Cain's Segments: Trucks Roll Over Subcompacts

Bertel Schmitt
by Bertel Schmitt

The eleven vehicles most obviously classified as subcompacts accounted for 3.8% of the American automobile industry’s May 2013 sales volume, down from 3.9% a year ago. Overall volume increased, but not at the rate of the overall market, and certainly not at the rate achieved by their opposite, pickup trucks. Let’s have a little look at the small cars.

Through the first five months of 2013, subcompacts are responsible for four out of every 100 new vehicle sales. That’s down from the 4.3% achieved by the same eleven vehicles in the same period of 2012.

Although it could be intelligently argued that the Hyundai Veloster (down 22% to 2826 in May) and Volkswagen Beetle (up 24% to 3718) could be listed here, as well as city cars like the Chevrolet Spark (2581 May sales), Smart Fortwo (up 16% to 818), and Scion iQ (down 41% to 526), the slightly narrower borderlines we’ve established for subcompacts in this post should do a better job of manifesting conventional subcompact purchases and leases. The Fiat 500, Mini Cooper, Toyota Prius C, and leftover Chevrolet Aveos are the most unconventional cars capable of throwing a wrench into the normality of the proceedings.

AutoMay 2013May 2012May % Change5 mos. 20135 mos. 2012YTD % ChangeChevrolet Aveo15– 80.0%253– 96.2%Chevrolet Sonic95237205+ 32.2%37,78335,455+ 6.6%Fiat 50040514003+ 1.2%17,56216,702+ 5.1%Ford Fiesta66936080+ 10.1%28,80126,737+ 7.7%Honda Fit46673879+ 20.3%20,48619,706+ 4.0%Hyundai Accent55786166– 9.5%24,22230,810– 21.4%Kia Rio51424019+ 27.9%19,49118,728+ 4.1%Mazda 2791901– 12.2%48519213– 47.3%Mini Cooper *40334377– 7.9%16,90718,623– 9.2%Nissan Versa86148643– 0.3%55,05652,173+ 5.5%Toyota Prius C37823693+ 2.4%17,13312,594+ 36.0%Toyota Yaris17783521– 49.5%11,17917,964– 37.8%—— —————Total54,653 52,492 + 4.1% 253,473 258,758– 2.0%

On that note, consider the falling sales in BMW’s Mini showrooms. Sales here include the original Cooper Hardtop as well as the Clubman, Convertible, Coupe, and Roadster. More than two-thirds of Mini’s non-Countryman/non-Paceman total is made up by the one car which spawned Mini’s return. Only 5527 of the Coopers sold this year have been Clubmans, Convertibles, Coupes, and Roadsters. Of these five Cooper sub-models, only the Roadster has posted year-over-year gains in 2013. By itself, the “regular” Mini Cooper’s 2521 May sales equal a 5.9% drop from May 2012’s output.

The Fiat 500, on the other hand, has yet to post a year-over-year U.S. sales decline in 15 tries, although growth has predictably slowed.

Back to the subject of conventional subcompacts, the Chevrolet Sonic’s May victory stands in contrast to the Nissan Versa’s usual leadership. Indeed, the Versa is 17,273 sales ahead of the Sonic through five months after a 30K+ unit victory in 2012. The Versa is not all-conquering. Don’t fall into the trap of confusing sales leadership with outright market domination. 78% of America’s 253,473 subcompact customers haven’t registered a new Versa this year. Jointly, the Hyundai Accent and Kia Rio own 17% of the category.

The very suggestion that the buyer of a well-optioned JCW Mini Cooper S would otherwise consider a Nissan Versa is comical, but we’re always left with these sorts of issues when rehashing sales data. (BMW releases 3-Series sales figures as a group, which presents us with the opportunity to compare a measure of hidden M3 volume, whether we like it or not, with sales of the Lexus IS250.) Besides, it is interesting to note that, despite the price differentials, buyers turn to the Mini and Honda Fit in similar numbers, although Chevrolet did sell twice as many Sonics as BMW sold Minis in May. Granted, unlike the potential Fit buyer, a prospective Mini customer isn’t also eyeing the Civic on the other side of the showroom.

