My wife gets about a compliment a week on her black Impala LTZ, which is amazing. I think a lot of it is due to the Chicagoland roads being so clogged with faceless CUV’s that people are stunned when they see an actual vehicle with Style.