The August 31 Edition of "The Wall Street Journal" (page B1) includes an article describing a proposed new labeling for passenger vehicles sold in the United States. On the proposed new window stickers, every new vehicle would include a prominently-displayed letter grade reflecting its fuel economy, emissions and estimated annual fuel costs.
There is a general consensus across the industry and among consumers that the current window sticker is not as reader-friendly as it could be; a new sticker that is simpler and easier to understand would therefore seem to face little opposition. However, an argument can be made that the proposed letter-grade change is going too far. Even though the letter grade would apply only to fuel economy and emissions, in my opinion there is no question that the consumer would perceive the letter grade as an overall assessment of the vehicle. The contractor who needs a fullsize pickup, and cannot adequately do his job with anything else, will be forced to buy a vehicle graded "C" or below. Similarly, buyers of large SUVs or midsize vehicles will be purchasing vehicles with a B or C grade. In contrast, a Volt, Leaf or Prius customer would be buying a "superior" vehicle because his car got an "A." To me it's clear this is saying to all that want to listen (and the Volt buyer hopes everyone is listening) that the Volt is "better" than the F-Series. Should the government be in this business? For that matter, should anyone be saying, even though indirectly, that one vehicle is superior to another? Again, even though an EPA spokesman may respond that the grade applies only to fuel economy and emissions, over time it is virtually inevitable that the grade will come to reflect a broader assessment of the car or light truck.
It's fair to say that the proposed letter grades are intended at least partially to move the consumer towards fuel-efficient hybrid, diesel or all-electric vehicles. However, these vehicles - in total - account for just 5% (3% hybrid, 2% diesel) of all retail new vehicle sales June 2010 CYTD. Therefore consumers are being urged to buy vehicles they currently are not buying. A simpler way to move the buying public towards more fuel-efficient vehicles, requiring no legislation restricting production or sales of any vehicle category whatsoever, would be to let gas prices rise.
However, if higher gas prices are not politically realistic, there is another solution, mentioned in the same Wall Street Journal article. It makes sense to compare vehicles within the same category, since by definition these vehicles are similar to one another on several factors including size. This type of assessment would accomplish the goals of moving the consumer towards higher-rated, more fuel-efficient vehicles while still allowing him to purchase a vehicle in his desired category with the specifications and features he wants.
Lastly, politically the proposed letter-grade change to new vehicle stickers plays right into the hands of the Tea Party and the conservative wing of the Republican Party. These two groups could not have asked for a better example of government intrusion in the individual's life and decision-making. Given this political situation, it is hard to see how the proposed changes (with the letter grade) will see the light of day.
Posted by Tom Libby, PolkInsight Advisor, Polk (09.01.2010)
It seems that almost every other vehicle on the road these days is a small utility vehicle. In fact, this category comprises two distinct sets of light trucks, one that is thriving and one that is holding on for dear life.
Compact non-premium crossovers (CUVs), those vehicles using a unibody, car-like architecture, offer the compelling combination of a car-like ride, superior fuel economy, competitive pricing and SUV-like utility. With this combination of features, the small crossover share of the retail new vehicle market has almost doubled to 11.2% through the first six months of this year from 6% in 2005. Excluding the luxury market, small crossovers now account for almost 13% of the market. They also account for more than a third of all utility registrations, including all sizes, architectures and brands. Small non-premium crossover retail registrations (June 2010 YTD) are up 26% year-over-year, substantially above the industry increase of 10%. Almost every make now offers a small crossover - there are now eighteen models on the market versus fourteen just five years ago.
In contrast, small utilities using a traditional body-on-frame design, which is common among pickups and large SUVs, currently account for only 1.99% of the industry, and they make up just 15% of all non-premium compact utility registrations. There are only five truck-based small utilities, less than a third the crossover model count. Truck-based small utility registrations (June 2010 YTD) are just 84,871, down 8% year-over-year.
Several makes have benefited from this surge in small crossover market share. The Honda CR-V, Toyota RAV4 and Subaru Forester are the most popular light trucks for their respective brands, and, not coincidentally, these three models were the original small crossovers, introduced in the 1990s. The Escape is Ford's number two light truck, and had the domestic compact crossover space to itself for several years before the launch of the four-cylinder Equinox and others. Lastly, the recent launch of the GMC Terrain has helped stabilize the share of both GMC and its parent company.
