By John Horner
May 9, 2008 -
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?
Subscribe to Newsletter48 Responses to “ Small Cars Make Money? Who’d a Thunk It? ”
Pages: « 1 [2] 3 4 5 » Show All Reverse Order
Pages: « 1 [2] 3 4 5 » Show All Reverse Order
Leave a Reply 
Back to Top
You must be logged in to post a comment.
Digg
del.icio.us
Blinklist
Furl
Netscape
Google
NewsVine
Reddit
StumbleUpon
Technorati
YahooMyWeb
Windows Live
POWERED
May 10th, 2008 at 3:19 am
It may sound weird, but a BMW 3-series is a small car (1.5 inches longer than a Honda Civic). BMW might yet find a market for the 320i or 320d here in the U.S. if this trend continues. Those of us who were around in the ’70’s gas crunches have already watched this movie twice, so it comes as no surprise that people will take a huge depreciation hit in order to get cars that get better fuel mileage.
When gas goes to $5.00/gallon, we’ll see a lot more of this kind of emotional trading and GM can introduce the X-car all over again.
The fact that GM and Ford did not see this coming is simply astonishing; war starts in the Middle East using borrowed money, the world gets jittery over the supply of oil and the dollar takes a dive. Doh!
May 10th, 2008 at 7:06 am
After dealing as a supplier to the Big 2.8, they did something no else could do, they sold me a Honda.
I bought an Acura TSX and at first wondered why I did it. Well 8 moths later, I found out why Honda’s are considered “boring”. They really don’t do anything wrong. It is a nice small car with all the features and then some, of larger more expensive cars and I get 29mpg.
So do think Honda is making money selling this car for $28K? They sure are, but GM, Ford and Chrysler can not figure out how to build small cars at a profit? I am tired of hearing them complain while they continue to make the same mistakes over and over again.
Ask anyone that has bought a “new” Focus and the first thing they say is “I got a really good deal”, not that “I got a really good car”. Ford did a great job with the Focus in 2000 when it came out, but never did anything to improve it until it was tooooo late and had to put a bunch of money on the hood of a car that they already claim they don’t make money on.
May 10th, 2008 at 8:01 am
I spoke to a Ford dealer here at a local Trade Show this week, he said that Ford would be bringing over a Focus diesel within two years! He also said in the first few years Focus had several problems, especially the first two years here in North America, he also claimed that the present Model(2008) got 50 miles per gallon? Not sure this is correct but thats what he was advertising at the Show!
May 10th, 2008 at 8:34 am
I believe I’ve mentioned this before - but this is an authentic comment, from a GM executive to me, when we were discussing Honda’s lineup of small vehicles shown at a car show some years ago.
“At GM building those cars would be a career dead-ender. It’s not macho.”
And there’s your explanation for why GM “can’t figure out how to make a profit building small cars.” There’s a reason why Lutz the Magnificent had “a massive V-16 engine on display in his office,” while pretending to have been fighting for EVs against his engineers in a Newsweek interview.
I absolutely love the heading of that interview: The Man Who Revived the Electric Car.
You can’t make this stuff up. (Well, Newsweek could, but you get my drift.)
http://www.newsweek.com/id/81580
May 10th, 2008 at 8:44 am
I have seen so many new Focuses (Foci?) on the road in the past 2 months during my commute I swear they are just self-generating from the weeds at the side of the road. Last night, I even saw the rara avis of small cars, a brand new Pontiac G5 with the 30-day new car plates and all. I’ve never even seen one at a BPG dealer, much less on the road.
I do think it is funny that people want all the tchotchkes on their new small cars. It just seems the more options you throw in, the more weight and less mileage you get. (For me in my commuting car it is all about getting the best mileage.)
May 10th, 2008 at 9:17 am
It’s amazing to watch people talk themselves up the options ladder on a Focus. They start out with a regular SE, decide they need SYNC, oh then that Deluxe Package looks nice, oooh cool ambient lighting, oh it has a roof, ok I’ll take it. A $17k Focus turns into a $19k Focus real quick and the customers love it.
May 10th, 2008 at 9:23 am
The fact that GM and Ford did not see this coming is simply astonishing; war starts in the Middle East using borrowed money, the world gets jittery over the supply of oil and the dollar takes a dive. Doh!…..
What is even more astonishing is that the morons in our government - you know the ones with the hands on the power levers - did not see that they were engineering America’s economic downfall. As for Detroit, why they kept on the trucks is because they sold well, actually had a decent reputation, and the profit margin was high. The only “look forward” was by GM who thought that if they could give their most profitable people movers (think Tahoe) a significant boost in mileage (Tahoe Hybrid) then the buyers would stay. Yet the hybrid trucks languish on the lots. What would would be interesting to see is what yesterday’s Tahoe shopper chose to buy in lieu of the Tahoe hybrid. I am willing to bet whatever vehicle that is, it probably does not get significantly better economy than the hybrid. The full size class of SUV’s is now no longer the fashion statement in the suburban school drop off circle, no matter what the mileage it may return.
May 10th, 2008 at 9:47 am
What is even more astonishing is that the morons in our government - you know the ones with the hands on the power levers - did not see that they were engineering America’s economic downfall.
Particularly astonishing, since lil’ ol’ me going to work everyday here in Columbus, Ohio predicted all this from the beginning.
John
May 10th, 2008 at 9:49 am
Did they not see it or did they want it to happen?
http://www.zeitgeistmovie.com/
May 10th, 2008 at 11:15 am
Yep, I’m feeling like a real trend-setter for buying my TSX in 2006 with Navigation, Blue-tooth and all the other goodies for about $29k. It is everything the Cimarron should have been, but wasn’t. Take a garden variety 4 cylinder small family sedan, option it up and sell it at a nice dealership with a squeaky clean service department that you almost never visit. When Honda sells stripper Accords for slightly more than half of what I paid you gotta figure they made some money on me, and I don’t mind.
I love Stein’s quote: “At GM building those cars would be a career dead-ender. It’s not macho.” Arrogance and idiocy do not make good bedfellows.
John