Buyers Go Big As Sales Of Small Cars Slump
DAVID GREENE, HOST:
Now, President Trump has also criticized U.S. automakers for shifting production to Mexico. He's made it clear in tweets, speeches and in a meeting with CEOs of U.S. car companies this week that he wants those jobs back. Now, many of the jobs Trump is talking about involve building small cars. NPR's Sonari Glinton tells us the future of American small cars is pretty bleak no matter where they're built.
SONARI GLINTON, BYLINE: Before meeting with executives of the American car companies, President Trump sent this tweet (reading) I want new plants to be built here for cars sold here.
And during the campaign and after, he called for domestic production of small cars like the Chevy Cruze and the Ford Focus.
JON LINKOV: Nobody's building a plant to build small cars in America.
GLINTON: Jon Linkov is with Consumer Reports.
LINKOV: The vehicles that people want more and more are small SUVs, whether they're conventional, mainstream ones or luxury, compact or even subcompact.
GLINTON: Trucks and SUVs began outselling cars about two years ago, and Americans have largely turned their backs on small cars. Low gas prices have helped. But Linkov, with Consumer Reports, says Americans honestly don't really like them.
LINKOV: Buyers just aren't really happy with particularly subcompacts. They give them poor and, you know, worse than average - much worse than average - owner satisfaction.
MICHAEL CALKINS: Americans have always liked their big cars. You know, wide open spaces, you know, bigger is better, the Texas ethos, that's kind of part of the American dream, I guess.
GLINTON: That's Michael Calkins. He's with AAA. He says the United States is fundamentally different than the rest of the world when it comes to cars.
CALKINS: We've been a wealthier country. We have large areas of open space. We've had a tremendous farming industry that has generated a need for vehicles like pickup trucks and SUVs.
GLINTON: It's about practicality, safety and comfort. You know, this is America.
CALKINS: In an SUV or a pickup truck, you sit up high, you have a good view, you feel safe because you're in a big, heavy vehicle. And, quite frankly, Americans tend to weigh a lot more than people in the rest of the world (laughter). We have larger people, and as a result, they like larger vehicles that are more comfortable.
GLINTON: The thing that does get Americans to embrace compact cars - high gas prices. In the late '70s and in the early part of this century, gas prices skyrocketed, and consumers rushed towards smaller cars. But here's the thing, the big American car companies have never been really good at making small cars. So that's why you see so many Toyota Corollas and Honda Civics on the road. Jon Linkov with Consumer Reports says it's tougher for the American car companies to make a profit from small cars.
LINKOV: It was hard for the domestics with wages in the U.S. to invest in a car that - really tight margins. There's huge margins on giant Chevy Suburbans and Ford Expeditions and pickup trucks. That's where the money is. That - they can afford the higher wages in the U.S. because those vehicles sold at such higher prices.
GLINTON: Just to give you an idea, Morgan Stanley estimates that 90 percent of Ford's profits come from its truck line. Now, what could bring the small car back? Linkov says tariffs on cars from Mexico, increased gas prices, maybe millennials could begin buying cars. But he doesn't see a resurgence anytime soon.
LINKOV: It may be like minivans. They'll be there. They're not going to see huge increases in sales. They're not going to see giant decreases in sales in the short term, but SUVs are where it's at.
GLINTON: And if there are new jobs, they'll likely be making SUVs and trucks. Sonari Glinton, NPR News. Transcript provided by NPR, Copyright NPR.