On the one hand, introducing new models is — as one would expect — a good thing. The study's premise is that carmakers who have the newest vehicles will attract more customers, because "OEMs with the highest replacement rate and youngest showroom age have generally gained share from model years 2004-19."
The average launch rate of 62 vehicles per year from 2020 to 2023 is 55% higher than the average rate of 40 per year from 2004 to 2019. John Murphy, lead analyst on the report, said it "should be noted that the extreme levels in model years 2019 and 2020 are also a result of nameplates splintering." Nevertheless, "Car Wars" believes CUV launch intensity is overweighted by 45 percent, especially in the hybrid and super-luxury categories. According to Murphy, with 149 crossover nameplates in 2023, "It will be, by definition, the most crowded segment in history."
The beginning of the cautionary tale here has several facets, the first being that crossover profits "will quickly fade and erode to where passenger car profits have been recently. A real significant risk, cycles decline, there's an overcrowding in the market." This isn't new; the Car Wars study from 2016 — when there were fewer crossovers and light trucks and fewer launches — stated, "new product comes at a high cost to [automakers], which will need to increasingly leverage global platforms and simplify product offerings to remain efficient and competitive."
Three years ago, Murphy said consumer preferences "should support demand," though, and that ""This focus on crossovers and trucks is a great thing for mix and, ultimately, profitability in the industry over the next four years." The coming glut leads this year's report to state, "the CUV segment is becoming increasingly saturated by new product, so little incremental benefit is likely to accrue to the industry as a whole, in our view."
Another factor involved is that the higher price of crossovers and light trucks put more entry-level vehicles out of reach for consumers. That might play a role in the predicted declining audience for new cars; according to Car Wars, annual sales will plummet from 17.27 million last year to between 13 and 14 million by 2022. That's a massive advance on Car Wars' previous timeline. In the 2016 study, analysts didn't predict the 14-million sales figure until 2026.
Away from the gloom, who could be winners? Beyond consumers spoiled for choice, Car Wars says Honda, Hyundai-Kia, and Ford have highest planned replacement rates during 2020-2023 model years, and so are poised to gain market share. Ford could see $2 billion in profit just from the now-arrived Ranger and coming Bronco, following the profit windfall from the most recent Expedition and Lincoln Navigator.
General Motors, Volkswagen and Fiat-Chrysler have the fewest new vehicles and replacements coming, and " Nissan continues to sputter." GM, it must be noted, is coming to the end of cycle after leading the pack in 2016 and 2017.
There's still a little bit of light for sedan lovers, with 24 percent of the coming launches and significant updates to cover the small-, midsize-, and large-car segments.