On the other hand, neither Dodge nor Chrysler has yet launched a small crossover, leaving a substantial hole in their product portfolios. And Nissan came to the party late, launching the Rogue in 2007, years after its Japanese rivals.
Posted by Tom Libby, PolkInsight Advisor, Polk (08.31.2010)
The August 23, 2010 edition of Time Magazine includes a segment from Michael Mandelbaum's new book, "The Frugal Superpower: America's Global Leadership in a Cash-Strapped Era". In the cited section, Mandelbaum argues that higher gas prices would improve national security by, among other things, reducing U.S. dependency on the Middle East and also weakening anti-U.S. countries such as Iran, Venezuela and Russia. There are also several reasons related to the dynamics of the U.S. new vehicle industry why higher gas prices make sense. Most importantly, higher gas prices would shift consumer demand away from larger vehicles in favor of smaller cars and light trucks. We saw these shifts occur in the spring of 2008 when gas prices spiked to more than $4 a gallon nationally and demand swung dramatically towards smaller, four-cylinder vehicles and away from larger SUVs and pickups.
If gas prices were pushed up as Mandelbaum recommends, higher natural demand for smaller vehicles would raise prices for these vehicles, which in turn would increase small vehicle profits for both dealers and manufacturers. Manufacturers would then be more motivated to design, engineer and assemble smaller vehicles (and salespeople would be more motivated to sell them as commissions rose) and similarly less inclined to focus on larger vehicles. Manufacturers would also be naturally motivated to develop alternative powertrains, reducing the need for external (government) financial assistance in these endeavors. Over time the manufacturers' corporate average fuel economy would rise on its own, lessening the need for external regulations such as CAFÉ. This would save money for both the government and the U.S. taxpayer.
In general, higher gas prices would encourage vehicle manufacturers to build what consumers actually want, as opposed to the present landscape in which the OEMs are frequently building and then selling at a loss something the consumer may not really want in the first place.
Mandelbaum notes that actually getting a gas tax through Congress is no small feat, but the benefits are substantial and perhaps need to be communicated more often in ways such as his book.
Posted by Tom Libby, PolkInsight Advisor, Polk (08.25.2010)
Imagine you have two email marketing campaigns deployed for your dealer customer. In campaign #1 the creative has excellent graphics, content and layout with a wonderful message about the product. In campaign #2 you have the same features; however, there is a hyperlink for the prospect to provide personal information to receive special new car sales or service offers as well as learn more about the product via the dealer's website.
While both campaigns have the ability to perform well wouldn’t it be great to have hot leads flowing into your inbox at the dealership? This can happen and does happen when a campaign is setup using method number two.
Lead Generation and Email Marketing are not new forms of gaining business, however utilizing a combination of the two methods allows the dealer to have leads generated and distributed to them using the technology of the Internet. This is a very powerful medium as automotive marketing agencies are now required to justify marketing spend for their dealer clients and track how well a campaign is performing.
The combination method in which to do this is relatively simple and can be developed with a backend landing page. Once the consumer clicks on the link the system can redirect them to the landing page or to a social media site where they are able to complete an online request or information form. Tech savvy companies are also setting up pop-up information boxes in which the individual submits information prior to getting to the landing page.
The benefits to using this type of methodology include:
- Allows for follow-up and relationship building with the prospect
- Allows for ownership of the prospect email information which follows CAN-SPAM regulations
- Conversion rates on leads received often have a higher conversion success rate than cold contacts because the prospect is prequalified
- Provides valuable metrics for the dealer about who is clicking through the pages. This helps to better budget the return on investment based on the lead conversion rate
Whether or not dealers embrace this type of methodology remains to be seen; however, if this combination shows success and can engage customers and increase customer loyalty in a relevant way, I see no reason why it won't continue to grow in popularity.
Please let me know your thoughts on this topic and perhaps the next evolution of lead generation: social media and mobile.
Posted by Mike Sharkey, Account Manager, Automotive Retail Solutions, Polk (08.17.2010)
Global Passenger Vehicle Sales Increased by 3.8%; First Seven Months of this Year Were 10.5% Above Previous Year
Key findings include:
- July sales increased approximately 10.5% year-over-year due to several incentive programs and more favorable economic conditions
- New registrations in Eastern Europe increased in July (+26%) and were led by the scrappage premium in Russia
- For the remainder of the year, sales growth rates will turn negative due to the expiration of several scrappage premiums in Western Europe
Forecast updated on August 11, 2010 with data from July 2010 YTD.
