Are changing automotive trends a threat to Tennessee jobs?

May 3, 2018

NASHVILLE, Tenn. (OSBORNE)  --  Car sales are headed lower, but the trend doesn’t appear to be a threat to Tennessee auto assembly jobs.

In late April Ford Motor Company announced plans to end production of several car lines due to falling sales, including the Taurus, Focus, Fiesta and Fusion.

The Cadillac XT5 crossover is built at the GM plant in Spring Hill, Tennessee.
Credit GM.com

Americans are, once again, buying trucks and SUVs in large numbers. Crossover vehicles are also chipping away at the market for traditional sedans. Automakers are happy with the trend because profit margins are much higher on the larger vehicles.

General Motors President Mary Barra highlighted the trend last week on a conference call with reporters.

“Deliveries of GM’s newest crossovers doubled year-over-year in the first quarter, led by the GMC Terrain, the Chevrolet Traverse, and Equinox, and Baojun 510 and 530.”

That’s good news for GM employees at Spring Hill. The plant is currently building two crossovers; the Cadilliac XT5 and the GMC Acadia.

Just two of six vehicle lines being produced by Nissan in Smyrna are sedans. Volkswagen is producing a crossover at its plant in Chattanooga.

Veteran auto analyst Jim Gillette says the large vehicles and crossovers are likely to remain popular.

“They sit higher, they’re easier to see the road and around you, and they have more storage space that the typical sedans.”

But Gillette cautions that the smaller cars do remain popular outside the U.S. and will continue to be built there by America's automotive competitors.

He worries American automakers could be hurt if a sudden spike in gas prices, or some other factor, should force car buyers back into more fuel efficient sedans.