With General Motors set to end production of its Chevrolet Cruze compact car next year, another high-volume, entry-level option will be crossed off American car buyers shopping lists.

On top of similar moves by Ford Motor Co. and Fiat Chrysler Automobiles, the demise of the Cruze adds to growing affordability challenges in the new-vehicle market. The continued death of cars is happening amid record-high prices and rising interest rates, but also shifting consumer tastes. Some dealers anticipate buyers will continue to gravitate toward compact utility vehicles or perhaps just defect from the American automakers that are shedding cars like birds molting feathers.

Consumers feel that affordability pinch especially when automakers drop car segments and focus more on crossovers, SUVs and pickups, said Chad Martin, a Bowling Green, Ky., dealer selling 12 brands including Chevrolet. And while some are loyal to a specific brand, customers generally seem to be shopping for a particular type of vehicle, such as compact cars. So if an automaker eliminates that option, those shoppers likely will turn elsewhere.

"What this is going to mean is, youre going to see a somewhat higher defection rate because you dont have the product lineup that particular consumer wants," said Martin, president of Martin Management Group.

GM said last week it would end production of the Cruze as part of a cost-cutting plan that would idle five North American plants and significantly trim hourly and salaried positions. GM also will stop production of the Buick LaCrosse, Cadillac CT6, Cadillac XTS, Chevrolet Impala and Chevrolet Volt throughout 2019.

Ford already said it will end sales of all sedans in North America as it transitions to a lineup heavy on crossovers and SUVs. FCA decided in 2016 to axe the Dodge Dart and Chrysler 200 cars.

Price will be a bigger hurdle for buyers who want to stick with one of the domestic brands. Many compact crossovers are $5,000 more than their compact sedan counterparts, Martin said. "Obviously, the consumer is going to have to absorb that $5,000 difference," he said.

According to Kelley Blue Book, the average transaction price for all compact cars this year through October was $20,623 vs. $28,448 for compact crossovers or $24,559 for subcompact crossovers. Automakers and dealers expect consumers moving out of compact sedans such as the Cruze to largely turn to the subcompact crossover segment.

Source: Autonews

December 3, 2018