Click here to visit the forecasting page and download the free Global Passenger Vehicle Market Monthly Forecast Report.
Posted by Ulrich Winzen, Chief Analyst, Polk, Essen, Germany (08.12.2010)
As I'm sure you're aware, Toyota found themselves the ire of Congress, their customers and general car enthusiasts alike earlier this year. You only have to go to the
Toyota Press Room to see why. Their recall obligations are substantial. So, it is no surprise that they jumped on a set of
good news, like The Fresh Prince and his cousin Carlton when
"Apache" by the Sugar Hill Gang is played. Toyota is giving everyone the "I told you so" face ever since a NHTSA report came out, citing driver error as the most likely cause of the infamous sticking accelerator debacle. To this end, Steve St. Angelo (Toyota's Chief Quality Officer) made his way to the social media landscape, via Twitter, to talk Toyota safety issues.
As far as I know, Toyota is the first OEM to do a live chat concerning Aftersales issues on Twitter. For those unfamiliar, a Twitter live chat (or Tweetchat) happens when you use a hash tag (# symbol plus corresponding text) that all users can plug in to their Twitter stream to follow and/or join in on a conversation. The hash tag must be used in every message and reply for the live chat idea to work properly. Toyota used the hash tag
#TQS for Mr. St. Angelo's chat on August 10.
While it was a great idea and there were some excellent questions posed, I think that the chat fell flat. Only 10 questions were answered out of 25 posed; many of the technical questions (especially those posed by @SeanKHotay) were largely ignored; and the post comments from the community weren't very favorable, sans a few Toyota slappies that sounded like plants. As a company that largely "didn't get it," in the traditional media space, by not answering questions, deflecting blame and generally appearing uncaring their Tweetchat was a yawner. Luckily, this came on the heels of positive news for the troubled automaker.
Regardless, let this be a lesson for anyone looking to employ social media as a part of their PR strategy - don't do it for a headline but attempt to be genuine and authentic when dealing with your publics. Also, be prepared to answer tough questions. There are some very intelligent and well read people about your products throughout the social-sphere. If you appear to be selective in what you answer, the negative can outweigh the attempt at connecting.
What did you think of Toyota's Twitter attempt? Were you satisfied with their answers or were you left wanting more like me?
Posted by Therran Oliphant, Product Strategist, Polk (08.11.2010)
I have to admit it, I'm kind of a news junkie especially during my morning commute. So I listened with interest the other day about Volkswagen creating a "Hybrid" Radio that enables users to create a personalized playlist including just about everything from news to music. From what I can see, the new Volkswagen system will automatically switch back and forth among radio stations according to a pre-defined playlist and times. Interest you? For a guy like me that is constantly changing channels when I'm in my car, it's perfect.
On my daily commute I am doing everything to beat the traffic as I drive into the Detroit suburbs. Being able to have a hybrid radio that switches between stations based on my preferences would be exactly what I need. For example, I could catch the WWJ Radio traffic report at 6:48 AM, listen to the top news stories on WJR at 7:00 AM and automatically flip to W4 Country to catch Breakfast with Bubba for the remainder of the commute. Simple. Easy. No fuss.
I've read
Volkswagen is testing the system in 2011. Bring it on OEMs, I'm waiting. What do you think?
Posted by Greg Hathaway, Manager, Communications, Polk (08.06.2010)
The July YTD data shows the passenger vehicle sales forecasting through 2011 for Spain.
Key Findings:
- In July 2010 the Spanish car market reached its lowest level for a month of July since 1995
- The end of the scrappage premium and the increase of the VAT from 16% to 18% had a strong and negative influence on registrations
- The strong positive effects in the first half of 2010 pushed the market to 1.01 million new registrations this year
- The forecasted decline of the Spanish market in 2011 (which will reach a maximum of 1 million new registrations) is due to the weak economic framework and missing positive special effects
Click here for the latest analysis and predictions for select markets around the world. Polk's Global Automotive Forecasting Dashboards are updated regularly. Be sure to check back often to ensure you have the most updated information. You can also click here to subscribe to receive our Knowledge Center and Forecasting updates via email.
