DIAMOND BAR, Calif.—Tire dealerships and auto service shops will be seeing an increase in the number of CUVs and pickup trucks in their bays over the next few years, but passenger cars will still be around for the foreseeable future.
That's the conclusion of new Specialty Equipment Market Association research on the U.S. vehicle parc.
Light trucks are expected to account for more than 82 percent of new consumer vehicle sales by 2028, up from 69 percent in 2018, according to SEMA. This is driven primarily by the popularity and growth of CUVs.
According to SEMA's new study, "2021 Vehicle Landscape Report," CUVs are expected to make up about half of all new light vehicles sold by 2028.
There are about 281 million light vehicles on the road in the U.S., with CUVs becoming more popular over the last decade.
"CUVs are the fastest growing light vehicle segment on the road today," SEMA Market Research Manager Kyle Cheng said during an April 8 webinar. But SUVs and pickups remain popular.
Full-size pickups are the most common, driven by the popularity of the Ford F-series and General Motors full-size trucks.
CUV popularity is driven by entry-level models because they are more affordable and attainable for consumers looking to enter the light truck market, he said.
"Even amid this growth of light trucks and shift in preferences, it's important to remember that passenger cars remain a significant presence on the roads and for our industry. There are just over 115 million on the road right now, and they will remain a significant share of vehicles on the road for years to come," Cheng said.
A majority of vehicles today are newer vehicles, with 90 percent of vehicles on the road being model year 2000 and newer; 57 percent are model year 2011 and newer.
"Each year millions of vehicles come into operation and millions come out. Typically, the landscape grows about 2 million to 5 million cars each year, and on any given year we see about 40 million to 50 million vehicles change hands in used car transactions," Cheng said. "Oftentimes these transactions can be a catalyst for someone looking to accessorize. A lot of accessorizers, we found in our previous research, tend to make their first upgrade on their vehicle within the first few months of purchasing their vehicle, whether new or used."
The pandemic dramatically impacted vehicle sales, especially in March and April 2020, but by year-end sales bounced back, he said, noting that SEMA's outlook for vehicle sales is better today than at this point last year.
"We anticipate that vehicle sales should be back to where they were pre-pandemic within the next two to three years," he said.
"In a typical recession, larger vehicles tend to be hit hardest; they don't sell as well because consumers are cutting back on their spending. We saw this in 2008-2009; people shifted into cheaper smaller cars because they were cutting back.
"But it's been different because of the pandemic. In 2020 new vehicles were actually sustained by light trucks, particularly pickups and CUVs. Consumers who cut back last year actually moved into cheaper entry-level CUVs instead of passenger cars.
"We expect the growth of CUVs to continue over the next decade and, by 2028, we expect them to be just under half of all light vehicles sold. And that shift to light trucks is why the average price of a vehicle has gone up."
During the Great Recession of 2008-2009, light trucks made up about half of all light vehicles sold with passenger cars making up the other half. By 2020 light trucks made up 76 percent of new vehicles sold, and by 2028 SEMA expects that rate to grow to 82 percent.