Big vehicles are back in the driver’s seat at Minnesota auto dealerships.
New-vehicle sales in Minnesota rose a modest 4.6 percent in 2014 after a strong 2013 and lower gas prices shaped the market. Sales of trucks and sport-utility vehicles jumped solidly, while sales of cars, including hybrids, dropped.
“Our Focus sales are off, and our trucking and SUV sales are up,” said Chuck Emick, director of sales and finance at Inver Grove Ford-Lincoln.
Across the state, nearly seven in 10 new vehicles sold in 2014 was a truck or SUV. Sales of trucks and SUVs rose 12 percent to 135,839, while car sales fell 6.1 percent to 79,236, according to the Minnesota Automobile Dealers Association. Sales of new hybrid and electric vehicles in Minnesota fell in 2014 for the first time in five years, to 5,608.
Light SUV sales are up probably 15 percent compared with a year ago at St. Cloud Toyota Scion, said Justin Hollenkamp, the dealership’s general sales manager.
“Highlander’s been a huge seller,” Hollenkamp said. “Between the Highlander and the RAV4, they’re both redesigned. Maybe the new design and quality and gas prices all have something to do with it.”
Smaller car sales have grown at the dealership too, just not as much as bigger vehicles.
“I don’t really see a decrease in business in those cars, it’s just not increasing like the SUVs are,” Hollenkamp said.
The numbers reflect a national trend that is gaining strength this spring. SUVs and trucks powered U.S. auto sales to a 4.6 percent gain last month, with several automakers reporting their strongest April sales ever. A stylish and practical generation of SUVs is pulling people away from cars, forcing automakers to discount sedans and even furlough workers to control growing inventories.
Ford announced in April that it plans to cut a shift at its Michigan assembly plant where it makes the Ford Focus because of declining sales of small cars, hybrids and electric vehicles.
A big drop in gas prices, to an average $2.66 a gallon from $3.65 a year ago, also works in favor of SUVs.
“People, boy, they change at the drop of a hat,” Emick said. “When gas was creeping up to $4 a gallon, people were trading Suburbans and heavy SUVs in and buying small cars. Then a month later it was down to $3 a gallon, they’re probably kicking themselves all the way down the road.”
While lower gas prices give consumers confidence, people are also buying new vehicles for other reasons, said Scott Lambert, an executive vice president at the Minnesota Automobile Dealers Association. Older vehicles need replacement after a long sales drought and low interest rates make borrowing more attractive.
Overall, auto sales in Minnesota are now close to eclipsing their all-time peak.
“2004 was our high-water mark,” Lambert said. “We’re sort of back to those numbers now.”
Adam Belz • 612-673-4405