Possible Sedan Resurgence? Survey Shows Rising Gas, Financing Costs Could Kickstart Sedan Sales [News]

According to a recent survey, we may see a sedan resurgence thanks to rising gas prices and interest rates.

Over the past few years, cheaper gas prices and easy financing have driven crossover and SUV sales through the roof. It’s turned the once-popular sedan market on its head, to the point where the segment has dwindled since 2014. However, as average gas prices near $3.00 per gallon once again, some customers are thinking twice about taking the plunge with trucks.

In fact, a recent May 2018 Autolist survey of 1,192 car shoppers concluded a significant portion would buy a sedan over a light truck. That’s if financing costs and gas prices continued to rise. The Fed recently hiked interest rates, which makes high-dollar purchases like trucks and larger SUVs more expensive. Not only that, but gas prices are up 30 percent from last year in California, the largest automotive market in the U.S. So what could that actually mean in the long run?

History may repeat itself

A decade ago, during the financial crisis, U.S. average gas prices topped $4.00 per gallon, a huge leap over prices in years prior. Up until that point, consumers drove large SUVs and trucks. However, when it costs $150 to fill up a Chevrolet Suburban, suddenly people don’t want to drive them anymore. The market shifted and smaller cars – namely sedans – enjoyed a resurgence. The data above suggests that trend may occur again in the near future.

Forty-nine percent of respondents in the Autolist survey stated they would buy a sedan over a truck if gas prices topped $4.00 per gallon. Fourteen percent said they would consider a smaller truck than what they were previously considering. Forty-five percent also stated they would buy a sedan over a truck if financing costs rose. Interestingly, twenty-five percent said they would still buy a truck even if gas prices and interest rates continue to rise.

In the short term, higher prices could be a boon to sedan sales. That could be problematic for some automakers, as those like Ford and Fiat-Chrysler are drastically shifting their focus away from sedans toward trucks and SUVs. The survey also noted that the sedan market could still be in trouble as small SUVs and crossovers are available at more price points. Sedans previously had an edge on price, but as that gap shrinks, their days could still be numbered.

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