Posted by Ulrich Winzen, Chief Analyst, Polk, Essen, Germany (08.05.2010)
Picture yourself driving a vehicle. The details of your vehicle will differ from person to person depending on the types of vehicles you own (or desire). But certain things are common. If you're driving in the U.S., you're sitting in the front left corner of the passenger cabin (aka, the driver's seat). You have one or both hands on a steering wheel. There is a gear shift, either on the steering wheel or the floor. The brake pedal is on the left and the accelerator is on the right.
Does it have to be that way? We're still using the same basic design for vehicles that Henry Ford used in his first cars more than a hundred years ago. It will be difficult to make quantum leaps in fuel efficiency, including hybrids and electric vehicles, without a fundamental change in our mental picture of a vehicle.
Consider the sub-compact segment, which includes cars like the Ford Fiesta, Toyota Yaris and Honda Fit. There's reasonable concern that these vehicles won't gain wide acceptance in the U.S. market, with comfort and safety being a major concern. Probably the most common use for these cars will be as a commuter car -- a car occupied only by a driver who uses it to commute to and from work with no passengers.
Why not design a minicar for this express purpose? Scrap the traditional car design and start over. Put a single seat in the middle of a small car, leaving open space around it for comfort and safety. Ditch the steering wheel – it takes up too much space and is a danger in crashes. Combine the functions of the steering wheel, gear shift and brake and accelerator pedals into a joystick instead. Borrow ideas from the space program to design a comfortable seat with the latest in safety restraints. Make it comfortable and safe, with really good fuel economy yet with sufficient power to drive on the freeway. And make it economical enough to justify buying and insuring a car strictly for commuting while leaving the SUV in the driveway for other uses. And fun to drive, of course - gotta love a joystick!
I'm no engineer, so I don’t even know if what I suggest is feasible. I describe it only as an example of what we might be able to come up with if we stop using the same basic design and completely reinvent the car.
Now picture yourself driving a vehicle. What does it look like?
Posted by Barbara Keys, Analytic Consultant, Polk (08.02.2010)
Discussions about aspirational luxury makes almost always include at some point a mention of BMW, Lexus and Mercedes-Benz. It is not a coincidence that these same three makes (and Jaguar) have at least one entry in both the very high-price, and low-volume, luxury car segments: the Large Premium Sedan and Large Premium Sport Segments. In fact, both BMW and Mercedes-Benz have multiple models in one or both of these segments. It is also not a coincidence that several luxury makes striving to attain the image of BMW, Lexus and Mercedes-Benz are not represented in either segment. These "near-luxuries" include Volvo, Saab, Acura, Infiniti, Cadillac and Lincoln. Audi falls somewhere in the middle, as it is represented in the Large Premium Sport Segment with the R8 and in the Large Premium Sedan Segment with the A8/S8, but the latter has struggled and is currently selling at a far lower rate than any of its German competitors.
Together these two segments now account for less than 1% of the U.S. retail new vehicle market, but having a product in these categories is invaluable. Each large premium sedan or sport car on U.S. roads lends its respective make an aura of true luxury and exclusivity that a lower-end model can't generate. Don't look for any of these high-price models to be discontinued any time soon, even if volume drops further (unless the brand itself is in serious trouble). Lastly, when one of the "near-luxury" brands is able to successfully market a vehicle in one of these segments, that marque will have genuinely "arrived" in the luxury market.
Posted by Tom Libby, PolkInsight Advisor, Polk (07.30.2010)
The large pickup segment, one of the highest volume and highest profits-per-vehicle new vehicle categories, is a battleground among just seven models. The Ford F-Series and Chevrolet Silverado perennially lead the segment, with the F-Series recently re-taking the retail sales crown from the Silverado. This is part of a recent industry trend in which Ford products have surged while GM has struggled with many automotive industry challenges such as bankruptcy.
The "middle level" players include the Dodge Ram, Toyota Tundra, and GMC Sierra. The Tundra's share of segment jumped dramatically in 2007 when the larger, more competitive version was launched, but its share has slipped slightly since then and hovers in the 10% range. The Ram also benefited from its re-design in late 2008, but also has not been able to maintain growth. The Ram's share is now slightly above that of the Tundra and the Sierra.
