By John Horner
May 9, 2008 - 4,516 Views
The Wall Street Journal [WSJ] reveals the not-so-surprising fact that U.S. car buyers are trading down to smaller vehicles in the name of fuel economy– but they still want iPoditude, hands-free schmoozing and thermal butt management. Small car market share is climbing, from about 14 percent (2004) to over 19 percent (year to date). At the same time, the average small car price is heading upwards by some $2k - $3k. Ford Marketing Maven Jim Farley says around 30 percent of Foci are now top spec. Hang on. Does this mean that there's, you know, money in small cars? Yes! So "auto makers accustomed to building eight-cylinder cars loaded with options while sparsely equipping four-cylinder vehicles [not naming any names yet] have to adjust their production. GM President Fritz Henderson [there you go] said Wednesday that the company is trying to find more plant capacity to build more cars." Too bad GM can't convert all those truck factories to small car production. Who saw that one coming? To illustrate the premium compact trend, the WSJ brings us the ethnically-correct case study of Hugo Chau. Mr. Chau traded his 2005 Mercedes for a Sync-ed-up Ford Focus and said: "I really wanted a car that has the features and is nice to drive… The Mercedes was more like a toy, and this is something I can drive every day." What Merc was that, then? An SLR?
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May 9th, 2008 at 8:28 pm
Yes, I am seeing this on the streets. Up-spec smaller cars.
Except for those folks in McMansions. The local Kia dealer is now only stocking the lowest priced lines of every vehicle (though he has plenty of 2007 higher spec variants still available).
Believe it or not, our town is the one town in the United States where several of the top ten car sellers are actually Kia. And I’m in northwestern Michigan.
Yeah, I was shocked, too. Until I took stock and looked at Michigan’s economy (and the fact that pretty much all of the car parts manufacturing “3rd tier” plants have closed and virtually stuck their managerial middle finger up into the air towards the ex-workers, and the jobs all went to Mexico, China and “anywhere but Michigan”).
So people take crap jobs and but cheap new cars, abandon Detroit (which abandoned them).
May 9th, 2008 at 8:58 pm
So, after taking a $20,000 depreciation hit in 2 years, Mr. Chau is now saving $2,000/year in gasoline. I knew that car-buying was mostly an emotional process, but this really takes the cake.
May 9th, 2008 at 9:02 pm
Mr. Chau’s new Focus is probably going to depreciate less than his 2005 MBZ would have continued to over the next five years, so he isn’t a complete economic fool. The purchase in 2005 may qualify as a bad decision, but getting out while the vehicle is still worth something isn’t all bad. Who knows, maybe he was on a three year lease with the ‘05 and his time was already up.
May 9th, 2008 at 9:05 pm
I assume the Cobalt qualifies as a small car. If GM needs more capacity to build these things, why do they have $500 on the hood?
May 9th, 2008 at 9:25 pm
I assume the Cobalt qualifies as a small car. If GM needs more capacity to build these things, why do they have $500 on the hood?
They don’t need capacity to build Cobalts but to build small cars. The Cobalt was designed to compete with Civics and Corollas. A task at which it has failed miserably.
May 9th, 2008 at 9:30 pm
Small cars are of course not a shameful choice, like many bigger car buyers seems to look on them. Bigger or more expensive does not make a person more than anyone. It seems circumstances result in it being easier to own a small vehicle in society not become a target or atleast feel ok being targeted.
I wonder if this is just a trend and lower specs cars will result in future majority and lower profits. Also like other countries I hope small cars don’t end up costing an arm and a leg. I do not want to drive a nano. Although that is a bit of change and probably noting to worry about. Inflation is a bitch though and I think a big part of Americas future.
May 9th, 2008 at 10:27 pm
now if only they (big 3) could actually build a high quality small car…
in terms of new car quality (and desirability), still have some catching up to do…
corolla, civic, jetta/rabbit, mazda 3, elantra, impreza, etc… are pretty nice…
please, please, please though - keep the wheel size at 16 inches (or 15, or even 14)… - just wasting gas driving a 140 hp car with 18 inch rims…
May 9th, 2008 at 11:30 pm
That Astra is a high quality small car sold by GM but nobody is buying it. With a year’s supply on the ground it might recieve some steep discounts soon and perhaps turn into the small car deal of the century like GM’s Saab 9-2X experiment and LS1/LS2 GTO debacle.
May 10th, 2008 at 1:09 am
What are we considering small these days? Even the small cars are so bloated compared to 10 years ago. The day GM creates a Mini fighter (with Mini quality) I’ll buy it.
May 10th, 2008 at 2:37 am
I would like a Ford Focus coupe. I think Ford should send over their European convertible version plus a hardtop coupe version to increase its status as a good compact car rather than just an economy car. Just because people want fuel-efficient cars doesn’t mean they want cheap ones.
Without decontenting, I figure Ford might be able to make a profit off of the Focus.