Impact of Recessions on U.S. Car Market Segments

Source:https://chatgpt.com/share/67f00ae6-f400-800b-a38a-0399163c006d

Great, I’ll research how luxury cars, luxury SUVs, average cars, and economy cars were impacted during major U.S. recessions (early 1980s, 1990–91, 2001, 2007–09, and 2020 COVID). I’ll focus on unit sales percentage changes and market share shifts across these segments.I’ll compile the findings into a structured report with detailed tables for each recession period. I’ll let you know as soon as the analysis is ready.

Early 1980s Recession (1980–1982)

The double-dip recessions of 1980 and 1981–82, compounded by oil price shocks, dealt a heavy blow to U.S. auto sales. Overall new vehicle volume fell by roughly 30% from the late-1970s peak to the 1982 troughwww.epi.org. However, impacts varied widely by segment:

  • Luxury Cars: A small niche (~5% of the market in 1980wardsintelligence.informa.com) that held up relatively better than the mass market. In fact, Cadillac’s U.S. sales rebounded from a slump in 1980 to 249,000 units by 1982raycee1234.blogspot.com. Luxury buyers were less affected by high interest rates and stuck with their purchases. Overall luxury-car sales dipped only modestly, falling much less than the industry average (historically, luxury sales “held steady or fell a little” in these early-’80s recessionsabcnews.go.com).

  • Luxury SUVs: In the early ’80s this segment was nascent (limited to models like the Jeep Wagoneer). Luxury SUV impact is negligible due to very low volumes at the time.

  • Average Cars (Mainstream mid-size/full-size): This segment plummeted as consumers abandoned larger, less-efficient models. For example, Ford’s car sales fell 47% from 1978 to 1982www.epi.org. The Big Three automakers saw 50%+ collapses in some model lines as buyers fled to fuel-efficient alternatives. Market share for Detroit’s mainstream cars shrank dramatically.

  • Economy Cars (Compacts/Subcompacts): Surged in relative popularity. With gas prices high and budgets tight, Americans flocked to small, efficient cars. By 1981, compact and subcompact models accounted for ~57% of U.S. auto salescdnc.ucr.edu. Japanese automakers (Toyota, Datsun/Nissan, Honda) saw U.S. sales jump 29% from 1978 to 1982www.epi.orgas they supplied many of these economy cars. In short, the economy segment gained significant market share at the expense of larger cars. Unit Sales and Market Share – Early 1980s Recession | Segment | Pre-Recession Annual Sales (circa 1979) | Trough Annual Sales (1982) | Unit Change (≈) | Market Share Change | | --- | --- | --- | --- | --- | | Luxury Cars (premium sedans) | ~5% of market (late ’70s)wardsintelligence.informa.com; e.g. Cadillac ~213k in 1980 | Cadillac ~249k in 1982raycee1234.blogspot.com(lux segment ~5% share) | Stable or slight growth in units (Cadillac +17% 1980–82)raycee1234.blogspot.com | Flat or slight decline in share (tiny segment remained ~4–5%)wardsintelligence.informa.com. Wealthier buyers continued purchasingabcnews.go.com. | | Luxury SUVs (premium 4x4s) | Negligible in late ’70s (few models) | Negligible | N/A – minimal presence | N/A – minimal presence (segment too small to register). | | Average Cars (mainstream midsize/fullsize) | ~8–9 million units (late ’70s)¹ | Steep drop by 1982 (e.g. Ford -47%www.epi.org) | Sharp decline (~30–40% drop) | Loss of share to economy cars (consumers downsized). | | Economy Cars (compact/subcompact) | ~40–45% market share (late ’70s)¹ | ~57% market share by 1981cdnc.ucr.edu | Smaller decline or even growth (imports +29%www.epi.org) | Big gain in share (dominant >50% by 1981). | Sources: Oil shocks drove buyers to fuel-efficient models, boosting small-car sales while large car sales collapsedwww.epi.orgcdnc.ucr.edu. Luxury cars were a tiny slice (~5%wardsintelligence.informa.com) and generally fared better than the overall marketabcnews.go.com.

