February U.S. car sales were driven in part by the appeal of mainstream compact crossovers. These vehicles offer the ideal combination of value for the money, good fuel economy, car-like driving characteristics, and SUV-like functionality. Midsize as well as sub-compact crossovers offer some of these advantages but not all of them. Compact crossover sales in February drove industry results at the segment, model and make levels.
At the segment level, the February results were extraordinary. Non-luxury compact crossovers captured 14.8% of all February sales, up from 11.7% a year ago and 13.8% for all of 2013. Non-luxury compact CUV deliveries jumped 27% from last February, while the industry was flat. Small mainstream crossovers are now the third largest category in the industry among IHS’s 30+ segments, trailing only non-luxury midsize cars and non-luxury compact cars, and small crossovers are not that far behind compact cars.
Among the 18 small mainstream crossovers now on the market, 15 enjoyed year-over-year sales gains in February, and several of the winners played a major role in their respective brands’ February successes. Sales of the all-new Jeep Cherokee were close to 12,000, up more than seven-fold from that of its predecessor, the Liberty, a year ago, and the Cherokee propelled the Jeep make to a 47% year-over-year gain, the largest in the industry. Chrysler was the only “domestic” automaker to register a gain in February. Remarkably, every other Jeep model also improved in February. A lack of cannibalization by a strong new model such as the Cherokee is rare.
Like the Cherokee, the Nissan Rogue had a terrific month, and pulled its brand along with it. The redesigned Rogue, now available with a third row of seats and more distinctive styling, had a 72% sales gain in February, and the Nissan Division climbed 17%. In this case, though, there was some cannibalization, as both the Murano and Pathfinder slipped (though the Murano’s decline was negligible). Nissan’s corporate U.S. share jumped by almost a point and a half in February to 9.7%, and, in a rare occurrence, the company out-sold American Honda.
There were similar results for the Buick Encore (up 93%) and the Buick Division (up 19% while the other three GM makes were all down) as well as for the Subaru Forester (up 95%) and Subaru itself (up 24% with a half-point share gain). Amazingly, not only did the Subaru XV Crosstrek not suffer in the wake of the Forester’s gains, the XV climbed 69% itself in February. These two Subaru models are a potent combination in the small crossover category, and help to explain Subaru’s ongoing success in the U.S.
Some compact crossovers’ successes in February pulled their respective makes up from what would have been dismal monthly results. The Mitsubishi Outlander Sport was up 43%, while every other Mitsubishi model that was also on the market a year ago dropped. Similarly, the Mazda CX-5 was up 72%, in contrast to the decline of all other Mazda models except the redesigned 6. Because of the appeal of these models, Mitsubishi and Mazda February results were only marginally down from a year ago.
Ironically, the segment sales leader for the month and year-to-date, the Ford Escape, suffered a 4% sales decline in February, but it was being compared with a strong year-ago total of 24,000+ units. One of the other three models retreating in February was the Tiguan, which is nearing the end of its life cycle. Its February deliveries of only 2,019 were the fewest in the segment and help to explain Volkswagen’s recent struggles in the U.S. market.
It is unlikely the segment can continue to grow at the same pace in the next few years. All the mainstream makes are now in the segment, and before the end of 2013 we will see sub-compact crossovers hitting the market from mainstream makes such as Honda. Although these smaller vehicles will not offer the ideal combination of car and SUV features mentioned above, it is almost inevitable that their sales will eat into the compact category to some degree.Non-Luxury Compact Crossover New Sales Feb. 14 Feb. 13 Chg. % Jeep Cherokee 11,795 0 NA Subaru Forester 10,773 5,529 94.8% Buick Encore 3,078 1,597 92.7% Nissan Rogue 17,197 9,964 72.6% Mazda CX-5 9,353 5,451 71.6% Subaru XV Crosstrek 5,489 3,258 68.5% Mitsubishi Outlander Sport 2,348 1,644 42.8% Toyota RAV4 16,451 13,329 23.4% Jeep Compass 4,354 3,776 15.3% Chevrolet Captiva Sport 4,452 3,867 15.1% Hyundai Tucson 3,956 3,444 14.9% Kia Sportage 2,669 2,334 14.4% Dodge Journey 7,963 7,530 5.8% Chevrolet Equinox 21,587 20,649 4.5% Honda CR-V 20,759 20,668 0.4% Ford Escape 23,145 24,110 -4.0% GMC Terrain 9,297 9,802 -5.2% Volkswagen Tiguan 2,019 2,533 -20.3% All models 176,685 139,485 26.7% Compact CUV share 14.8% 11.7%
Posted by Tom Libby, Solutions Consultant, Loyalty Practice, IHS Automotive (03.07.2014)
In “Twilight of the Brands” in the February 17/24 issue of “The New Yorker,” James Surowiecki discusses the challenges facing brands in today’s information-rich U.S. economy. Surowiecki focuses on Lululemon Athletica, a yoga apparel company that quickly became the darling of the industry and then tumbled almost overnight because of negative customer feedback. Such instantaneous customer reaction can propel a company to new heights or spell its doom in the blink of an eye, according to Surowiecki. He also claims “information overload” is a myth, that consumers in fact are adept at efficiently obtaining the information they want. This plethora of information available via the web is increasing the possibility that consumers will switch brands, reducing brand loyalty and rendering brands more fragile. Proof of brands’ reduced clout is the lower premiums consumers are willing to pay for them.
