US light vehicle market shares for GM and Ford should stabilise over the next five years as domestic crossovers and alternative fuel vehicles continue to grow in popularity, according to the research firm JD Power and Associates.
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Jeffrey Schuster, executive director for the firm, said this stabilisation should occur despite the expected entry of new Chinese automakers in the United States.
Consumers bought 16.9 million new cars and trucks last year, the third best sales year on record, and that is expected by JD Power to grow to 17.6 million by 2010. Domestic automakers should be able to capture enough of that growth to improve their health.
In remarks reported by the Detroit Free Press, Schuster said: “I think Detroit needs to weather the next two years. If we don’t start to see some stability after that, then all bets are off.”
Schuster also said sales of profitable SUVs, which dropped throughout 2005, will level off. That would be good news for Detroit.
“I actually don’t think they’ll fall much further,” he said. “We’re not expecting much more deterioration.”
Hybrid and other alternative fuel versions of SUVs will help the segment stay strong, Schuster said.
But crossovers – vehicles that look like sleek SUVs or station wagons and use the mechanical underpinnings of front-wheel-drive cars – will likely prove to be Detroit’s saviour.
“That’s where I think the traditionals will get their stability,” Schuster said of GM and Ford. “We expect these vehicles to do well for them.”
While domestic automakers are investing a great deal in small cars, which are booming in popularity, Schuster said that he doesn’t think that investment will pay off quite as much.
The firm predicts that there will be some 25 new small cars on the market within the next four years.
“We’ll see small cars growing,” he said, “but not to the extent we see investment activity.”
Meanwhile, consumers can continue to look forward to less-expensive vehicles with more content.
With increased competition from the Chinese in coming years, he said, the pressure to offer more for less will only intensify.
