New-car buyers are downsizing, Ford research shows Examiner.com
18.11.09
NEW YORK, Nov. 18 -- Small is the new big.
That was the word from George Pipas, manager of sales analysis for Ford Motor Co. during a forum on automotive buying trends presented for New York-area journalists.
“What’s taking place,” Pipas told his audience, “ is a compromise between want and need . . . Our view is that small is going to continue to grow and small is going to be more expensive.”
To bolster his point, the speaker pointed out the small-car portion of the market, after remaining stable with an approximate 15 percent market share from 2000 to 2004, has ballooned from 14 percent in 2004 to 21.6 percent in 2009.
The cars he was referring to are known as C segment entries. They include such vehicles as the Honda Civic, Toyota Corolla, Toyota Yaris, Nissan Versa and Nissan Sentra.
Meanwhile, Pipas noted, gas prices rose from $1.49 a gallon in 2000 to $1.85 in 2004, then skyrocketed to $3.25 in 2008, receded to $2.20 this year and are climbing again.
Gas-price volatility is an important factor in the 50-percent growth in small-car sales between 2004 and 2009, he said, but certainly not the only one. Pipas noted that small-car sales have continued to rise since 2008, despite the decline in fuel prices.
In the same time period, he said, there have been major upheavals in the utility-vehicle market. In 2000, the top nine utility vehicles were truck-based SUVs and the l0th place vehicle, the Honda CR-V, was the lone crossover utility vehicle.
Between then and now, the landscape has changed dramatically. The No 1-selling utility vehicle is the CR-V and 9 of the top 10 are crossovers. The lone traditional SIUV, the Jeep Wrangler, is in 7th place. The Explorer has disappeared from the list.
Overall in 2009, small cars represent 21.6 percent of the market; crossover vehicles, 21.2 percent; mid-size cars, 16.2 percent; pickup trucks, 13.1 percent; luxury cars, 7.2 percent; SUVs, 6.4 percent; large cars, 5.3 percent; and minivans, 4 percent.
Pipas said the Millenials, roughly those born between 1979 and 1994, are the hot new demographic. They represent 27 percent of the driving-age population and purchase 11 percent of new vehicles. Forty-nine percent of these first-time buyers are going to the small-car segment.
But, he noted, they want more than base, entry-level vehicles. “They are willing to do without some things so that the things they do acquire have content,” Pipas said.
“If you want to survive, you have to connect with this group,” he warned.
Pipas also emphasized the importance of the Baby Boomers, who represent 32 percent of the driving-age population and 46 percent of new-car buyers. He said research also shows that they are “downsizing, streamlining and simplifying.”
So what is Ford doing to catch the small-car wave?
Pipas said the company will produce up to two million small cars around the world annually by 2012, with up to 10 models sharing the C-segment platform. He also said the company will be selling one million B-Class mid-size vehicles to compete with such entries as the Honda Accord and Toyota Camry.
He noted that the Ford Fiesta, which has already passed the 500,000-mark in sales worldwide, will be unveiled at the Los Angeles Auto Show in December and go on sale in the United States next year.
He also reminded that a new Ford Focus, which will closely resemble the Focus that has been on sale in Europe, will be shown at the North American International Auto Show in Detroit in January, and also go on sale next year in the United States.
Among vehicles sharing the Focus platform will be the upcoming seven-passenger Ford C-Max, a small minivan that is due to go on sale in late 2011 in the United States.
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