xcel
11-10-2006, 07:02 AM
The surge in small cars has been led by the Toyota Yaris, the Honda Fit and the Nissan Versa. (http://www.chicagotribune.com/business/chi-0611100199nov10,0,4649338.story?coll=chi-business-hed)
Rick Popely and Jim Mateja - Chicago Tribune - Nov. 10, 2006
http://www.cleanmpg.com/photos/data/501/2007_Toyota_Yaris4.jpg Gas prices are widely credited with fueling a surge in small-car sales this year and a decline in large pickup trucks.
But industry analysts attributed those sales trends to a stale lineup of pickups and the rollout of new small-car models.
John Wolkonowicz, an analyst at industry forecaster Global Insight in Lexington, Mass., predicted that the interest in small cars will ease and that Americans' appetite for trucks will bounce back.
"You don't drive small unless you are an environmentalist and all your friends are too," he said. "I don't see the small-car craze having any longevity unless gas reaches $7 a gallon, and then it's a new ballgame."
But Andrew Coetzee, vice president of product planning for Toyota Motor Sales U.S.A., said more consumers are worried about fuel efficiency and global energy resources, so small cars should continue to grow.
Low prices of small cars makes them attractive to young buyers who have less money to spend than their Baby Boomer parents, Coetzee said.
"Compact cars have grown in price as new safety equipment has been added. That leaves an opportunity for smaller, more affordable entry-level cars," he said.
Small-car sales have surged 50 percent this year, to 240,000 through October, spurred on by three distinctively styled models that debuted this year.
The surge in small cars has been led by the Toyota Yaris, which starts at a price of $11,050, the Honda Fit (base price $13,850) and the Nissan Versa ($12,550), which have sold 96,000 this year combined and offset declines in other small cars.
The two best-selling compacts, the Toyota Corolla and Honda Civic, start at $14,205 and $14,810, respectively.
For those who give economy priority, a car such as the Yaris gets 37 miles per gallon for about half the price of a Toyota Prius, rated at 55 m.p.g., Coetzee said.
In contrast, full-size pickups have hit hard times, falling 10 percent, to 1.87 million.
Fresh products typically boost sales. So large pickups could see an upswing as new versions of General Motors' pickups go on sale this month and a redesigned Toyota Tundra is due in February. Without those additions, the newest model, the Nissan Titan, debuted three years ago.
Wolkonowicz said Americans still like trucks, big ones at that, and buy small cars only out of economic necessity.
"Gas prices are a factor, but only for a short time before people go back to buying what they want," he said. "Driving a small car makes a poverty statement, not a positive statement."
Full-size pickups, meanwhile, were in the Dumpster during the spring and summer, when many Americans were paying more than $3 a gallon.
Ford sales analyst George Pipas says pickups were down mainly because construction and trades workers saw their incomes shrinking and postponed buying.
"The largest factor in the decline of pickup trucks has been the slowdown in the construction and housing markets and higher interest as well as mortgage rates," he said, adding that buyers who need a large truck for work aren't going to change vehicles because of gas prices.
"Their motivation is capability of the product, which ranks for ahead of any other considerations including gas prices. The truck is a business asset or income earner for them, and they rely on it to get the job done," Pipas said.
Even with this year's sales decline, large pickups still outsell small cars by nearly 8-1, and Ford's F-Series pickup remains the industry's best-selling model, as it has been for 24 years.
Pickup sales have rebounded the last two months, jumping 31 percent in October. But that was compared to weak sales in October 2005, when dealers were short of inventory and showroom traffic dried in the wake of Hurricane Katrina.
In addition, sales last month were inflated by high incentives on 2006 models.
Toyota's Coetzee says that despite this year's spike in gas prices, pickup buyers are still more likely to choose a full-size model over a smaller, more economical one.
"The surprise in the last few months is that we haven't seen a lot of consumers switching pickup sizes," he said, adding that Toyota expects full-size pickups to gain strength next year.
Gas prices also get blamed for hurting sales of traditional truck-based sport-utility vehicles such as the Ford Explorer, which five years ago was the third-most-popular vehicle in the U.S. but now ranks 14th.
Pipas, however, says, "The decline in big SUVs already had started in 2003 before gas prices started to rise. Gas prices accelerated the decline.
"The largest factor for the decline in the big SUV market is that the Baby Boomer generation is aging, and their households are getting smaller and they don't need a vehicle that size anymore."
Five years ago, five of the 10 best-selling vehicles in the U.S. were trucks, but now it's only three, as the Explorer and Ford Ranger, an aged midsize pickup, have lost ground.
Passenger car sales are up 3 percent this year, while trucks of all types (pickups, SUVs and vans) are down 9.3 percent.
But the hottest part of the market are the "crossover" SUVs like the Honda CR-V, Mazda CX-7 and Ford Edge, car-based models that are luring consumers away from truck-based SUVs. They look like trucks but ride more like cars and get better mileage.
One attraction of crossovers, Wolkonowicz says, is that, like trucks, they give a commanding view of the road compared to cars.
"People get a feeling of security driving trucks, sitting up high and seeing down the road. They don't want to give up that feeling of security," he said.
Ford is changing its product line to rely more on cars and crossovers and less on big SUVs like the Explorer and Expedition, but Pipas said Ford isn't walking away from those segments.
"One size never fits all. There's 240 million people in the U.S. who are driving and not everyone wants or needs the same thing," he said.
"Two years ago big SUVs accounted for 20 percent of our sales and today it's only 11 percent. Two years ago cars and [crossovers] accounted for 35 percent of our sales, and today it's 47 percent. You have to learn to make money with sales tilted more toward cars and crossovers."