Regardless of the validity of comparisons, the numbers achieved by a large group of small cars certainly proves that interest in inexpensive small cars continues to pale in comparison with moderately more expensive compacts and midsize cars. Together, the Toyota Camry and Honda Accord have found 326,939 buyers in the United States this year, outselling these subcompacts by 73,466 units. The Toyota Corolla and Honda Civic have outsold these subcompacts by 8022 units.

Sure, what with plunging Mazda 2 volume and disappearing Toyota Yaris sales and challenging times for the Hyundai Accent, subcompact sales haven’t been healthy this year. But those same two pairs were handily outselling these subcompacts at this time last year, too.

What’s the point? If subcompacts aren’t as profitable and don’t sell as often, why bother? Automakers feel that they’re hedging their bets against a possible turning of the tide, like when fast-rising fuel prices led to the Honda Civic becoming America’s overall best-selling vehicle in May 2008, outselling even Ford’s F-Series. More important, automakers sell subcompacts as a means of targeting first-time buyers, hoping that a future increase in wealth will inspire a Sonic owner to become a Cruze owner, who will then step into a Malibu before ending up in a CTS, or more likely, a Silverado.

Independent analyst Timothy Cain is the founder and editor of GoodCarBadCar.net. His look at the important segments will be a permanent fixture at TTAC, along with a look at the market up North.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • TW4 TW4 on Jun 06, 2013

    Trucks = easy to monetize Subcompacts = less easy to monetize In a business environment with finite resources and high opportunity costs, manufacturers have little or no interest in devoting funds to product development or marketing for subcompacts. CAFE 2025 will require small cars to achieve over 40mpg combined, a requirement that isn't particularly friendly to the subcompact segment. Unless EV costs plummet or CAFE regulations are adjusted, I don't see subcompacts surviving for much longer, despite the many redeeming qualities, which manufacturers have yet to monetize.

    • Jimbob457 Jimbob457 on Jun 07, 2013

      Imo. car guys ought to at least have a passing acquaintance with the gasoline and diesel markets. Prices here are poised to break downward. How much is hard to say. OPEC is going to have to lower oil prices in order to take the economic measure of 'fracking'. Subcompact car sales in low gas tax countries like the USA, Canada, Saudi Arabia, Mexico, et.al. are bound to tumble in response. In many other emerging, rapidly growing markets, they are probably going to be the wave of the future regardless of oil prices. You might take note that in much of south and eastern Asia and some of Africa, human beings in this generation are much smaller than in the Americas, Europe and Australia. EV's are already very, very heavily subsidized. Prospects for any huge technological 'breakthrough' are not in sight. Lower oil prices are likely to kill most of the urge to supply these subsidies. EV's may eventually prevail, just not for a few more decades. I guess the same goes for hybrids. It's always been hard for me to see how two engines can be better than one. CAFE? I dunno. I just see CAFE legislation, its regs and their enforcement as being more effect than cause. The Exxon-Mobile corporate planning department sees North America as being self-sufficient in mogas and diesel by 2020. I suspect it's either that or $50 per bbl oil or maybe both. Regardless, if any of this happens, EV and hybrid subsidies, subcompacts in the USA, and today's CAFE regs would be soon be kaput.

  • Beerboy12 Beerboy12 on Jun 06, 2013

    I don't know what the market share for sub compacts was prior 2008 but I suspect a lot less than it is now and that is mostly because there are now more cars and brands in this arena. So, the market share is stabilizing rather than shrinking. Consider that the sub compacts on the market now are way different to those on the market 2008. Bigger inside, more comfortable and safer, it's no surprise they are making a space for them selves. Also consider that 50% (correct me if I am wrong) of the market are full size pickups so that makes the sub compact market 8% of the traditional passenger car market.

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