The Nissan Titan and Chevrolet Avalanche make up the rest of the segment (the Lincoln Mark LT has been discontinued), as the Titan has not been able to compete with the re-designed Tundra and the Avalanche has suffered from GM's general woes.
At one time not too long ago VW was seriously looking at entering this segment. There are rumors that Hyundai is currently working the numbers to determine if it makes sense to plunge in. Clearly there are risks for the OEMs when getting into this segment (the current Tundra is Toyota's third try), but the rewards – high profits, high volume, and potential advertising claims, among others – are considerable.
Posted by Tom Libby, PolkInsight Advisor, Polk (07.30.2010)
With the ongoing focus on reducing dependence on Middle East oil and reversing climate change, it seems like a no-brainer that small cars are becoming more and more popular. The only problem is that this is not as clear-cut as you might think. The entry level car segment (sometimes called the subcompact segment), whose products are sized and priced under the compact sedan segment that includes the Civic, Corolla, and Focus, etc., saw dramatic growth from 2005 to 2008, with its share of the industry more than doubling to 4.31% in 2008. That year played right in to the hands of this segment with the spring 2008 dramatic jump in gas prices to more than $4 a gallon.
However, since then entry level vehicles have lost share, and the segment now accounts for less than 3% of all new vehicle retail registrations, according to Polk registration data April 2010 CYTD. The segment's current share of 2.88% is almost a half point less than a year ago. While the entire new vehicle industry is up almost 10% in 2010, this segment is down 4%. The segment-leading Versa has enjoyed dramatic growth, but the other volume leaders, Fit and Yaris, are both down in double-digits. The Scion models are also suffering double-digit drops, and the G3 has been discontinued along with the entire Pontiac make.
The picture is not as bleak as one might think. It needs to be mentioned that the small vehicle arena is fragmenting, and there are other portions of it that are showing growth. Minicars (including the smart fortwo), entry level crossovers (including the Kia Rondo, Scion xB, Kia Soul and Nissan Cube), and the compact sedan segment (including the upcoming Chevrolet Cruze and Volt and the Ford Focus, among others) are other areas of the small vehicle industry, and these categories generally are enjoying substantial new product activity and growth.
Furthermore, the entry level car segment will soon be getting two major additions in the Ford Fiesta and Fiat 500, and these should help to reverse the declines mentioned above.
Posted by Tom Libby, PolkInsight Advisor, Polk (07.29.2010)
For any brand, automotive or non-automotive, greater diversity across its product portfolio reduces risk since dependence on any one product is limited. Given the generally high quality of today's new vehicles, there is not as much risk as there used to be of one product being virtually crippled by a major quality problem, recall or bad publicity.
The seven leading premium marques have varying degrees of product diversification (see table below). Mercedes-Benz appears to have the most diverse set of vehicles, as no Mercedes-Benz model accounts for more than 29% of the brand's total U.S. retail new vehicle registrations (May 2010 CYTD). And each of four Mercedes-Benz models has more than 10% of the make's registrations, something only one other brand (Acura) can claim.
Other premium brands with moderate diversification include Acura, Audi (which is less reliant on the A4/S4 than it used to be), Cadillac and Lexus. Both BMW and Infiniti are heavily reliant on one product, with the 3-Series accounting for almost half of all BMW sales and the Infiniti G claiming almost six of every ten Infiniti deliveries.
It is also noteworthy that the three leading large premium sedans (7-Series, LS and S Class) each account for exactly 6% of their respective brand's portfolios, suggesting the direct competition among them and their ongoing positioning against one another. Lastly, for six of the seven leading luxury market brands, the model with the highest proportion of registrations is a small car or crossover, which one would predict given these models' low prices. However, this is not the case at Mercedes-Benz, where the E-Class out-sells the smaller and less expensive C Class, which underscores the long history – and substantial owner base - of the midsize E in this country.
Posted by Tom Libby, PolkInsight Advisor, Polk (07.28.2010)
I was with my family this weekend at the Irvine Spectrum, a popular open-door shopping and entertainment center in Orange County, California. I happened to stumble upon the Ford Fiesta Lounge display, and of course couldn't help but inspect every inch of it, especially given my prior experience in experiential marketing at Mazda North American Operations.