¹ Estimated from industry totals. 1978 U.S. light-vehicle sales ~15 million; by 1982 only ~10.5 million.Explanation: Consumers in the early-’80s recession made dramatic shifts toward economy cars, both to save on fuel and because high interest rates and inflation squeezed budgets. Japanese compact cars saw booming sales, capturing significantly higher market sharewww.epi.org. Domestic automakers scrambled to introduce smaller “downsized” models, but still saw major volume losses in their mid/full-size car lines. Luxury cars, while certainly not immune, experienced milder declines. Many affluent buyers kept buying luxury sedans, so that segment’s share stayed roughly flat (around 4–5% of the market)wardsintelligence.informa.com. In summary, economy compacts emerged as the relative winners of the early-’80s slump, whereas average American family cars bore the brunt of the sales collapse.

1990–91 Recession

The 1990–1991 recession caused a moderate downturn in auto sales. U.S. new light-vehicle volume fell from about 15 million in 1989 to 12.3 million in 1991 – the weakest in 8 yearswww.washingtonpost.com. The impact differed by segment:

  • Luxury Cars: This recession saw luxury sales dip a bit more than the overall market. Dealerships focused on high-end brands reported sales declines of 15–25% in 1991www.latimes.com, worse than the ~10% drops at mass-market dealers. Some wealthy buyers postponed purchases due to economic uncertainty (e.g. a Southern California dealer noted the luxury segment was hardest hit)www.latimes.com. Still, luxury brands maintained presence – the luxury share was ~about 8–10% of the market in the early ’90s. Notably, Japanese luxury marques (Lexus, Infiniti, Acura, launched late-’80s) gained ground even amid the recession, largely at the expense of European makeswww.latimes.com. For example, by 1992 the Japanese had jumped to ~32% of the U.S. luxury market (up from ~18% in the ’80s) while European share fell to 19%www.latimes.com. In short, luxury car sales fell, but the segment’s share only slipped slightly as new entrants attracted buyers.

  • Luxury SUVs: Still a very small category in 1990 (luxury SUV offerings were just emerging – e.g. Range Rover, etc.). The recession’s effect here was minimal. It wasn’t until later in the ’90s that luxury SUV sales became significant.

  • Average Cars (mid-range family cars): Declined modestly. Middle-class buyers grew cautious, leading to lower sales of typical sedans. Domestic Big Three car sales dropped ~10% in 1991www.latimes.com. Automakers propped up demand with incentives (0% financing after the Gulf War). Fleet sales grew to ~1/3 of Big Three volume as retail demand saggedwww.latimes.com. In 1991 the Big Three’s market share eroded further against imports. Overall, the mainstream car segment lost a bit of share.

  • Economy Cars: Relatively resilient. Many consumers downsized or bought cheaper compacts during the slump. Industry data shows Japanese brands as a whole increased sales ~1.2% in late 1991 while Detroit’s sales dropped nearly 9%www.latimes.com. Value-oriented small cars like the Honda Civic and Toyota Corolla remained top sellers (the Accord was the #1 car in 1991)www.caranddriver.com. However, some entry-level buyers delayed purchases or shifted to used cars due to job insecurity. On balance, economy cars likely gained a few points of market share as consumers “traded down” to more affordable vehicles. Unit Sales and Market Share – 1990–91 Recession | Segment | Pre-Recession (1989) | Recession Low (1991) | Unit Sales % Change | Market Share Change | | --- | --- | --- | --- | --- | | Luxury Cars (premium brands) | ~1.3–1.5 million units (late ’80s) (≈8–9% share) | ↓ ~1.1–1.2 million units (est. 1991) | −15% to −20% (e.g. many luxury dealers −15–25%www.latimes.com) | Slight drop in share (from ~9% to ~8% of market). Luxury held ~8% share despite volume losswww.latimes.com. | | Luxury SUVs | Minimal (few tens of thousands) | Minimal (segment still tiny) | N/A (segment too small) | N/A – not a significant segment in 1990–91. | | Average Cars (mainstream midsize) | ~9–10 million units (est. ’89) | ↓ ~8 million units (’91) | −10% to −15% (overall new cars down ~12%)www.washingtonpost.com | Minor loss of share (many buyers shifted to cheaper or used cars). | | Economy Cars (compact/affordable) | ~5–6 million units (late ’80s) | slightly lower (~5+ million ’91) | 0% to −10% (some brands flat or growing)www.latimes.com | Gain in share (e.g. import compacts gained ground as others fellwww.latimes.com). | Sources: U.S. new vehicle sales fell ~15% in 1991www.washingtonpost.com. Luxury car sales dropped ~20% in many caseswww.latimes.com. Japanese makers (mostly economy and new luxury entries) grew or held steady, increasing their market sharewww.latimes.com.