Several challenges mentioned by Surowiecki exist in the U.S. light vehicle industry. New car customers today have a huge amount of information at their fingertips, including (among other things) what the dealer pays the manufacturer for a particular model, what the model is actually selling for today in any given zip code, actual incentives, and actual customer feedback about the vehicle and its attributes. With such information seemingly everywhere and available in two seconds via the web, car shoppers increasingly will gravitate to that car or truck that provides the most value, with the brand playing a less important role.
But the new vehicle industry does not readily fit with some of the descriptions provided by Surowiecki. Unlike the yoga apparel industry, the automobile industry is exceptionally capital intensive, with billions of dollars needed to design, engineer, manufacture, assemble and sell new vehicles. The barriers to entry are huge, so few makes actually do enter and survive. The table below shows the makes currently on the U.S. market, along with their U.S. launch years and the number of years they have survived. The average amount of time a new vehicle make has been on the U.S. market is 48 years; only four makes have been on the market less than ten years, and only five less than 20 years. In other words, few makes have recently entered the market and survived. One of these is Ram, which is not completely new but rather a semi-new name (derived from an existing model name) for an existing set of light trucks. Tesla has done well in the past year in terms of sales, but its financial position is not clear. Smart is still here but struggling, with 2013 sales down 7% (in a market up 8%) to just 9,300 cars. Two of the four makes launched in the past ten years are not yet “out of the woods.”Longevity of New Vehicle Makes Make U.S. Launch Year Number of Years on the U.S. Market Ford 1903 111 Cadillac 1903 111 Buick 1904 110 GMC 1910 104 Chevrolet 1912 102 Dodge 1914 100 Lincoln 1920 94 Chrysler 1924 90 Jeep 1946 68 Jaguar 1955 59 Volkswagen 1955 59 Volvo 1959 55 Toyota 1959 55 Nissan (Datsun) 1959 55 Mercedes-Benz 1960 54 Mazda 1972 42 Audi 1973 41 Honda 1974 40 BMW 1975 39 Porsche 1975 39 Subaru 1975 39 Ferrari 1978 36 Rolls-Royce 1978 36 Bentley* 1978 36 Mitsubishi 1982 32 Maserati 1984 30 Lamborghini 1985 29 Aston Martin 1986 28 Hyundai 1986 28 Acura 1986 28 Land Rover 1987 27 Infiniti 1989 25 Lexus 1989 25 Kia 1993 21 MINI** 2002 12 smart 2008 6 Tesla 2008 6 Fiat** 2011 3 RAM 2012 2 Average 48.1
*Bentley is estimate
**MINI and Fiat years on market prior to most recent launches are not included
Source: 1996 Automotive News Market Data Book, miscellaneous industry sales reports
Surowiecki uses Hyundai as an example of a make that quickly climbed the sales charts, going from “being a joke to selling four million cars a year." Quickly may not be the correct word – Hyundai launched in Seoul in 1967 and in the U.S. in 1986 (though I admit its rise to one of the largest global automakers in 47 years has been remarkable).
Buyers are still paying premiums for some brands and models in the luxury and non-luxury markets. The Hyundai Genesis competes in the same segment as the Mercedes-Benz E-Class, but the E-Class has a current transaction price in Southeastern Michigan of almost $49,000, approximately 23% above the (comparably equipped) Genesis’s transaction price. At the model level, a 2014 Honda Civic sedan is now selling for an average transaction price of $18,469, 11% above a comparably-equipped Dodge Dart. (All transaction price data were obtained from Edmunds.com on February 20, 2014.)