As expected, the display was professional, and every aspect truly aimed at reaching that young and trendy customer Ford is seeking with the launch of the new Fiesta. Bright colors, upbeat music, use of Apple iPads throughout, and young attendants ready to answer any question you may have.
Although I had already seen the Fiesta at auto shows, somehow the car looked even more attractive in that setting, especially the hatchback in that bright green used in advertising. The trunk space was surprisingly roomy, and there is no doubt that Ford was trying to convey that the Fiesta is no cheap entry-level car, with the use of leather seats in both display cars, a feature not commonly expected in that category. That option, however, will typically take the sticker price closer to $20K, at which point you might as well consider an entry level Focus or base Fusion.
Will consumers buy into the new Fiesta and into small cars? Judging from the several product entries into that category, OEMs are betting consumers will. Polk forecasts that the small car segment will gain a growing share of the industry, with Fiesta joining the ranks of competitors Honda Fit and Toyota Yaris.
Will the Fiesta, and this type of automotive marketing, help Ford gain share in import-friendly territories such as California? Ford definitely hopes so. While Ford's share in the U.S. (retail excluding fleet) rose from a low of 10.6% in 2008 to a 12.8% year-to-date through May 2010 (Polk registrations), Ford's share in CA only grew by 0.8 pt share (7.4% to 8.2%) in the same timeframe. With California accounting for 16.9% of Toyota Yaris U.S. registrations (15.8% for Honda Fit), you can count on Ford to keep experimenting with initiatives such as the Ford Fiesta Lounge.
Posted by Stephan Gallon, PolkInsight Advisor, Polk (07.28.2010)
More than half of all premium new vehicles delivered to private retail consumers in the U.S. are now equipped with either all-wheel drive or four-wheel drive, according to Polk new vehicle retail registrations for the first four months of 2010. Three drivers of this trend have been the growth of crossovers, the consumer's increased interest in safety, and OEMs' continued use of common platforms (including those designed and engineered with AWD) for both non-luxury and luxury products.
The premium AWD mix has been steadily rising since 2005, when it was a little over a third of the market. At the make level, two of the three luxury market volume leaders, Mercedes-Benz and BMW, have driven this trend, as their AWD penetration rates have climbed from less than a third to 54% and 46%, respectively. The trends have been similar at other major luxury makes including Acura, Infiniti and Cadillac. Audi's exceptionally high AWD mix of 81% reflects the installation of its highly-touted Quattro on virtually every unit. The premium retail volume leader, Lexus, has actually exhibited a slight drop in AWD penetration, though it remains over 40%.
Posted by Tom Libby, PolkInsight Advisor, Polk (07.27.2010)
July 26, 2010. Dearborn, Michigan. 11:30 a.m., Eastern Standard Time. On the grounds of Ford's world headquarters.
Live band belting out classic rock from the 60s to mid-80s. I'm now singing tunes in my head from The Kinks, The Who and Journey. T-shirts, frisbees and footballs for the employees and media. Definitely a festive feeling. Hot dogs, chips and water for the employees. A cool canopy for invited VIPs and Ford dealers. Lots of excited Ford employees walking around. It's hot. We want shade. But we want to see the product, too.
Backdrop: A huge 20-25 foot pile of sand and dirt with a clear path coming down onto the main stage has been built. Right next to the stage where the band is playing music. No fewer than 6 fullly grown pine trees adorn each side of this man-made mountain.
12 noon. Lewis Booth, Fords' chief financial officer, takes the microphone and welcomes everyone. He explains to the crowd he slept very well the previous Friday after Ford announced its
second quarter earnings and financial results. All global operations were profitable. The crowd applauses. For a long time. Booth smiles.
Up comes Derek Kuzak, Ford's head of product development. He is very pumped up. He looks at the crowd and says what the new Explorer is. And what it isn't. You can
watch details yourself and read about them
here. By the way, the "SUV" segment just lost an entrant - the Explorer is a cross-over based on its uni-body frame (that's shared with the new Taurus).
12:20 p.m. A white Ford Explorer appears over the crest of the man-made hill.
Kuzak takes the microphone again. He encourages the Ford employees to get the word out. Share the news with friends and family. Be an advocate. We rush the stage for photos.