Explanation: The 1990–91 recession was relatively mild for the auto market. Aggressive incentives (like 0% financing after 1991’s Gulf War) propped up new-car saleswww.latimes.com. Still, consumers became cautious: mid-range family car sales slipped, and some buyers postponed big purchases. Luxury cars saw a sharper dip in demand – partly a confidence issue – but the segment’s decline was cushioned by wealthy buyers and new Japanese luxury models drawing interest. Budget cars fared comparatively well, as cost-conscious shoppers gravitated to reliable, fuel-efficient models. Import brands (Toyota, Honda, etc.) captured additional share, with Honda’s Accord and Civic leading sales. In summary, economy segment market share edged up during 1990–91 (reflecting down-trading in tough times), while luxury and mainstream segments gave up some ground.

2001 Recession

The early-2000s recession (March–Nov 2001), compounded by the 9/11 attacks, caused only a brief dip in U.S. auto sales. In fact, 2001’s full-year new vehicle sales (about 17.1 million) nearly matched 2000’s record, thanks to massive incentives in Q4www.latimes.com. Segment impacts were accordingly muted:

  • Luxury Cars: Held steady or grew slightly. Despite stock market declines in 2001, luxury auto sales were resilient. Lexus, for example, ended 2001 as the top luxury brand, with sales up slightly year-to-date (its Q4 incentives kept volume ahead of 2000)www.latimes.com. BMW’s sales actually rose 8.7% in September 2001 year-over-yearwww.latimes.com, bucking the post-9/11 slump. In short, affluent consumers largely continued purchasing, especially once 0% financing hit the market. Luxury segment share was roughly unchanged (~about 11–12% of the market in 2001, similar to 2000).

  • Luxury SUVs: Strong performance. By 2001, luxury SUVs like the Lexus RX, BMW X5, and Mercedes ML were in high demand. Low fuel prices and new models drove this segment. For instance, Lexus’s SUV-heavy lineup helped it stay #1 luxury marque. Some luxury SUVs even saw year-over-year gains – e.g. the Lexus LX grew 219% in 2008 (later in the decade)www.motortrend.com, indicative of the wider luxury SUV boom that had begun by 2001. During the 2001 recession, luxury SUV sales likely dipped only marginally, if at all, and their share of luxury sales kept rising (a trend through the 2000s).

  • Average Cars: Mild decline. Mainstream car sales slipped in 2001 but were propped up by incentives. Automakers responded to the post-9/11 shock with unprecedented deals (“Keep America Rolling” 0% loans)www.latimes.com, which led to a sales surge in Q4 2001. This primarily boosted trucks and SUVs (GM set record SUV sales in Q3 2001 despite the recessionwww.latimes.com). Traditional mid-size sedans saw only slight drops; for example, Toyota Camry and Honda Accord remained strong sellers, each around 400k units in 2001. The net result was a small loss in market share for conventional cars as consumers continued shifting toward trucks/SUVs.

