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Hurricane · 08-06-2008, 08:41 AM

All Small Cars Are Not Created Equal
Compacts and subcompacts are up 40% in 2008. But in the long run, more than size will matter
by Michael Frank

Here's a list of 18 sub-$20,000 compacts and subcompacts (save the Toyota Prius (BusinessWeek.com, 6/6/08), which nudges through the $20k barrier). Data listed are the manufacturer's suggest retail price (MSRP), fuel economy (city/highway), and the EPA's measure of annual fuel cost (all figures are for lowest-cost models and manual shift unless the automatic gets superior mileage). The last stat is the percentage increase or decline in sales through six months this year.

SALES WINNERS

Honda Fit $13,950; 28/34; $1,991; +67%

Toyota Yaris $11,550; 29/36; $1,930; +39%

Scion xB $15,650; 22/28; $2,571; +39%

Mini Cooper $18,050; 28/37; $2,038; +33%

Pontiac Vibe $15,310; 26/33; $2,127; +28%

Ford Focus $14,755; 24/35; $2,201; +27%

Nissan Versa 1.8S; $12,980; 27/33: $2,127; +20%

Chevy Cobalt $14,410; 22/30; $2,604; +19%

Honda Civic: $14,810; 26/34; $2,536; +19%

Kia Spectra $12,895; 23/30; $2,374; +15%

SALES LOSERS

Pontiac G5 $15,675; 25/35; $2,127; -4%

Mazda 3i $13,895 24/32; $2,281; -1.8%

Chevy Aveo $12,170; 24/34; $2281; -1.65%

Dodge Caliber $14,965; 24/29; $2,374; flat

Toyota Corolla $14,405; 28/37; $1,991; -3%

Toyota Prius $21,500; 48/45; $1,338; -3%

PT Cruiser $15,970; 21/26; $2,682; -38%

Suzuki Forenza/Reno $14,249; 20/28; $2,682; -43%

The real question is why some high-mileage cars are selling and others are moribund. Why is the Chevy Aveo (BusinessWeek.com, 12/27/06), which is roughly the size of the Kia Spectra (BusinessWeek.com, 8/7/07) and about the same price, not seeing increased sales, especially when it gets marginally superior fuel economy? Why is the Mazda 3i losing sales to the Ford Focus (BusinessWeek.com, 4/16/08), a stable mate under the Ford (F) corporate umbrella, when, again, prices and mileage figures are similar? And why, oh why, is the Honda Fit screaming off the lot?

Crucial Dealer Network
The answers aren't always simple. For instance, the Ford Focus isn't as good a car as the European edition of the Focus (the latter's on a newer platform), nor is it three times better than the Kia Spectra, yet three times as many Focuses have sold than Spectras. But Ford has a huge dealer network, and when you trade in your massive F-150 pickup (BusinessWeek.com, 4/19/06) (Ford's sitting on a half-year backlog of those) or your Explorer (BusinessWeek.com, 9/1/06) (it's a three-month supply), you're likely to buy the most fuel-efficient Ford rather than search around for the nearest Kia (KIMTY) dealer. Also, for the money, the Focus is relatively large, if spartan, and delivers quite good fuel economy. By the way, you can lump the Cobalt (BusinessWeek.com, 8/4/08) in the mix with the Focus; its sales are strong because Chevy is massive, and this is the best high-mileage, inexpensive machine they sell.

Part of the difficulty is the carmaker reputation, not just a product's features. Tom Libby, senior director of industry analysis at J.D. Power, says that the Chevy Aveo may be a weak product, but a bigger problem is likely that Chevrolet doesn't have a strong brand image as a maker of small cars. "And Dodge has almost no track record with small cars," which is why, he says, the Caliber is so weak relative to the rest of the segment. (J.D. Power, like Businessweek.com, is owned by McGraw-Hill.)

On the Docket
As awful as this year has been for nearly all carmakers in the U.S. (Toyota and Nissan are also being hit hard by the plunge in truck and SUV sales), the future should smell like a big opportunity, albeit one freighted with risks.

For instance, Ford is about to undertake a critical shift toward small cars. For starters, we'll see the Fit-size Fiesta (BusinessWeek.com, 2/27/08) finally coming to market (2010), as well as at least a few variants of the newer, better Focus (2010/11). General Motors (GM), too, is suggesting it will leave the SUV market for dead. Chevy promises a new compact model, called the Cruze (BusinessWeek.com, 7/10/08) (2010), but right now says it will be a sedan, not a hatch. Likewise. the interesting Chevy Beat concept (BusinessWeek.com 7/27/08) may arrive in 2010, as well. The question is, will GM, Ford, (and let's pray, Chrysler get the right mix of powertrain, fuel economy, and cleverness that has made the difference between winners and losers? They'd better. Since there'll be yet more competition coming by then from Honda, Toyota, Nissan (NSANY), Mini, Kia/Hyundai, and that original mass seller of small, cute cars, Volkswagen (VOWG). Detroit can't counterpunch fast enough.

