DETROIT — Product saturation within automakers' current and future crossover offerings is leading to increased competition and profitability levels at or below those of sedans, while also leaving dealers short of entry-level new vehicles to sell, according to Bank of America Merrill Lynch's annual "Cars Wars" study of the U.S. product pipeline.
This year's study, which looks at automakers' current and planned product offerings from the 2020-23 model years, was released to the Automotive Press Association here by senior auto analyst John Murphy. Among its top findings:
- Automakers collectively plan to launch 246 new or significantly updated models in the 2020-23 model years, an average of 62 per year — half again the average number of new or major updated models introduced in the 2004-19 model years.
- Seventy percent of automakers' planned products through the 2023 model year are crossovers, SUVs and light trucks, compared to 24 percent in the small/midsize/large-car segments. The study suggests that the overweighting within crossovers will pressure profitability.
- Slowing new-vehicle sales will further pressure profitability for automakers chasing market share.
- Japanese automakers' continued commitment to passenger cars appears to be shifting somewhat to a heavier crossover mix, making their product cadence volatile through 2023, with Honda and Toyota planning larger moves compared to Nissan.
- Hyundai-Kia's replacement rate for the next five years is above the industry average, especially in the 2020 and 2021 model years, but remains weighted heavily toward passenger cars.
- Introductions of alternative-powertrain vehicles, including hybrids and battery electrics, will remain limited for now, due largely to continued prohibitive development costs keeping pricing for those vehicles elevated above those of traditional powertrains.
- While the average showroom age of automaker products has declined year over year, it is largely attributable to product cancellations.