Economy, Auto

SUVs, Crossovers Drive Sales for US

SUVs, Crossovers Drive Sales for USSUVs, Crossovers Drive Sales for US

Ford Motor Company and Fiat Chrysler Automobiles are cutting production of smaller cars and idling workers at some North American factories, while boosting output of crossovers and SUVs in reaction to a long-term shift toward larger vehicles, the companies said on Tuesday.

The assembly plant near Detroit in Wayne, Michigan, which makes the slow-selling Ford Focus and C-Max compact cars, will shut an additional five weeks through the end of this year, Ford told Reuters.

Ford spokeswoman Kelli Felker said company executives earlier this year saw demand for small cars slowing and planned the extra downtime. The factory employs about 2,445 hourly workers, most of whom will be laid off when the plant is idled.

US consumers have increasingly favored crossovers, SUVs and pickup trucks over traditional cars such as sedans and hatchbacks. Car sales made up about 42% of US new-vehicle sales in the first five months of this year. That compares with about 46% in the same period of 2015 and 51% in 2013, when US gasoline prices were still averaging above $3 a gallon.

Overall, US light-truck sales have climbed 8.8% this year through May while car demand has slipped 8%.

The US government has forecast gasoline prices will average about $2.27 a gallon this summer. As gas prices have fallen, so has demand for smaller cars such as the Focus. US sales of the model are down 12% through the first five months of this year.

At the same time, automakers are revving up production of SUVs and trucks. Ford said on Tuesday that five of its US and Canadian plants that make crossovers, SUVs or heavy-duty trucks will have one rather than the normal two weeks of summer shutdown to keep up with robust demand.

Among the plants with reduced downtime due to high demand is the Louisville Assembly Plant in Kentucky, which makes the Ford Escape, one of the top-selling crossovers in the United States.

Fiat Chrysler said five of its plants in the United States and Mexico will not have any summer shutdowns this year and three other factories will shorten the normal two weeks of downtime to a single week.

FCA said previously that it plans on July 5 to cut a shift at its Sterling Heights, Mich., plant near Detroit that makes the light-selling midsize Chrysler 200, indefinitely laying off 1,300 workers.

General Motors, meanwhile, said it would not divulge its North American summer plant schedule.