More here: http://www.businessweek.com/lifestyl...mpaign_id=yhoo

08-06-2008, 08:41 AM	#1 (permalink)
Hurricane 6.0 Liter Vortec V8 Join Date: Sep 2003 Posts: 1,543	All Small Cars Are Not Created Equal All Small Cars Are Not Created Equal Compacts and subcompacts are up 40% in 2008. But in the long run, more than size will matter by Michael Frank Here's a list of 18 sub-$20,000 compacts and subcompacts (save the Toyota Prius (BusinessWeek.com, 6/6/08), which nudges through the $20k barrier). Data listed are the manufacturer's suggest retail price (MSRP), fuel economy (city/highway), and the EPA's measure of annual fuel cost (all figures are for lowest-cost models and manual shift unless the automatic gets superior mileage). The last stat is the percentage increase or decline in sales through six months this year. SALES WINNERS Honda Fit $13,950; 28/34; $1,991; +67% Toyota Yaris $11,550; 29/36; $1,930; +39% Scion xB $15,650; 22/28; $2,571; +39% Mini Cooper $18,050; 28/37; $2,038; +33% Pontiac Vibe $15,310; 26/33; $2,127; +28% Ford Focus $14,755; 24/35; $2,201; +27% Nissan Versa 1.8S; $12,980; 27/33: $2,127; +20% Chevy Cobalt $14,410; 22/30; $2,604; +19% Honda Civic: $14,810; 26/34; $2,536; +19% Kia Spectra $12,895; 23/30; $2,374; +15% SALES LOSERS Pontiac G5 $15,675; 25/35; $2,127; -4% Mazda 3i $13,895 24/32; $2,281; -1.8% Chevy Aveo $12,170; 24/34; $2281; -1.65% Dodge Caliber $14,965; 24/29; $2,374; flat Toyota Corolla $14,405; 28/37; $1,991; -3% Toyota Prius $21,500; 48/45; $1,338; -3% PT Cruiser $15,970; 21/26; $2,682; -38% Suzuki Forenza/Reno $14,249; 20/28; $2,682; -43% The real question is why some high-mileage cars are selling and others are moribund. Why is the Chevy Aveo (BusinessWeek.com, 12/27/06), which is roughly the size of the Kia Spectra (BusinessWeek.com, 8/7/07) and about the same price, not seeing increased sales, especially when it gets marginally superior fuel economy? Why is the Mazda 3i losing sales to the Ford Focus (BusinessWeek.com, 4/16/08), a stable mate under the Ford (F) corporate umbrella, when, again, prices and mileage figures are similar? And why, oh why, is the Honda Fit screaming off the lot? Crucial Dealer Network The answers aren't always simple. For instance, the Ford Focus isn't as good a car as the European edition of the Focus (the latter's on a newer platform), nor is it three times better than the Kia Spectra, yet three times as many Focuses have sold than Spectras. But Ford has a huge dealer network, and when you trade in your massive F-150 pickup (BusinessWeek.com, 4/19/06) (Ford's sitting on a half-year backlog of those) or your Explorer (BusinessWeek.com, 9/1/06) (it's a three-month supply), you're likely to buy the most fuel-efficient Ford rather than search around for the nearest Kia (KIMTY) dealer. Also, for the money, the Focus is relatively large, if spartan, and delivers quite good fuel economy. By the way, you can lump the Cobalt (BusinessWeek.com, 8/4/08) in the mix with the Focus; its sales are strong because Chevy is massive, and this is the best high-mileage, inexpensive machine they sell. Part of the difficulty is the carmaker reputation, not just a product's features. Tom Libby, senior director of industry analysis at J.D. Power, says that the Chevy Aveo may be a weak product, but a bigger problem is likely that Chevrolet doesn't have a strong brand image as a maker of small cars. "And Dodge has almost no track record with small cars," which is why, he says, the Caliber is so weak relative to the rest of the segment. (J.D. Power, like Businessweek.com, is owned by McGraw-Hill.) On the Docket As awful as this year has been for nearly all carmakers in the U.S. (Toyota and Nissan are also being hit hard by the plunge in truck and SUV sales), the future should smell like a big opportunity, albeit one freighted with risks. For instance, Ford is about to undertake a critical shift toward small cars. For starters, we'll see the Fit-size Fiesta (BusinessWeek.com, 2/27/08) finally coming to market (2010), as well as at least a few variants of the newer, better Focus (2010/11). General Motors (GM), too, is suggesting it will leave the SUV market for dead. Chevy promises a new compact model, called the Cruze (BusinessWeek.com, 7/10/08) (2010), but right now says it will be a sedan, not a hatch. Likewise. the interesting Chevy Beat concept (BusinessWeek.com 7/27/08) may arrive in 2010, as well. The question is, will GM, Ford, (and let's pray, Chrysler get the right mix of powertrain, fuel economy, and cleverness that has made the difference between winners and losers? They'd better. Since there'll be yet more competition coming by then from Honda, Toyota, Nissan (NSANY), Mini, Kia/Hyundai, and that original mass seller of small, cute cars, Volkswagen (VOWG). Detroit can't counterpunch fast enough. More here: http://www.businessweek.com/lifestyl...mpaign_id=yhoo __________________ 2007 Yukon XL Denali 2006 Chevrolet Corvette Last edited by Hurricane : 08-06-2008 at 08:44 AM.

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