Do It for the Children: Honda and Toyota Sticking With Small Cars for the Sake of Our Children, and Our Childrens' Children

Timothy Cain
by Timothy Cain
do it for the children honda and toyota sticking with small cars for the sake of our

The Dodge Dart is dead. The Ford Fiesta is likely on its last legs in the United States. Ford Focus production is moving to China, off the North American continent where demand for Ford small cars is rapidly declining. General Motors is scaling back production at the Chevrolet Sonic’s Orion Township, Michigan, assembly plant.

That’s the Detroit small car picture, or at least part of it. From Japan’s perspective, however, small cars are entirely worth it, not just because of the sales success enjoyed by the Honda Civic (currently America’s best-selling car through 2017’s first seven months) and Toyota Corolla, but because of the demographic small cars target.

“Small cars get our buyers hooked from cradle to grave,” Toyota spokesperson Curt McAllister tells The Detroit News. “If you get them into the family early, then you can keep them on up the family tree.”

Full-size pickup trucks transacting at an average price of $46,441, according to Kelley Blue Book, are hugely profitable machines for the Detroit Three. But such vehicles might not serve as the ideal ticket for budget-conscious first-time auto buyers.

Volume remains quite low in the subcompact car category, not just for Detroit’s Ford Fiesta and Chevrolet Sonic but for most Japanese automakers as well. Even the segment-leading Nissan Versa has seen its sales plunge by nearly a quarter this year as Nissan seeks to foster greater support for certified pre-owned vehicles.

Yet in Honda’s case, for instance, “Seventy percent of Fit buyers are first-time buyers,” says vice president at American Honda, Jeff Conrad. True, Fit volume is low, substantially lower than even the nosediving Versa. Honda reported a 5-percent drop to 31,126 Fit sales in America in the first seven months of 2017. But Conrad says, “We’re interested in an entry point for cars and trucks. The Fit is that product for cars and HR-V is that for trucks.” HR-V sales are up 29 percent this year to 56,407 units in 2017.

For the trio of large Japanese automakers — Toyota, Nissan, Honda — that continue to offer a full slate of small cars in America, it’s not an either/or comparison. Subcompact crossovers such as the Ford EcoSport do not invariably have to cancel out subcompact cars such as the Ford Fiesta. According to KBB, subcompact crossovers require, on average, $7,704 more to acquire than subcompact cars.

In other words, subcompact crossovers have every potential to continue as high-profit-margin vehicles for automakers of all stripes, but they don’t compete at the most affordable end of the spectrum. Their ATPs are almost precisely in line with midsize cars.

If the cradle-to-grave theory expressed by Toyota is a fact-based business theory, automakers that forsake the most affordable corner of the market are losing out on the opportunity to capture lifelong buyers who’ll eventually move up the ladder: Yaris iA, Corolla, C-HR, Camry/RAV4, Highlander, RX350, LC500.

Honda, meanwhile, doesn’t feel as though the abandonment experienced by the small car sector is worthy of concern for automakers that are operating successfully in said sector. “People have abandoned segments for a long time,” Honda’s Conrad says. “A few years ago a lot of manufacturer sold minivans. How many manufacturers really make a serious run at selling (them) anymore? Not many, but we’re still in it and we sold over 120,000 last year.”

[Images: Honda, Nissan, Toyota]

Timothy Cain is a contributing analyst at The Truth About Cars and and the founder and former editor of Follow on Twitter @timcaincars.

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  • Tennessee_Speed Tennessee_Speed on Aug 24, 2017

    I'd rather have a small car for the sole reason that they are more fun to drive. I'd consider a VW GTI but in today's America the size of the VW Golf concerns me. On the road are a majority of big SUVs weighing two tons and usually more. It's the safety angle that worries me by being hit by one of those huge SUVs. Do any of you folks have a similar concern that would keep you from buying a well built small car?

  • Barryfaetheus Barryfaetheus on Aug 25, 2017

    I guess this means that in a few years my 2014 Fiesta ST might actually start to appreciate. Think I will hang onto it for a while.

  • MaintenanceCosts Despite my hostile comments above I really can't wait to see a video of one of these at the strip. A production car running mid-eights is just bats. I just hope that at least one owner lets it happen, rather than offloading the car from the trailer straight into a helium-filled bag that goes into a dark secured warehouse until Barrett-Jackson 2056.
  • Schurkey Decades later, I'm still peeved that Honda failed to recall and repair the seat belts in my '80 Civic. Well-known issue with the retractors failing to retract.Honda cut a deal with the NHTSA at that time, to put a "lifetime warranty" on FUTURE seat belts, in return for not having to deal with the existing problems.Dirtbags all around. Customers screwed, corporation and Government moves on.
  • Bullnuke An acquaintance of mine 50+ years ago who was attending MIT (until General Hershey's folks sent him his "Greetings" letter) converted an Austin Mini from its staid 4 cylinder to an electric motored fuel cell vehicle. It was done as a project during his progression toward a Master Degree in Electrical Engineering. He told me it worked pretty well but wasn't something to use as a daily driver given the technology and availability of suitable components of the time. Fueling LH2 and LOX was somewhat problematic. Upon completion he removed his fuel cell and equipment and, for another project, reinstalled the 4 banger but reassembled it without mechanical fasteners using an experimental epoxy adhesive instead which, he said, worked much better and was a daily driver...for awhile. He went on to be an enlisted Reactor Operator on a submarine for a few years.
  • Ajla $100k is walking around money but this is almost certainly the last Dodge V8 vehicle and it's likely to be the most powerful factory-installed and warrantied pushrod engine ever. So there is some historical applicability to things even if you have an otherwise low opinion of the Challenger.And, like I said up thread, if you still hate it will be gone soon anyway.
  • Carlson Fan GM completely blew the marketing of the Volt. The commercials were terrible. You'd swear they told the advertising company to come up with an ad that would make sure no one went out and shopped a Volt after seeing it!...........LOL My buddy asked why I bought a car that only goes 40 miles on a charge? That pretty much sums up how confusing and uninformative the advertising was.