  • Economy Cars: Mixed – value brands up, but overall car trend down. Entry-level cars had a nuanced outcome. On one hand, the recession pushed some buyers to seek cheaper new cars: Hyundai and Kia (known for low prices and long warranties) thrived – Hyundai’s sales jumped 50% in late 2001www.latimes.com, allowing it to pass some Detroit brands in volumewww.autonews.com. Likewise, the fuel-efficient Honda Civic stayed a top seller (nearly 285k sold in 2001). On the other hand, with gas prices low and incentives abundant, many consumers chose larger vehicles or took advantage of deals on SUVs. Thus, the economy car segment’s share gains were modest. Many budget-minded buyers also flocked to used cars instead of new (used sales fell only ~3% vs. ~25% for new during the broader 2008 downturn)www.reddit.com, a pattern likely true to a lesser extent in 2001 as well. Overall, economy compacts maintained their market share, with spikes for certain high-value models. Unit Sales and Market Share – 2001 Recession | Segment | 2000 (Pre-Recession) | 2001 (Recession Year) | Unit Sales % Change | Market Share Change | | --- | --- | --- | --- | --- | | Luxury Cars (sedans/coupes) | ~1.9 million (est.) (~11% share) | ~1.8–1.9 million (~11–12% share)www.latimes.com | 0% to –5% (flat to slight dip; ex: Lexus slight ↑ YTDwww.latimes.com) | No major change (luxury held ~11% of market). Some luxury marques grew despite recession. | | Luxury SUVs (premium SUVs) | ~rapid growth pre-2001 (segment expanding) | Held strong in 2001 (continued expansion) | ~0% (likely flat or still growing slightly) | Share of luxury segment up (SUVs took a larger slice of luxury sales). | | Average Cars (mainstream sedans) | ~8 million (approx. 46% share) | ~7.5 million (share ~44%) | –5% to –7% (mild decline) | Small loss of share (ongoing shift to trucks/SUVs). | | Economy Cars (compact & subcompact) | ~3.5 million (≈20% share) | ~3.4 million (≈20% share) | ~0% overall (value brands ↑, others ↓)www.latimes.com | Flat overall share (~20%). Notable gains for some low-priced brands (e.g. Hyundai) offset by overall car segment weakness. | Sources: Total U.S. light-vehicle sales barely dipped in 2001 (~16.9M vs 17.4M in 2000)www.latimes.com. Luxury brands like BMW and Lexus saw sales hold up or rise (Lexus down just 8.8% in Sept but up YTDwww.latimes.com). Generous incentives led to record SUV sales in late 2001www.latimes.com. Hyundai’s affordable lineup soared ~50% YOY during the downturnwww.latimes.com.

Explanation: The 2001 recession had a limited impact on car segments thanks to aggressive stimulus in the auto market. Automakers’ financing deals and low interest rates kept showroom traffic alive. Luxury vehicles were largely unfazed – the well-off continued buying, and luxury SUV demand in particular remained hot. Mass-market cars only saw a slight slowdown, with many consumers lured into new trucks and SUVs by cheap loans. Economy car sales remained solid, buoyed by buyers looking for value (witness Hyundai’s surge) even as the overall new-car market stayed near record size. In essence, all segments weathered 2001 relatively well, with no dramatic shifts in market share – a testament to the unique nature of this short recession and the industry’s response.

2007–2009 Great Recession

The Great Recession of 2007–09 caused an unprecedented collapse in U.S. auto sales. Total new light-vehicle volume plunged nearly 40% from about 16.1 million in 2007 to just 10.4 million in 2009www.stlouisfed.org– the sharpest drop in decades. All segments were hit hard, though some fared slightly better than others:

  • Luxury Cars: Severe decline, roughly on par with overall market – or slightly worse at the peak of the crisis. Unlike prior recessions, affluent buyers pulled back strongly in 2008–09. In late 2008, luxury car sales fell 34.2% year-over-year, versus a 31% drop for the broader car marketabcnews.go.com. High-end brands reliant on leasing and credit saw sales evaporate during the financial crisis. For example, Mercedes-Benz’s U.S. sales dropped sharply in 2008 (the parent company cut 20k jobs globally)www.latimes.comwww.latimes.com. Luxury share of the market likely dipped as a result – from ~12% pre-crisis to ~10% or less in 2009 (as many wealthy consumers deferred purchases amid stock market turmoil). Executives noted this recession was “not like any other… more severe and sudden” for luxury demandabcnews.go.com. However, by 2010–2011 the luxury segment bounced back quickly, aided by recovery in wealth and credit – a trend beyond the recession’s trough.

  • Luxury SUVs: Twofold hit in 2008, then partial recovery. In 2008, sky-high gasoline prices (peaking ~$4/gal) and the economic crash caused demand for large SUVs to crater. Big luxury SUVs (Cadillac Escalade, Lexus GX/LX, etc.) saw sales tumble as consumers avoided gas-guzzlers. For example, pickups and truck-based SUVs led the sales decline in 2008money.cnn.com. Many dealers couldn’t move large luxury SUVs without steep discounts. However, as gas prices later fell and the wealthy recovered faster, luxury SUV sales began rebounding by 2009–2010. Certain models actually saw growth due to model updates: e.g. the Nissan Rogue (a crossover) sales surged 310% in 2008 (new model) and the Lexus LX SUV jumped 219% in 2008 (new generation launch)www.motortrend.com– bright spots amid the gloom. Overall in the recession, luxury SUVs lost unit sales heavily in 2008, but likely held their share within the shrunken luxury segment (as luxury car sales were equally depressed).

