Sales of sport utility vehicles (SUVs) in the US remained strong in April even as global car sales and oil prices fell due to a coronavirus-led demand crunch, according to consultancy Facts Global Energy.
Sales of light trucks grew 77 per cent in April in the US while large pick-up model sales rose 20 per cent for the first time ever, the London-based consultancy said in a report.
"This [SUV] segment is particularly important for the manufacturers due to its relatively high profitability,” the report said.
"During Q1 2020, the top three models of this segment alone (the Ford F Series, Chevrolet Silverado and RAM Pickup) together accounted for nearly half a million new vehicles on the road. We think that this segment’s dominance will continue in the medium-term, as carmakers continue to focus on it, and due to CAFE standards being relaxed,” it added.
CAFE refers to corporate average fuel economy, which was first enacted during the oil embargo of the 1970s to improve the fuel economy of cars and light trucks, including SUVs.
FGE’s view comes amid a bleak outlook for car sales globally, as the pandemic necessitated lockdowns that kept people off the roads. Global car sales are forecast to drop 15 per cent in 2020, double the decline experienced during the 2008-09 global financial crisis, according to the International Energy Agency (IEA).
Car sales are likely to slump by 13 million compared with 2019, with the largest declines to be registered in Europe, the US and China – all of which had enforced lockdowns to stem the virus.
However, FGE was more bullish on the SUV segment, expecting sales to continue in Europe.
“The trend set last year continues, with SUVs also comprising the primary growth factor in the market there,” said the report.
SUV sales in Europe rose 13 per cent in 2019 to reach 5.7 million, while the overall European car market grew by only 1 per cent. Last year, SUV sales accounted for 37 per cent of overall car sales, with the figure expected to grow more than 40 per cent in 2020.
Meanwhile in China, SUVs registered a 7.4 per cent growth year-on-year in April, despite contraction across all other segments of the economy. The share of SUVs in total sales is likely to accelerate to 50 per cent this year, FGE said, amid growing investment by carmakers in the segment and in crossover utility vehicles (CUVs).
The consultancy projected a dim outlook for electric vehicles worldwide, except in Europe, where sales picked up due to car manufacturers complying with changing fuel emission regulations.
In the US, electric vehicle sales performed worse than the overall car market. Total car sales for the first quarter fell 13 per cent year-on-year, while sales of electric vehicles crashed by nearly a third.
"Importantly, the rise in the US last year can be attributed to one car, the Tesla Model 3, which made up half of new registrations in 2019,” FGE said.
Sales of new electric vehicles collapsed 60 per cent in China during the first quarter, outpacing the total market decline of 45 per cent.
"The downward move in Chinese electric car sales is a trend that has continued since the change in the subsidy scheme in June 2019,” the consultancy said.
Last year, China cut subsidies on electric vehicles by 10 per cent -a move which Platts estimates has resulted in more than a 20 per cent decline in sales for the segment.
FGE's outlook contrasts sharply with that of the IEA, which expects electric vehicles sales to exceed 2019's total to reach more than 2.3 million, taking up a record share of the car market of more than 3 per cent.