Sub-compact category captures almost 5% of industry sales

21 Mar 2012 Tom Libby

The non-luxury sub-compact car segment, home to such well-known cars as the Ford Fiesta, Honda Fit, Nissan Versa, and Toyota Yaris, is one of the hottest in the industry. Consider the following facts:

  1. The segment's new registrations in January increased 26% versus January 2011, the fifth highest increase among all 29 segments
  2. The segment's share of the industry reached 4.73% in January, up from 4.12% last January and 4.0% in 2010
  3. This segment is now the third largest car segment in the industry, behind only the midsize and compact non-luxury car segments
  4. More than twice as many non-luxury sub-compacts were registered in January as all non-luxury sporty cars put together

There are at least four drivers of this growth. One is the ongoing increase in gas prices. A second is the fact that these models are no longer the econoboxes of old; rather, they come well-equipped with features formerly available only on larger vehicles (e.g., 10 airbags, heated leather seats, and remote start capability). Third, almost all major OEMs now participate in this segment, driving up the number of models from 13 two years ago to 17 today. Lastly, some OEMs have replaced modest entries with much more competitive products; an example is the Chevrolet Sonic which succeeded the dated Aveo.

In January the Nissan Versa was the most popular non-luxury sub-compact, capturing 21% of segment registrations, followed by the Sonic (13%) and Accent (11%). The Versa was also the segment sales leader in 2011 with a 19% segment share, but last year, the runner-ups were the Fiesta (14%) and the Fit (11%).

Profitability has always been an issue in this segment. Fortunately consumers appear to be opting for mid-level trim packages rather than the base packages, a trend that will improve the OEMs bottom lines. Sonic, Fiesta, Accent and Rio buyers have gravitated to the LT, SE, GLS and LX trim packages, respectively, all of which are at least one level above the base category.

Going forward, the Polk automotive forecast sees this category continuing to grow. More makes will be moving into this segment, including Dodge and Subaru. And those OEMs already participating will be launching derivatives of existing entries, including a four-door Fiat 500, a sport utility version of the MINI Cooper, and electric vehicles derived from the traditionally-powered models, for example.

Five Segments with Greatest Year-Over-Year Growth

Posted by Tom Libby, Lead Analyst, North American Forecasting, Polk (03.22.2012)


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