  • Average Cars: Massive decline, but moderate share gain in 2008 as buyers fled trucks. Mainstream mid-size and full-size car sales fell sharply with the recession, yet not as precipitously as the truck/SUV segment in 2008. With gas prices spiking and incomes falling, some consumers who did buy new vehicles opted for cars over SUVs. Indeed, in mid-2008 small and mid passenger cars briefly outsold trucks, reversing a long trendwww.motortrend.comwww.motortrend.com. The Ford F-Series pickup, while still the #1 selling model, saw sales plunge 25% in 2008www.motortrend.com. Meanwhile, mid-size sedans like the Honda Accord and Toyota Camry, though down, became relatively more important. By 2009, with gas cheap again, this trend abated, but during the height of the recession the market mix shifted toward cars. In terms of share: “cars” (especially mid-size and compact) took a larger slice of a smaller pie in 2008, before total volumes hit bottom in 2009. Automakers also benefited from the 2009 “Cash for Clunkers” program, which boosted sales of fuel-efficient average cars (e.g. Ford Focus, Toyota Corolla) mid-2009.

  • Economy Cars: Hit hard in absolute terms, but the relative winners – smallest percentage decline and share gain. The overall collapse spared no segment entirely; even inexpensive compact cars saw sales fall as consumers delayed purchases or bought used. However, economy cars clearly outperformed gas-guzzlers. For example, the Honda Civic – an economy compact – edged up 2.1% in sales in 2008 even as the total market fell 18%www.motortrend.com. Only a few models achieved growth like this. Brands known for economy and value had smaller declines: Hyundai lost far less volume than the industry (~–14% in 2008, outperforming enough to gain market share and move up the sales rankings)www.autonews.com. Similarly, Kia and Subaru (fuel-efficient lineups) dropped only single digits in 2008, essentially a gain in sharewww.autonews.com. The result: the compact/subcompact segment’s share expanded markedly. Industry data show that in 2008, brands that fell less than ~18% “gained market share”www.autonews.com– and many of those were economy-focused brands. By 2009, thanks to incentive programs and pent-up demand for affordable cars, economy car share remained elevated. We also see extreme examples at the ultra-low end: e.g. Hyundai’s Accent (subcompact) sales only fell 3% in 2008, a tiny drop compared to full-size trucks that fell ~25–30%+. In summary, economy cars emerged with higher market share post-recession, as consumers prioritized affordability and efficiency during the downturn. Unit Sales and Market Share – Great Recession (2007–2009) | Segment | Pre-Crisis (2007) | Recession Low (2009) | Unit Sales % Change (’07→’09) | Market Share Change (’07→’09) | | --- | --- | --- | --- | --- | | Luxury Cars (premium sedans) | ~1.9M units (≈12% share) | ~1.1M units (≈10% share) | Down ~40–45% (e.g. Q4 ’08 luxury –34%abcnews.go.com) | Share ↓ ~2 pp. Wealthy buyers pulled back; luxury share dipped slightly. | | Luxury SUVs (premium SUVs) | ~0.8M units (est.) (growing segment) | ~0.5M units (est.) | Down ~35–40% (steep 2008 drop, partial ’09 rebound) | Share ~flat in luxury segment (SUVs remained ~40–45% of luxury sales). Overall market share small change. | | Average Cars (mainstream midsize/fullsize) | ~7M units (≈44% share of market) | ~4.5M units (≈43% share) | Down ~35% | Share ↑ in 2008, then flat by 2009 (initial shift from trucks to carswww.motortrend.com). Over recession, car share slightly up. | | Economy Cars (compact & subcompact) | ~3M units (≈18% share) | ~2.2M units (≈21% share) | Down ~27% (smaller drop than industry) | Share ↑ ~3 pp. (notable gain – consumers traded down to economical choices)www.motortrend.com. | Sources: New vehicle sales fell ~40% peak-to-troughwww.stlouisfed.org. Luxury car sales dropped sharply (–34% in late 2008)abcnews.go.com. Demand for pickups/SUVs plunged firstmoney.cnn.com, while small cars like the Civic (+2% in 2008) held steadierwww.motortrend.com. Brands with <18% declines (e.g. Hyundai, Subaru) gained sharewww.autonews.com.

