SUV’s Driving New Car Sales Worldwide

Auto sales continue to increase worldwide. Automakers in the United States report sales up 7 % in October of 2012 compared to October of 2011. Auto makers reaffirmed a full-year outlook for U.S. sales to rise to between 14.5 million and 14.7 million. Sales were 12.8 million last year. (More details on U.S. car sales here.) The increase in sales is not limited to just the United States.

Chrysler group and Toyota sales were up 5% over a year ago, although it remains to be seen how Toyota’s recent recall will affect consumer trust in what was once a brand synonymous with quality and safety. General Motors and Ford turned smaller increases but held their own overall. Nissan and Honda also posted gains year-over-year.

In Australia sales are up almost 10% over 2011 in the first 10 months of this year and up nearly 12% in October compared to the same month last year.

While economic recovery crawls along at a snail’s pace worldwide, the auto industry may be ahead of the curve. So, no pun intended, what’s driving the auto industry? Well, according to, SUV sales are leading the way in Australia at least.

SUV’s More Popular Than Ever

Manufacturers have recognized the demand and are eager to provide the supply. SUV sales are up 29% in the land down under this year alone.
While SUVs have a reputation for being gas guzzlers, today’s buyers are focused on new smaller models of SUVs like the Subaru XV and Mazda CX-5. Combined with mainstays like the Nissan X- trail, Toyota RAV4 and the Toyota’s Prado model sales have been steady to the tune of 1400 buyers per month.

Volkswagen is considering adding an entry-level SUV to the Australian market that would be priced in the low $20,000 range. The new Taigun will join the Tiguan and Touareg. “We in Australia love our SUVs and we would be stupid not to look into it,” said VW Australia managing director Anke Koeckler.

Other Models May Suffer

It’s not all good news, however, as other vehicle types are somewhat sluggish. SUV buyers who in the past may have settled for a large sedan are being lured away in droves, to the point where car manufacturers may adjust the numbers of large sedans produced. Only one in every 18 new cars produced is a large sedan.

Long Term Outlook

Can the auto industry sustain this kind of sales growth? A look inside the numbers might paint a different story long-term. Long-term for example in Australia research indicates that 584,000 Australians intend to purchase a new car within the next 12 months, compared to 616,000 which is the long-term average.

Consumers have become more discriminating to be sure. SUV’s have taken over the industry as the new have to have family car. Manufacturers are manufacturing SUVs that are more economical to operate and are significantly more fuel-efficient than the large tank like models produced in the early days of SUVs.

Combined with a price point that makes a new SUV affordable for almost every family and it’s easy to see the growth of their popularity in many developed markets.

Bottom Line

Car sales may be a precursor to a future economic recovery. After all, consumers who are willing to buy a new car and are willing to finance their purchase indicate a higher consumer confidence level.

No industry suffered more than the auto industry during this economic downturn and any increase in sales could have a far-reaching effect. If producing more SUVs is the ticket to financial stability, you can be sure you will have your choice of new SUVs to choose from.

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