Price competition among sport-utility vehicle makers appears likely to further erode automaker profits this year.
The Wall Street Journal reports that August sales, on a retail daily average basis, are expected to be the lowest of the year when they're reported tomorrow. Analysts long believed 2017 sales would fall short of the records set in 2016, but the Journal added that stagnant sales are now affecting a previously immune segment: the crossover SUV.
Sales in that highly profitable category tended to remain robust despite industry patterns, but the paper noted that automakers sought to capitalize on its higher margins by introducing new crossover models.
As a result, observers contend that too many are on the market. Edmunds estimated the average crossover inventory at 61 days — the highest in at least five years — while average incentives offered on the SUVs jumped more than 30 percent in the first half of the year and now exceed $3,000.
The trend also appears unlikely to stop anytime soon. Bank of America Merrill Lynch analyst John Murphy predicted that the number of crossover models would climb from 78 to 110 over the next three-plus years, the Journal reported.
“The industry is wildly overweight on crossovers,” Murphy said.