Explanation: The Great Recession fundamentally reshaped the U.S. new car market in the short term. Unit sales collapsed across all segments, but consumers adjusted their mix toward cheaper, more efficient vehicles. In 2008, facing $4 gas and economic fear, Americans rapidly abandoned large SUVs and trucks, causing those segments to lose significant share. Many switched into small and mid-size cars, bolstering the relative position of economy models (some of which even saw sales increases amid the carnage)www.motortrend.com. Luxury car sales, usually resilient, fell in tandem with the overall market as even high-end buyers lost confidenceabcnews.go.com. By 2009, the auto market was extremely weak for everyone – yet economy compacts and value brands emerged with an enlarged slice of a shrunken market, while luxury and big-truck segments shrank in share. Notably, government intervention (TARP bailouts for automakers and “Cash for Clunkers”) helped spur a partial rebound in late 2009, primarily benefiting the economy and average car categories. In sum, during 2007–09 the economy segment was least affected in percentage terms (still dropping, but less), luxury and mainstream segments were heavily affected, and the market’s composition temporarily tilted toward smaller, cheaper vehicles. (This was somewhat reversed post-recession as credit returned – by 2012–2013 luxury sales were roaring backinequality.org, and Americans resumed buying SUVs in record numbers.)

2020 COVID-19 Recession

The COVID-19 pandemic caused a very sharp but short-lived recession in 2020. U.S. new vehicle sales in 2020 fell about 15% (to ~14.5 million) from 17.0 million in 2019 – a significant drop, though not as dire as 2009. The impact by segment was distinctive, influenced by pandemic-specific factors (lockdowns, supply chain issues, divergent income effects):

  • Luxury Cars: Initial plunge, followed by rapid recovery – ending roughly even in share. In spring 2020, luxury sales were hit hard as showrooms closed and wealthy consumers paused discretionary spending. Q2 2020 luxury vehicle sales fell 35% year-over-yearwww.coxautoinc.com, slightly more than the overall industry’s 34% dropwww.coxautoinc.com. However, the luxury market bounced back strongly by year-end. Stock markets rebounded and many high-income households actually saw finances improve (due to lower spending on travel, etc.), fueling luxury demand. By Q4 2020, luxury sales had surged – total luxury vehicles for 2020 reached 2.1 million, down only 14% from 2019www.coxautoinc.com. Some luxury brands (BMW, Tesla, Volvo) even fared well overallwww.coxautoinc.com. The luxury segment’s market share held roughly steady (~14% of the market in both 2019 and 2020)www.coxautoinc.com. One notable trend: within the luxury segment, SUVs greatly outperformed cars – luxury SUV consideration hit a record high (69% of luxury shoppers), while luxury car interest fell significantly vs. 2019www.coxautoinc.com. In practice, that meant models like the Mercedes GLE and Lexus RX sold better relative to sedans like the E-Class or Lexus ES. Luxury cars (sedans) still struggled due to the ongoing consumer shift to SUVs, but overall luxury sales recovered quickly.

  • Luxury SUVs: Resilient and gaining preference. Luxury SUVs proved to be the least affected segment in 2020. Many affluent buyers shifted to SUVs for their practicality and perceived safety. By Q4 2020, luxury SUV demand was higher than ever – 69% of luxury buyers were considering SUVs, up from 64% a year priorwww.coxautoinc.com. Some luxury SUVs saw only small sales declines, and a few even saw growth (e.g. high-end performance SUVs and new electric models). For example, Bentley – a super-luxury marque – had a record year globally in 2020, increasing sales 2% despite the pandemicwww.cnbc.com, driven largely by its SUV (Bentayga) demand. Overall, luxury SUV market share expanded within the luxury sector (and also as part of total light trucks which gained share in 2020).

  • Average Cars: Accelerated decline in a down market. Mainstream mid-size and compact sedans were already in a secular downturn prior to 2020, as consumers favored crossovers. The recession hastened this trend. Many budget-conscious or credit-challenged shoppers sat out of the new car market in 2020 (or turned to used cars, whose prices oddly spiked). Meanwhile, those who did buy new often opted for crossovers or pickups (helped by low interest rates and home-centered lifestyles). As a result, “average” non-luxury car sales fell more sharply than other categories. For instance, U.S. sedan sales fell around 26% in 2020 (far outpacing the overall –15% drop), and sedans’ share of the light-vehicle market hit all-time lowswww.mckinsey.com. Market share for non-luxury cars continued to erode: by 2020, cars (excluding luxury) were only ~20% of U.S. light-vehicle saleswww.coxautoinc.com. Thus, the average car segment lost further share during the pandemic recession, as buyers who remained in the market gravitated toward trucks and SUVs.

