All Small Cars Are Not Created Equal

[Hurricane]

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

[jkennedy293]

I wonder why they used the EPA rating for the Cobalt SS, instead of the XFE?

[Ambalanche]

Originally Posted by jkennedy293

I wonder why they used the EPA rating for the Cobalt SS, instead of the XFE?

Because the media is uninformed and just don't care to research the facts to get a well rounded report out anymore. Plus the public doesn't demand it so they get by with articles on rumors and half truths and the sheeple just accept it as gospel.

[PhishPhood]

Originally Posted by Hurricane

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

It's a good analysis and worthwhile. I'm more and more impressed by BW's articles than almost any of the others..

[GMC-70]

Why is the HHR not included?

[t-rex]

Originally Posted by GMC-70

Why is the HHR not included?

I reckon because the HHR is considered by many sources, including GM itself, to be a "compact crossover" rather than simply a compact car.

***

I saw an ad on local TV recently where a area dealer was selling G6's priced below the Vibe!

[Uzzy]

Originally Posted by t-rex

I reckon because the HHR is considered by many sources, including GM itself, to be a "compact crossover" rather than simply a compact car.

***

I saw an ad on local TV recently where a area dealer was selling G6's priced below the Vibe!

But the PT Cruiser is included.

[corvettekidc6]

they must be comparing the cobalt ss, caz its brother the G5 states that it gets 35 highway, and the cobalt should be right beside it, and the XFE's get 36

one of my friends who has a cobalt says he gets 38mpg highway on his 2005 base model

[Koasterking]

huh, looks like the Astra isn't doing well.

[WishIhadatruck]

One reason the Fit is selling well is because it is a nice car and depending on your needs may offer more than the Civic. It is a hatch has great cargo flexibility as well as excellent fuel economy. Some will prefer the Civic and others will actually prefer the Fit depending on your needs and it also costs less.

Compare that to the Chevrolet dealer. You have the Cobalt and the Aveo. In my opinion the Aveo is not as nice of a car compared to the Cobalt and doesn't offer any real advantages. The 5 door was/is still the old model. Perhaps when the new 5 door comes out it will help with sales. I'm not sure the Aveo 5 door has quite the cargo room or flexibility either.

If I went into a Honda dealer I'd buy a Fit but if I was at a Chevrolet dealer I'd buy a Cobalt.

[FierySolstice]

Where does the Saturn Astra and Toyota Matrix rank? I see the Vibe so the Matrix should be on there as well. The Astra isn't a bad car, I'm surprised more people arent' buying them. I think it's because people don't know much about them. I rarely see them advertised. The G5 is a joke and needs to be replaced and I don't mean with a rebadged Aveo either!

[Chaz_23]

HHR in terms of sales: +9%

Originally Posted by GMC-70

Why is the HHR not included?

[Chaz_23]

The good news is that G5 sales have been increasing for the last 4 months.

[Chaz_23]

Astra sales nearly doubled from June->July. Hopefully things will improve.

Originally Posted by Koasterking

huh, looks like the Astra isn't doing well.

[HoosierRon]

The most obvious answer is: supply. As one example, the Prius's sales are down because dealers don't have any.