Sometimes, the American consumer just has too many choices. Although projections call for 16 million vehicles to be sold in the U.S. in this year — the highest amount since 2006 — there simply isn’t enough demand for all car companies to be winners. Whether from a lack of differentiation or unexciting designs, investors should consider the following three car brands to be on yellow alert. If things don’t improve rapidly, they could disappear altogether before 2020.
The good times are rolling — but not for everyone
Clearly, some automakers have rocketed out of the gate this year. We’ve seen Ford Motor Company (NYSE:F) scream higher thanks to the wide acceptance of its EcoBoost engine, which improves fuel efficiency without sacrificing power.
Even electric-vehicle maker Tesla Motors Inc (NASDAQ:TSLA) has joined in the action, proving to consumers that electric-vehicle mass-production is possible. Tesla Motors Inc (NASDAQ:TSLA) recently delivered its first one-time charge-adjusted quarterly profit in history, and has now met or surpassed its own production targets in three straight quarters, as consumer demand remains high.
But there’s another side to this coin. While total U.S. auto sales are up 9.6% through the first 206 days of the year, the following brands have struggled to woo the U.S. consumer.
2010 Volvo S80 Source: Wikimedia Commons.
The Swedish car company known for its staunch lines and rigid safety standards is nowadays just a distant memory in the minds of American and global consumers.
In recent months, Volvo has found some moderate success in China, where its redesigned models sent sales up by 62% in July.
Ultimately, though, Volvo is no longer a global player. About half of its sales come from Europe, where austerity measures are putting the kibosh on the entire industry, while its sales in the U.S. have been on a more or less steady decline since 2004. In that year, Volvo sold close to 140,000 units in the United States. But through the first eight months of 2013 Volvo has sold just 44,005 units, a 6% decline from the previous year.
Volvo lacks a true identity — and any sort of swagger whatsoever. Known previously as the “safe” car, Volvo has seen numerous other automakers make its models irrelevant by spending quite a bit of R&D on improving safety in their own cars. Think of it this way: When was the last time you heard anyone excited about the arrival or redesign of a new Volvo?
With no differentiation and a loss of previous its comparative advantage, Volvo’s days could be numbered.
2011 Suzuki Swift, Source: NRMA Motoring & Services, Flickr.
Speaking of cars that fail to excite the American consumer, how about Suzuki? Whether or not you realize it (because it’s not as if Suzuki cars were all that prevalent on the road in the U.S. to begin with), Suzuki made the decision in November to pull out of the American market after three decades.
Hitting a high of 102,000 vehicles sold in the U.S. in 2007, Suzuki was able to muster only 26,266 units sold in the U.S. in its previous fiscal year.