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Spotlight on the dominant auto segments

03 January 2012 Tom Libby

It seems like there are a million different types of cars and trucks on the road these days. I'm not a mathematician, but if you were to calculate all of the different combinations of vehicles available based on such vehicle characteristics as size, body type, price and powertrain, there are probably a million possibilities. Yet, even with such a wide choice of vehicles from which the consumer can choose, four types of vehicles dominate the marketplace. Midsize cars, compact cars, compact crossovers and fullsize pickups together account for almost two-thirds of all non-luxury car and light truck registrations (which comprise almost 90% of all new vehicle registrations October 2011 CYTD). The 12 remaining non-luxury segments together make up the remaining third.

While there are at least eight "mainstream" makes striving to gain share in the non-luxury business, only four currently participate in the four core non-luxury segments mentioned above. Chevrolet, Ford, Nissan and Toyota are indeed full-line brands, while their competitors are not. Dodge to this point has not marketed a small crossover (the Nitro, just discontinued, is a body-on-frame light truck), and it also lacks competitive products in the midsize and compact car segments (though new Fiat-based products are on the way). Honda, Hyundai, Kia, and Volkswagen do not currently offer a frame-based pickup, and they are warily watching as Toyota and Nissan struggle in this category.

The importance of the midsize car, small car, small crossover and fullsize pickup segments also helps explain many recent product actions and their ramifications. The current (though aging and soon-to-be-replaced) Malibu and Equinox give Chevrolet competitive products in parts of the market where the bowtie brand previously had been sorely lacking. Similarly, the recently launched, much more price-competitive Volkswagen Jetta and Passat suddenly give Volkswagen, for the first time in decades, viable entries in the midsize and small car segments. This immediately gives Volkswagen much opportunity for sales and share gains. Similarly, the Hyundai Elantra and Sonata, both sporting leading-edge styling and competitive fuel economy ratings, give Hyundai compelling products in the two largest sectors of the marketplace, a key reason for the make's recent sales and share surge.

There may be segments that command more media attention, such as sporty cars or hybrids, but sales trends suggest that for a mainstream brand to climb towards the top in the overall market, it needs to market (at least) a midsize car, small car, small crossover and fullsize pickup.

Segment Share of Non-Luxury New Vehicle Market

Posted by Tom Libby, PolkInsight Advisor, Polk (01.03.2012)

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