(By the way, I witnessed this event due to connections from a friend - not a business colleague... someone at Ford is doing their job).
Good automotive marketing. Explorer hits later this calendar year. Let's see what else they've in store to help their dealers rejuvenate the Ford customer base.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis (7.26.2010)
Can minivans survive? The registration and sales data are ominous. Through the first third of this year, only 88,328 minivans have been registered to individual consumers according to Polk new vehicle retail registration data. That's down 18% from a year ago in an overall industry that is up 10%. The minivan segment's share of the retail new vehicle industry is now just 3.28%, down more than a point in just the past 12 months. For all of 2009, minivans accounted for just 3.71% of the market, a little more than half the segment share of 6.07% five years ago. Back in 2000, minivan sales* made up 7.9% of the market, and the Dodge Caravan/Grand Caravan ranked number #11 in sales among all models.
There are only seven minivans on the market now, and that is being generous because one of the seven, the Nissan Quest, has only 195 retail registrations through April 2010 CYTD. This model count is down by more than half from 17 in 2005. Further, just four of the current models – Honda Odyssey, Toyota Sienna, Dodge Caravan and Chrysler Town & Country – account for 92% of all minivan registrations. Even as these four models grab exceptionally high shares of the segment, their volumes will continue to dwindle if the segment further declines. At some point it would seem to be hard to financially justify product programs with such low volumes. Also, the U.S. automotive market is now being deluged with more and more crossovers and new designs that don’t easily fit into any segment, putting continued pressure on the traditional minivan design. One of the new designs gaining traction in the retail marketplace is the true small van exemplified by the Mazda5.
Toyota has just launched a re-designed Sienna, a new Odyssey is imminent, and Nissan claims a new Quest is on the way, but it's hard to imagine that we will continue to see such major product programs in what is rapidly becoming a small niche of the market.
Do you think OEMs will still be offering traditional minivans in 2015? Posted by Tom Libby, PolkInsight Advisor, Polk (07.26.2010) *Source: 2001 Automotive News Market Data Book
Lincoln caught my attention. Again.
In an earlier
post, I shared some thoughts about how this American brand was making a visible comeback.
Recent news tells me they are on a tear!
Most of us know that it's a premium to get a hybrid version of many existing nameplates, yet the new MKZ hybrid will be the same price as its gas-only counterpart. Read for yourself, but this is not a low-risk move. Why?
- It could imply to shoppers that they have an inferior hybrid technology inside it.
- It could create price depressions among other hybrids if competitors follow suit to Lincoln's move.
- It could cannibalize dollars from those intending to buy other Ford products with higher margins on each sale.
The upside?
- This gets people to try a hybrid and feel they're not paying more than what it's worth to them. Simply put: it gives us one more easy choice.
- It tells the competition they're serious about driving business (and hitting sales targets) for this nameplate, regardless of the powertrain used in the MKZ.
- It implies Lincoln is taking risks to grow Ford Motor Company's overall business. Investors like that!
Either way you look at it, I think it's a classy move.
No premium for a premium brand. Very nice.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.26.2010)
It has been said that Americans are suckers for lists, and I'll admit I'm as guilty as anyone. The lists below showing the 10 most popular new vehicles with U.S. consumers (private individuals, not fleet) illustrate some industry trends that, coincidentally or not, also exist in the broader U.S. new vehicle market that includes over 400 models.