Ford announced Thursday it will eliminate one of two shifts at a plant in Wayne, Mich., that builds the Expedition and Lincoln Navigator, saying it expects sales of both to decline. Both are large SUVs that were redesigned for 2007.
Rick Popely and Jim Mateja - Chicago Tribune - Nov. 10, 2006
http://www.cleanmpg.com/photos/data/501/2007_Toyota_Yaris4.jpg Gas prices are widely credited with fueling a surge in small-car sales this year and a decline in large pickup trucks.
But industry analysts attributed those sales trends to a stale lineup of pickups and the rollout of new small-car models.
John Wolkonowicz, an analyst at industry forecaster Global Insight in Lexington, Mass., predicted that the interest in small cars will ease and that Americans' appetite for trucks will bounce back.
"You don't drive small unless you are an environmentalist and all your friends are too," he said. "I don't see the small-car craze having any longevity unless gas reaches $7 a gallon, and then it's a new ballgame."
But Andrew Coetzee, vice president of product planning for Toyota Motor Sales U.S.A., said more consumers are worried about fuel efficiency and global energy resources, so small cars should continue to grow.
Low prices of small cars makes them attractive to young buyers who have less money to spend than their Baby Boomer parents, Coetzee said.
"Compact cars have grown in price as new safety equipment has been added. That leaves an opportunity for smaller, more affordable entry-level cars," he said.
Small-car sales have surged 50 percent this year, to 240,000 through October, spurred on by three distinctively styled models that debuted this year.
The surge in small cars has been led by the Toyota Yaris, which starts at a price of $11,050, the Honda Fit (base price $13,850) and the Nissan Versa ($12,550), which have sold 96,000 this year combined and offset declines in other small cars.
The two best-selling compacts, the Toyota Corolla and Honda Civic, start at $14,205 and $14,810, respectively.
For those who give economy priority, a car such as the Yaris gets 37 miles per gallon for about half the price of a Toyota Prius, rated at 55 m.p.g., Coetzee said.
In contrast, full-size pickups have hit hard times, falling 10 percent, to 1.87 million.
Fresh products typically boost sales. So large pickups could see an upswing as new versions of General Motors' pickups go on sale this month and a redesigned Toyota Tundra is due in February. Without those additions, the newest model, the Nissan Titan, debuted three years ago.
Wolkonowicz said Americans still like trucks, big ones at that, and buy small cars only out of economic necessity.
"Gas prices are a factor, but only for a short time before people go back to buying what they want," he said. "Driving a small car makes a poverty statement, not a positive statement."
Full-size pickups, meanwhile, were in the Dumpster during the spring and summer, when many Americans were paying more than $3 a gallon.
Ford sales analyst George Pipas says pickups were down mainly because construction and trades workers saw their incomes shrinking and postponed buying.
"The largest factor in the decline of pickup trucks has been the slowdown in the construction and housing markets and higher interest as well as mortgage rates," he said, adding that buyers who need a large truck for work aren't going to change vehicles because of gas prices.
"Their motivation is capability of the product, which ranks for ahead of any other considerations including gas prices. The truck is a business asset or income earner for them, and they rely on it to get the job done," Pipas said.
Even with this year's sales decline, large pickups still outsell small cars by nearly 8-1, and Ford's F-Series pickup remains the industry's best-selling model, as it has been for 24 years.
Pickup sales have rebounded the last two months, jumping 31 percent in October. But that was compared to weak sales in October 2005, when dealers were short of inventory and showroom traffic dried in the wake of Hurricane Katrina.
In addition, sales last month were inflated by high incentives on 2006 models.
Toyota's Coetzee says that despite this year's spike in gas prices, pickup buyers are still more likely to choose a full-size model over a smaller, more economical one.
"The surprise in the last few months is that we haven't seen a lot of consumers switching pickup sizes," he said, adding that Toyota expects full-size pickups to gain strength next year.
Gas prices also get blamed for hurting sales of traditional truck-based sport-utility vehicles such as the Ford Explorer, which five years ago was the third-most-popular vehicle in the U.S. but now ranks 14th.
Pipas, however, says, "The decline in big SUVs already had started in 2003 before gas prices started to rise. Gas prices accelerated the decline.
"The largest factor for the decline in the big SUV market is that the Baby Boomer generation is aging, and their households are getting smaller and they don't need a vehicle that size anymore."
Five years ago, five of the 10 best-selling vehicles in the U.S. were trucks, but now it's only three, as the Explorer and Ford Ranger, an aged midsize pickup, have lost ground.
Passenger car sales are up 3 percent this year, while trucks of all types (pickups, SUVs and vans) are down 9.3 percent.
But the hottest part of the market are the "crossover" SUVs like the Honda CR-V, Mazda CX-7 and Ford Edge, car-based models that are luring consumers away from truck-based SUVs. They look like trucks but ride more like cars and get better mileage.
One attraction of crossovers, Wolkonowicz says, is that, like trucks, they give a commanding view of the road compared to cars.
"People get a feeling of security driving trucks, sitting up high and seeing down the road. They don't want to give up that feeling of security," he said.
Ford is changing its product line to rely more on cars and crossovers and less on big SUVs like the Explorer and Expedition, but Pipas said Ford isn't walking away from those segments.
"One size never fits all. There's 240 million people in the U.S. who are driving and not everyone wants or needs the same thing," he said.
"Two years ago big SUVs accounted for 20 percent of our sales and today it's only 11 percent. Two years ago cars and [crossovers] accounted for 35 percent of our sales, and today it's 47 percent. You have to learn to make money with sales tilted more toward cars and crossovers."
Ford announced Thursday it will eliminate one of two shifts at a plant in Wayne, Mich., that builds the Expedition and Lincoln Navigator, saying it expects sales of both to decline. Both are large SUVs that were redesigned for 2007.