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Increased Popularity of SUVs Sparks Conflict Between Car Companies and Dealers

Automotive practice group chair Aaron Jacoby recently spoke with the Los Angeles Times about how as the year draws to a close, new car sales for 2017 have been marked by demand for SUVs rising to unprecedented heights, while interest in traditional passenger cars has plummeted. The article also discusses how the shifting sales picture has created headaches at the retail level too. Many dealers have had to expand their physical footprint to accommodate new SUV models, while also saving room for the less-popular sedans. “Dealers are being asked to build these huge Taj Mahal showrooms that showcase the SUVs and the whole lineup of cars, by manufacturers who believe they are following the market,” Aaron said. The tension between the dealers and car companies is exacerbated, Aaron went on to say, because dealers are required every five to seven years to upgrade their showrooms to stay current with new models, even as the market is changing so fast that $5-million to $10-million face-lifts may not make sense if gas prices rise and SUVs and larger vehicles go out of favor. “Dealers would like to stay where they are until the future is more clear, so they don’t spend millions of dollars to service a need that turns out to be obsolete five years from now,” Aaron said. “But the here and now is that gas is cheap and people want to buy bigger cars.”

To read the full article, click here.