Surowiecki says, “the percentage of brand-loyal car buyers has plummeted in the past twenty years.” IHS Automotive make-level loyalty for the calendar years 2008 through 2013 is shown below; it appears to be increasing rather than declining (data prior to the 2008 calendar year are not readily available). These results are derived from actual registration data (not sample data) collected by Polk, recently acquired by IHS.
For the auto manufacturer, loyalty remains critically important. Retaining an existing customer within the same make is much less expensive than conquesting a buyer from a competitive make. OEMs utilize several tools to improve make-level loyalty, including leasing (21% of all new vehicle transactions in 2013 were leases) and enhanced relationships with existing customers via the web.
The days of buying one brand because “we’ve always bought xx” are over, for sure. The internet is changing much of the new vehicle industry in profound ways, including the retail sales process. But brand still plays an important role, in both the luxury and non-luxury arenas, and those makes with substantial clout in the marketplace will benefit.
Posted by Tom Libby, Solutions Consultant, Loyalty Practice, IHS Automotive (02.20.2014)
Given all the attention recently focused on Tesla, I thought it would be interesting to see who is buying the Model S. Specifically, what are customers trading in for the Model S, or what other vehicles do Model S buyers have in their garage if they are adding to their fleet? The Model S conquest data, derived from Polk new vehicle registration data, are fascinating.
There are two ways of looking at the data. First, the pure conquest data show that the Model S is conquesting owners of Toyota (brand) vehicles more frequently than owners of any other brand on the road, followed by Mercedes-Benz and BMW owners (see table below). The Toyota conquests by the Model S are being driven by the Prius, which is the number one model conquested by the Model S. The Highlander and Sienna are fifth and sixth on the list. Interestingly, the Leaf ranks number seven on the model list, and the fact that the Prius and Leaf both rank so high on the Model S conquest list suggests that the S now gives hybrid/EV-inclined purchasers an opportunity to move up to a vehicle that is:
- clearly a hybrid or electric, like their current model
- more luxurious and upscale than their current car
- more stylish as well
The second approach to the conquest data looks more deeply at the data and by so doing provides a more useful picture of the actual marketplace dynamics. This second approach compares a model’s conquest share of all conquests with the same model’s return to market share of all customers who returned to the market. In other words, is the model in question being conquested by the Model S at a faster or slower rate than the overall rate at which owners of that model return to the market? This calculation results in an entirely different list of top ten makes. The ten brands which are most likely to be conquested by the Model S, when compared to the rate at which their customers return to the market in general, are all either exotic or premium makes. Also, the conquest/return to market ratios for these makes are exceptionally high, suggesting they are much more likely to move to the Model S than the typical customer coming back into the marketplace. These data point unequivocally to the conclusion that Model S buyers are very well-off financially.
In summary, while the simple conquest data suggest the high-volume mainstream and premium makes are losing the most customers to the Model S, a comparison of conquest data with return to market data reveals that, in fact, the exotics are moving to the Tesla model at rates far above those of other brands.
Posted by Tom Libby, Solutions Consultant, Loyalty Practice, IHS Automotive (02.06.2014)
Do you think a Jeep Grand Cherokee is a direct competitor of a Porsche Cayenne? Would you add the Volkswagen Touareg to the competitive set? Well, many Brazilian consumers do. And the results may be surprising.
Let me start with the winner in the SUV/crossover segment. Land Rover is the preferred brand. The Range Rover Evoque sells over three times more than vehicle number two, the Volvo XC60. And the Freelander (LR2 in the U.S.) comes right in third place. Looking one length class above, the competition is fiercer, but the Discovery (LR4) has the highest volume. Finally, in the large segment, Land Rover sells five Range Rovers for each Mercedes GL-Class that leaves the dealer network.
There is no doubt Land Rover is doing well all over the world, so it is natural that it is the market leader in Brazil among off-road vehicles. However, what is striking to me is how well the Porsche Cayenne does. Last year, according to preliminary numbers, 622 Cayennes were registered ahead of Mercedes ML-Class, BMW X5 and X6, Audi Q7 and Volkswagen Touareg. Our light vehicle forecast for next year accounts for 571 Cayennes, but Porsche will sell even more SUVs thanks to the Macan.
Porsche has only five dealers in Brazil, a country larger than the continental U.S. Land Rover has 35 dealers, while BMW has 38 and Mercedes has 37. The most "affordable" Cayenne costs 329,000 Brazilian reais (US$ 138,125). An Audi Q7 starts at R$ 277.300 (US$ 116,420) and a Lexus RX is priced at R$ 256.000 (US$ 107,477).
As in many other countries, SUVs and crossovers are the must have vehicle of the elite in Brazil. It is also the fastest growing segment, especially considering smaller models such as the Ford EcoSport and the Chevrolet Tracker. Without any consumer research, I can tell image counts a lot in this segment. SUVs make drivers look more powerful and richer.
There is still a lot of inequity in Brazil, where 10% of the population hold 43% of the country's income. Although Brazil does not have as many billionaires as China, Russia or India – according to Forbes, there are 46 billionaires in Brazil compared to 122 in China –, those who have money like to spend in very expensive goods. That explains why an entry level luxury vehicle is not the best seller in a brand's portfolio. The Audi A4 outsells the A1. The BMW 3-Series is the most popular BMW in Brazil, ahead of the X1 and the 1-Series. And Mercedes C-Class registrations are double those of the A- and B-Class combined.
Another of the Brazilian market characteristics that just cannot be explained through logic.
Posted by Augusto Amorim, Lead Analyst – South America Forecasting, IHS Automotive (01.20.2014)
When Google released its Zeitgeist 2013, a compilation of the most googled terms of the year, the Hyundai HB20 reached the top spot for the Brazilian automotive industry. It was followed by the Chevrolet Onix and Chevrolet Prisma. The new Volkswagen Golf and the Volkswagen Beetle (locally called Fusca) rounded out the Top 5. The HB20 hatchback, the Onix and the Fusca were launched late in 2012.
There is no doubt the HB20 has written its success story in Brazil’s automotive history. With 3,312 units registered in its first month in the market (October 2012), it had over 122,000 units registered last year. Polk, now IHS Automotive, forecasts that more than 125,000 units will be registered in 2014, in line with many of the vehicles made by more established brands in Brazil. Hyundai built a factory with a 150,000-unit capacity just to make the HB20, and it cannot keep up with demand. Earlier in 2013, a sedan version was added to the assembly lines, and Hyundai has already added a third shift.
Hyundai did loads of consumer research and developed the HB20 just for the Brazilian market. With potential to be successful in other countries as well, it is not exported at all. The Korean make ended up creating a very good looking car that competes in the so-called “popular” segment for offering a 1.0-liter engine, but that also competes with more premium small cars with a 1.6-liter engine.
By the way, the small hatchback segment in Brazil is the largest and most competitive one. Almost 37% of all registrations fall under this category, where 25 vehicles try to steal sales from each other, including Brazil’s best seller for the last 28 years, the VW Gol. The new model is challenging make loyalty: we estimate that for each 100 HB20 that Hyundai sells, VW loses 22 sales.
The state of São Paulo led Google’s search, which is very understandable. This is the largest state in the country by population, where more light vehicles are registered than in the entire country of Argentina. The city of São Paulo also led the search, which is also very understandable. It is the country’s largest and richest city. The surprises popped in the second places: the state of Mato Grosso and the city of Bauru, in the São Paulo state.
Out of 27 states in Brazil, Mato Grosso is the third largest in area, but only the 19th in population. Most of the land is used for agriculture, and it is the country’s biggest soy and seed cotton producer. Mato Grosso has the eighth highest GDP per capita. In Bauru, 362,062 people live there, which ranks it as the 65th largest city in Brazil, well behind other capitals such as Rio de Janeiro and Salvador. In both Mato Grosso and Bauru, pick-up trucks are successful for their agricultural vocation.
But what really pushed the HB20 to the top of Google’s list? Hyundai’s confusing marketing strategy. First, there is no simplified URL for Hyundai such as: www.hyundai.com.br (while Fiat and Volkswagen have: www.fiat.com.br and www.volkswagen.com.br). So when a consumer tries the most basic web URL and gets and error message, Google becomes the natural alternative. The second reason is that there is a dealer network only for the HB20, and a different network for the imported vehicles. A store selling a Sonata, for example, cannot sell an HB20 and vice-versa. Naturally, the locally built vehicles do not share the same website as the imported ones. If someone is visiting www.hyundai-motor.com.br, he or she is redirected to linhahb20.com.br to get HB20’s information and schedule a test drive. The website does not inform price, and "preço HB20" was the most popular query. Preço means price in Portuguese.
