Big Vehicles Put U.S. Auto Makers Back in Driver's Seat

By Jeff Bennett

After years of science projects, econo-boxes and scuffles over which car can go the farthest on a tank of gas, the U.S. auto industry has returned to its sweet spot--big vehicles and big profits.

Cheap gas, easier access to cash and multiyear lease deals are again making North America the fastest-growing, and one of the richest, auto-sales regions in the world, as consumers flock to dealerships to buy pickup trucks, sport-utility vehicles and crossovers. U.S. sales reached 16.5 million vehicles last year and could go as high as 16.8 million to 17 million this year.

"We believe there is still plenty of room for the auto industry to grow, " General Motors Co. Chief Executive Mary Barra said last week. "The strength of the labor market, better job security and the recovery in home prices have consumers feeling pretty good about the future."

So this week's North American International Auto Show in Detroit will underscore an industry at a crossroads. GM will show off its next-generation Chevrolet Volt, and hundreds will gather to hear Elon Musk talk about his vision for the future of Tesla Motors Inc.

But most executives will be watching consumers as they climb into the Chevrolet Colorado pickup truck, check out Ford Motor Co.'s F-150, spend time with Nissan Motor Co.'s 2016 Titan or take a look at Toyota Motor Corp.'s new Tacoma.

Trucks and SUVs accounted for 52.1% of the vehicles sold in the U.S. last year, compared with 47.3% in 2009, and will represent 58% of first-quarter production mix, according to WardAuto.com. Car makers, on average, net an operating profit of as much as $10,000 on every pickup truck sold.

North America, meanwhile, which had accounted for only 21% of the world's auto sales during the recession in 2009, has clawed its way back, finishing near 24%, while the rest of the world's regions remained flat or fell, according to WardsAuto.com.

Cheap gas and the return to big also are raising concerns on whether the auto makers will meet the stringent Corporate Average Fuel Economy standards requiring the miles per gallon for cars to rise to 37.8 miles in 2016, and trucks to go to 28.8 mpg. By 2025, an auto maker's average fuel efficiency for its vehicle portfolio must reach 54.5 miles.

Meanwhile, momentum is building both among politicians and company CEOs to raise the federal gas tax. The 18.4-cent-per-gallon tax hasn't been increased in the past 20 years. Some executives see higher and more predictable gas prices stabilizing auto sales around more fuel-efficient vehicles.

Write to Jeff Bennett at jeff.bennett@wsj.com

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