After GM, Ford, FCA Abandoned Cars, Toyota, now No. 1 in the United States, publicly rubs shoulders with their monumental blunder
There is a demand for cars, often cheaper. Dropping them was a foolish decision to please Wall Street which now haunts the big three US automakers.
By Wolf Richter for WOLF STREET.
To please Wall Street and focus on the most profitable trucks, SUVs and crossovers, GM, Ford and FCA killed almost all of their sedan models. GM stopped taking orders for the Malibu in February. They kept their muscle cars and Cadillac kept two models. But the whole range of mainstream sedans is disappearing.
At Ford, for example, aside from the Mustang, every car model has been phased out, from the entry-level Ford Fiesta that had a starting MSRP of $14,200 in 2019, its final year of production, to the Ford Fusion Hybrid, a large, well-engineered car that got around 40 mpg, which would be sorely needed at today’s gas prices.
It was a move, engineered by some corporate idiot perhaps with the backing of some high-paid recent MBA graduates at a major consulting firm, to please analysts infected with Wall Street’s short-termism.
And Toyota will have the last laugh. The former number 3 in new vehicle sales in the United States, then number 2 after Ford moved away from sedans, is now number 1.
Toyota was number one for the very first time on a quarterly basis in the second quarter of 2021, largely because it still had access to chips, unlike others, and that blew everyone away.
But in the first quarter of 2022, Toyota was No. 1 again. This time it also suffered from chip shortages and its sales were also down from a year ago. But it has sold many of those hated sedans, including low-cost sedans that cost far less than SUVs and pickups, which others have moved away from.
And Toyota is now rubbing it publicly.
“A lot of the growth in our market share is really in the automotive side of the business,” Bob Carter, Toyota Motor North America’s executive vice president of sales, told reporters during a Wednesday briefing.
“Cars are still a big part of the market,” he said.
“Unlike other brands that have exited the sedan market, we choose to double down,” he said.
Honda and other foreign automakers still sell a lot of sedans, many of which are low-cost, gas-guzzling cars. Tesla manufactures the Model 3, its least expensive model. GM, Ford and FCA just exited the market to please some Wall Street banking analysts in what will likely go down as one of the dumbest decisions in automotive history.
Toyota’s first-quarter sales fell 14.7% from a year ago to 515,592 vehicles, but that topped sales from GM (512,846 vehicles) and Ford (432,132).
Toyota sales included 142,523 cars, Toyota and Lexus models combined, with 47,501 Corollas at the low end and 78,151 Camrys at the high end. Car sales are down 25% from a year ago as Toyota can’t make enough of them due to chip shortages, and it also prioritizes high-margin trucks and SUVs, whose sales have also fallen as dealers have run out of stock, but there is sufficient demand for the cars.
GM, Ford and FCA have just ceded this business to Toyota, Honda, Tesla and the other automakers that still make sedans. And with gas prices where they are now—$6.15 a gallon for regular gas at my local gas station—these cars are certainly worthwhile. GM, Ford and FCA may never be able to fully recover from this monumental mistake.
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