2005
#1 Ford F-Series
#2 Chevrolet Silverado
#3 Toyota Camry
#4 Honda Accord
#5 Dodge Ram
#6 Honda Civic
#7 Toyota Corolla
#8 Nissan Altima
#9 GMC Sierra
#10 Honda Odyssey
| 2006
#1 Ford F-Series
#2 Chevrolet Silverado
#3 Toyota Camry
#4 Honda Accord
#5 Toyota Corolla
#6 Honda Civic
#7 Dodge Ram
#8 Nissan Altima
#9 GMC Sierra
#10 Honda Odyssey | 2007
#1 Chevrolet Silverado
#2 Ford F-Series
#3 Toyota Camry
#4 Honda Accord
#5 Honda Civic
#6 Toyota Corolla
#7 Dodge Ram
#8 Nissan Altima
#9 Honda CR-V
#10 Toyota Tundra |
2008
#1 Chevrolet Silverado
#2 Toyota Camry
#3 Honda Accord
#4 Honda Civic
#5 Ford F-Series
#6 Toyota Corolla
#7 Nissan Altima
#8 Honda CR-V
#9 Dodge Ram
#10 Ford Focus | 2009
#1 Toyota Camry
#2 Ford F-Series
#3 Honda Accord
#4 Chevrolet Silverado
#5 Honda Civic
#6 Toyota Corolla
#7 Honda CR-V
#8 Nissan Altima
#9 Toyota RAV4
#10 Dodge Ram |
2010 April CYTD
#1 Ford F-Series
#2 Honda Accord
#3 Toyota Camry
#4 Chevrolet Silverado
#5 Honda Civic
#6 Toyota Corolla
#7 Nissan Altima
#8 Toyota RAV4
#9 Honda CR-V
#10 Chevrolet Malibu
Source: Polk |
The number of compact vehicles on the top 10 lists doubled from 2 to 4 during the 6-year time frame, consistent with the move towards smaller vehicles after the spring 2008 temporary gas price explosion. Crossovers were not on the list at all in 2005, but 2 made the top 10 by 2009, and they remain there this year.
The midsize sedan segment remains formidable and the Japanese continue to thrive there, as witnessed by the fact that 3, and then 4 of these models ranked among the top 10 (including the Camry, Accord and Altima every year). Similarly, the lists point out the ongoing strength of the large pickup category, though it has lost some of its luster since the 2008 gas price spike; the domestics still dominate this segment, with the Ford, Chevrolet and Dodge models making the top 10 every year except 2010. The re-designed and larger Tundra made the list in its inaugural year, 2007, but it has not re-appeared. There was one minivan on the list in 2005, but none since as that segment has retreated.
There are no truck-based SUVs on the list in any year, again in keeping with the broader overall industry where these vehicles have rapidly been replaced by crossovers.
The domestic OEMs' weaknesses in cars are supported by the fact that only 2 of the 50 entries on the table are domestic cars, and the Chrysler Corporation does not have any cars on the list. Finally, though the Ford F-Series has been the most popular vehicle in the U.S. for many years on a total sales basis, it has not always been at the top of the chart on a retail basis. It was the retail leader in 2005 and 2006 and is out in front again this year, but it trailed the Silverado in 2007, four vehicles in 2008, and the Camry in 2009.
Posted by Tom Libby, PolkInsight Advisor, Polk (07.23.2010)
Ads for the Chevrolet Volt are now appearing in the media in the New York metropolitan area, one of the metro markets that will be among the first to receive the Volt. The launch of the Volt reminds me of what Vice-President Biden whispered to President Obama when Obama was signing the historic new health care bill: "This is a big deal." (Actually, Biden also included a colorful adjective that can't be used in the normal media.) The Volt launch is a big deal. One reason for this is that GM has been playing up the Volt for such a long time: the first Volt concept vehicle was displayed at the 2007 North American International Auto Show more than three years ago, and the first pre-production Volt using the current design was built in June 2009.
To me the Volt launch represents a fork in the road for GM. On the one hand, it is a huge opportunity for GM to improve its standing in the eyes of the American consumer, as well as to strengthen the Chevrolet Division. A successful launch of the Volt would enable GM to leapfrog over its Japanese and domestic rivals and be perceived as one of the industry's most "green" car companies; a successful launch would also put further behind GM its bankruptcy and associated other troublesome occurrences of 2009 (including the disappearance of half its brands); lastly, a successful Volt launch would bring many benefits to the Chevrolet Division, including an enhanced image and greater dealership floor traffic that would parlay into increased sales of other Chevrolet products. Greater floor traffic at Chevy stores would benefit the launch of the important, all-new Cruze compact sedan. While production of the Volt will be severely limited in the near term, Chevrolet can and wants to build and sell as many Cruzes as the market will bear.
On the other side of the coin, if the Volt launch has significant glitches that make their way into the media, GM and Chevrolet's images will be hurt substantially, particularly since both organizations are currently somewhat fragile after the difficult past two years or so. A bumpy launch will probably spur discussion of the EV1 over 10 years ago and that vehicle's travails.
GM needs to get this one right. It's a big deal.
Posted by Tom LIbby, PolkInsight Advisor, Polk (07.22.2010)
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