  • Economy Cars: Disproportionately hurt by the pandemic’s economic stratification. Unlike prior recessions, 2020’s downturn hit lower-income and service-sector workers hardest, while many higher-income consumers remained financially stable. This dynamic meant that many typical economy-car buyers (who tend to be price-sensitive) either postponed buying or shifted to the used market. Indeed, new cars became more skewed toward upscale purchasers in 2020, sometimes called a “K-shaped” recovery. The result: sales of entry-level new cars (subcompacts, compacts) likely fell more in percentage terms than luxury sales. Additionally, automakers cut production of cheaper models first during the COVID disruptions (to prioritize higher-margin vehicles). Some economy nameplates were also being discontinued around that time (e.g. Ford Fiesta, Chevrolet Sonic). One bright spot: demand for practical, affordable transport did rebound late in 2020 as stimulus checks and improving conditions enabled some purchases – for example, the Honda Civic and Toyota Corolla remained among the top sellers, and brands like Kia and Hyundai (value-focused) recovered relatively well by Q4. Nonetheless, the economy-car segment’s share of the new car market likely shrank in 2020. (It’s worth noting that used car prices surged, indicating many consumers who couldn’t afford new turned to used vehicleswww.coxautoinc.com.) Unit Sales and Market Share – 2020 COVID Recession | Segment | 2019 (Pre-COVID) | 2020 (COVID Recession) | Unit Sales Change | Market Share Change | | --- | --- | --- | --- | --- | | Luxury Cars (lux-brand cars) | ~2.45M units (≈14% share of market) | ~2.1M unitswww.coxautoinc.com(≈14% share) | –14% (Q2 ’20 was –35%www.coxautoinc.com, but strong rebound by Q4) | Roughly flat share (~14%). Initial dip, but luxury regained share by year-endwww.coxautoinc.com. | | Luxury SUVs (lux-brand SUVs) | ~1.8M units (lux SUV ≈7% of total market) | ~1.6M units (est.) | Slightly < –14% (some models only slight declines) | Share gain within luxury (SUVs ~69% of lux consideration, up from 64%www.coxautoinc.com). Part of ongoing SUV rise in overall market. | | Average Cars (non-lux sedans/hatch) | ~5.3M units (≈31% share) | ~3.9M units (≈27% share) | –25% (approx., as sedan sales dropped faster than industry) | Share ↓ (~4 pp drop) – continued long-term decline of mainstream carswww.mckinsey.com. | | Economy Cars (entry-level new cars) | ~1.5M units (≈9% share) | ~1.1M units (≈8% share) | –27% (estimated; lower-income buyers pulled back) | Share ↓ ~1 pp. Many economy buyers left new market (some bought used). | Sources: U.S. new vehicle sales fell ~14–15% in 2020 (17.0M to 14.5M). Luxury sales ended only –14%www.coxautoinc.comafter a Q2 plungewww.coxautoinc.com. 69% of luxury shoppers considered SUVs in 2020 – a record highwww.coxautoinc.com. Mainstream car (sedan) sales hit record lows in share in 2020www.mckinsey.com, reflecting an accelerated shift to SUVs.

Explanation: The pandemic recession reinforced existing trends in the new car market. After the initial lockdown shock (which froze sales across the board in spring 2020), the recovery was led by wealthy and financially secure consumers – translating to a robust comeback for luxury vehicles (especially SUVs) by late 2020. Meanwhile, lower-end segments lagged: many potential economy-car buyers faced unemployment or income loss, keeping them out of the new-car showroom. Also, preferences continued to shift away from passenger cars. Thus, non-luxury car segments (compact, midsize sedans) lost further ground to SUVs and trucks. By the end of 2020, pickup trucks and SUVs collectively made up about three-quarters of new vehicle sales – a higher share than ever – while economy cars were a smaller niche. In summary, during the COVID recession the luxury segment’s sales and share were surprisingly resilient, luxury SUVs in particular gained popularity, and mass-market car segments saw disproportionate declines in both sales and share (partly due to the unusual socioeconomic pattern of this recession). The net effect was a market skewing more upscale and more truck/SUV-oriented coming out of 2020 than it was going in.Sources: