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Forget Humvees, America Learns To Drive The Minis
Posted by Pradeep Sadanapalli | July 5, 2008 | 408 views
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India has always loved its small cars. But now, the mini magic is rubbing off on the most unlikely market — the US. As gasoline prices hit $4 a gallon, gas-guzzling all-American SUVs are getting the big heave-ho as the US joins the rest of the world in rooting for fuel-efficient compact cars.
In the first six months of 2008, sales of small cars bucked the market trend in the US to jump up 31%. Along with compact and economy models (which include the Honda Civic, Chevy Aveo and Cobalt and Ford Focus), the segment was up nearly 7% in June, the only one to show an increase. In contrast, overall passenger vehicle sales were down 10%.
Sales of big SUVs and light trucks, once the mainstay of the Detroit Big Three, were down 31%. GM alone reported a 21% drop in sales of trucks and pick-ups. Analysts predict that the overall sales in the US could fall below 15 million units this year, down from just over 16 million units in 2007.
US’ new-found love for small cars is due to the rising fuel bill.
Small cars make a mark in Europe too
And that should continue through to 2012 by when minis would account for 29 million units globally. Including compacts/economy models, the tally is estimated at 38 million, nearly half of the total car market. In western Europe, mini car sales are expected to rise 50% in the next four years. In the US, they should grow 25% to hit 3.4 million by 2012, say auto analysts.
In Europe too, small is kicking into top gear as petrol gets dearer. Small and mini cars have clocked a 4.5% increase in the first six months of 2008 backed by a 15% jump in sales in France. Small cars now make up for 50% of all new cars sold in France as homegrown brands Renault and Peugeot-Citroen grab marketshare ahead the implementation new emission rules. According to the new regulations, cars that spew less than 130g/km of CO2 get discounts worth euro 200-5,000 while those spewing 160g/km to 250g/km of CO2 are slapped an additional euro 200-2500 in duties.
The mini rush has helped France stand out in western Europe as other big auto markets like Spain, Germany and Italy sputter. In May, overall demand was down 8% mostly due to the bumpy ride in Spain and Italy. The going has been so bad that JD Power has had to downgrade its annual forecast for western Europe this year.
Europe’s favourite models in the first six months actually tell the tale. The VW Golf is top of the heap followed by the new Peugeot 207, Ford Focus, Opel Corsa and Renault Clio — all bonefide small cars. The others in the top 10 list are Opel Astra, Ford Fiesta, Fiat Grande Punto, VW Polo and BMW 3 Series. If Europe is lapping up the Golfs and Grande Puntos, what’s selling in the US now are models like the Ford Focus, Mazda3, Chevy Aveo and Cobalt, Honda Civic and Fit and Toyota Yaris. GM has just announced the rollout of its small car Chevy Beat, tipped to be the smallest in the US. It will be to America what Smart is to Europe, a trendy mini. In June this year, the smallest cars in America (Honda Fit, Toyota Yaris, Chevy Aveo) saw an 8% increase in sales to command 25% of the entire market.
Not surprisingly, big autos are looking to use India and China as their base to launch small cars. Already Toyota is looking at a new small car platform for India and select overseas markets. While Honda is setting up a factory in Rajasthan to make the Jazz/Fit in India, Volkswagen group company Skoda is building a small car platform under its Fabia range. On its part, VW is setting up a plant to make the UP! and Polo in India. Thats not all. Fiat has tied up with Tatas to share engine and assembly facilities in India; Ford is working on a small car, and GM is putting up a second plant and is planning a second small car after Spark.
SOURCES:
Economic Times
Topics: Latest Trends, Travel |
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