Hyundai just made it faster to Google HB20.
Posted by Augusto Amorim, Lead Analyst – South America Forecasting, IHS Automotive (01.17.2014)
U.S. car dealers delivered 15,600,199 new cars and light trucks in 2013, up 8% from 2012. This is the fourth consecutive year-over-year increase and follows three years of double-digit growth from 2010 through 2012 as the industry climbed out of the 2009-10 recession. Of the 38 makes now on the market, 29 enjoyed year-over-year increases in 2013, eight saw declines and one (Tesla) could not be compared to 2012 since it had no sales at all last year.
The five makes with the largest increases (excluding exotics) were Maserati, Jaguar, Subaru, Ram and Cadillac (see chart below). A look behind the numbers shows that these marques owe their successes almost entirely to the launches of compelling all-new or redesigned products.Maserati
- The redesigned 2014 Quattroporte hit showrooms in August, and total 2013 Quattroporte deliveries tripled
- Maserati introduced the all-new Ghibli midsize premium sedan in October, offering the Maserati mystique at an "affordable" price for the first time in many years. Maserati dealers delivered 424 Ghiblis in the fourth quarter, all incremental versus a year ago
- Embodying Jaguar's DNA of styling and performance, the F-Type roadster has brought 2,250 incremental sales to Jaguar since its introduction in May. The launch of the F-Type coupe this June will bring still more customers to the brand.
- XF deliveries climbed 43% thanks to an adjustment in its powertrain offerings. In the first 10 months of 2012, 100% of XFs were equipped with a V8 engine; the 2013 addition of both four-and six-cylinder powertrains to the XF has shifted the mix dramatically, with over half now coming with a V6 and a third with a four-cylinder engine. Also, more than half of the six-cylinder XFs are now equipped with AWD versus zero a year ago; a similar shift in powertrains has occurred in smaller volumes with the XJ
- The Forester, XV Crosstrek and BR-Z propelled Subaru to another outstanding year (Subaru is the only brand in the U.S. industry to record a year-over-year sales gain in every year from 2007 through 2013); all these models were either introduced or redesigned in 2012 or 2013
- The Legacy, Impreza and Forester have all been “right-sized” with their most recent redesigns, putting them at the centers of their respective segments in contrast to past years when they lacked some size and/or functionality of competitors
- Subaru does not compete in any of the large vehicle segments (car or light truck), shielding them from the gradual declines in those categories
- The Ram 1500 Pickup was launched in November 2012, making 2013 its first full year on the market; the 2500/3500 came to market this past August. Total 2013 Ram pickup sales climbed over 60,000 (21%) during a year when Chevrolet, GMC and Toyota all launched redesigned full-size pickups
- Ram also sold 3,220 large Promaster Vans this year versus none a year ago
- Cadillac expanded its lineup to three competitive cars in 2012 (for the first time in decades) with the launch of the XTS in June and ATS in September; 2013 was the first full year for both these models and also the year in which Cadillac introduced the larger midsize CTS
- With the Escalade and SRX, Cadillac now offers five competitive products in the ultra-competitive premium market dominated by BMW, Lexus and Mercedes-Benz
Other makes with double-digit improvements in 2013 include (listed in descending order based on their year-over-year sales gains): Porsche, Land Rover, Buick, Dodge, Audi, Mercedes-Benz, Lexus, Ford and Nissan.
Posted by Tom Libby, Solutions Consultant, Loyalty Practice, IHS Automotive (01.16.2014)
It was my pleasure to be a co-presenter last night, along with Edouard Tavernier, as 33 winners were recognized for automotive loyalty and conquest during the Polk Automotive Loyalty Awards presented by IHS. For those of you unfamiliar with how owner loyalty is measured, it’s determined when a household that owns a new vehicle returns to market and purchases or leases another new vehicle of the same model or make.
This year's Polk Loyalty Awards recognized the best-of-the-best and winners were named in eight featured categories. Additionally, 25 segment-level loyalty winners were announced, many of which were repeat winners from previous years.
Of the eight featured categories, Ford Motor Company dominated once again this year. The company earned honors in the prestigious Overall Loyalty to Make and Overall Loyalty to Manufacturer categories as well as being recognized in the African American Loyalty to Make category, which highlights the company's ability to retain owners of African American decent. Mark Fields, Chief Operating Officer for Ford Motor Company, accepted the Polk Automotive Loyalty Award for Overall Loyalty to Manufacturer in addition to serving as the evening’s keynote speaker. Meanwhile, Toyota earned top honors in the Hispanic and Asian Loyalty to Make categories, Subaru in the Most Improved Conquest Percent of Registrations, and Audi in the Highest Conquest Percent of Registrations award category.
Here are a few key market facts that I shared with the audience last night. They help to paint a picture of the changing automotive environment regarding owner loyalty and defection.
First of all, there was a strong increase in the number of consumers returning to market in the 2013 Model Year. Based on IHS Automotive’s recent analysis, more than 7.4 million consumers returned to market in the 2013 model year; this is up from 5.9 million in model year 2012. A strong 26 percent increase. Digging a bit deeper, we found that owners from three manufacturers ‒ General Motors, Toyota and Ford ‒ account for half of the total return-to-market population. This clearly illustrates the importance of customer retention for these high-volume manufacturers, but it also shows the huge opportunity for other smaller manufacturers to conquest these returning-to-market owners.
Secondly, an average of 51 percent of consumers returning to market in model year 2013 stayed loyal to a brand. This is slightly higher than our 2012 model year findings of 50 percent and demonstrates the effort needed to retain customers. Even as overall brand loyalty is around 51 percent, it is still a very volatile marketplace, with brands fighting every day for customer retention.
- Thirdly, ethnic representation among new vehicle buyers continues its significance. For the 2013 model year, we identified that nearly one out of every five owners returning to the new vehicle market are from three ethnic groups: Asian, African American and Hispanic. This highlights the importance for OEMs to work with their multicultural agencies to connect their brands with these key consumer groups who, by the way, are continuing to increase their buying power.
The competition in the luxury part of the U.S. new vehicle industry has perhaps never been as intense as it is right now, and, in a related trend, new product activity in this space is as frenetic as ever. BMW, Lexus and Mercedes-Benz continue to vie for luxury sales leadership with Audi and Cadillac aggressively trying to move up. Many of the luxury makes have been expanding into new segments, with such products as the Evoque, F-Type and CLA. There are other examples of this trend coming this year, including the ELR, Q3, A3 sedan, GLA, MKC, NX, Macan, RC, i3, 2 Series, 4 Series, X4, and X6. On top of this, yet another make will jump into the premium arena when Alfa launches the 4C this spring or summer. Given all of this activity, it would seem almost inevitable that the luxury makes in aggregate would be eating into the non-luxury piece of the pie and gaining share.
Surprisingly, that is not happening. As the chart below illustrates, the luxury market, whether analyzed as a combination of makes or segments, has not been gaining share over the past five years. It's share of the U.S. market has hovered in the 10.5%-11.5% range going back to at least 2008. (The results vary slightly depending on whether one defines the luxury market as a group of makes or a group of segments; the group of makes will include some models that do not fall into luxury segments, such as the Mercedes-Benz Sprinter, while the group of segments will include some models that are not part of luxury makes, such as the Chevrolet Corvette, Hyundai Equus and Genesis, Dodge Viper and Nissan GT-R.)
Several luxury makes have indeed been gaining share including Audi, Land Rover, Mercedes-Benz, and Porsche. On top of this, Tesla has gone from 0% a year ago to .12% of the industry this year (October CYTD). But at the same time, several makes have either lost ground or disappeared altogether. Lexus has slipped slightly while Lincoln and Volvo have lost quite a bit of share and Hummer and Saab have been discontinued.
The same pattern exists at the segment level. The biggest segment gainer in the luxury space is the compact crossover category, which has almost quadrupled from .3% of the industry to 1.16% now. The subcompact car category has also gained. On the other hand, four segments have slipped, including full-size SUVs and cars, midsize cars and compact cars. Generally segments made up of larger vehicles have lost share while the smaller-vehicle categories have grown.
There are (at least) two conclusions one can draw from these trends. First, while luxury makes may be pulling non-luxury buyers up into the luxury space via attractive lease programs, an equal number of luxury owners must be leaving the category. On a net basis then, luxury makes are conquesting owners from other luxury makes (assuming sales to used owners and other sources remain constant). And, secondly, as the large-vehicle segments gradually cede share to the small-vehicle segments, both dealer and OEM per-vehicle profits decline, suggesting less overall profit in the U.S. luxury market going forward. It's no wonder the leading luxury makes are increasingly focusing on China.
Posted by Tom Libby, Solutions Consultant, Loyalty Practice, IHS Automotive (01.08.14)