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New Cars - US - April 2010

This report explores the new car market in the US. It provides insight into the external and internal factors affecting new car sales. Additionally, it looks at purchasing and consumer trends, and what they mean for future sales, promotional campaigns and industry innovations. Specific questions that are answered in this report include, but are not limited to, the following:

  • What effects do rising gasoline costs and the economic downturn have on the overall market?
  • How has the recall crisis for Toyota and other automakers affected market share?
  • What incentives have galvanized consumers to purchase, even while in a recession?
  • Which companies are successfully using social and digital media to generate enthusiasm among consumers that ultimately lead to brand awareness and sales?
  • Which companies are losing or gaining market share and how has that affected sales?
  • How have new car dealerships been affected by the recession and how many are still operating?
  • What cars have consumers purchased during the last 24 months and what cars do consumers want to purchase during the next year?
  • How is the high price of steel and other raw materials contributing to future growth?
  • What options are consumers purchasing along with their cars and which household income level is purchasing which options most?
  • What works at a dealership to influence purchasing? What doesn’t work?
  • What incentives are consumers responding to the most and the least?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Total unit sales of new cars reach 6 million, a 20% decline from 2008
                        • Domestic unit sales outpace imports although both suffered in 2009
                          • March 2010 sales suggest slight rebound for domestic automakers
                            • General Motors, Toyota share nearly 40% of total U.S. car market
                              • Primarily older, wealthiest households purchased new the most…
                                • …but younger buyers are planning to purchase more over the next year
                                  • Women are essential to new car buying
                                    • In the past, consumers purchased four-door sedans the most…
                                      • …today sedans still rule but consumers aspire to be more diverse in what they purchase
                                        • Price and fuel economy is not enough to get high income earners to buy
                                          • To sell consumers options, automakers will need to go past practicality
                                            • Cut-rate financing, shorter loan terms trending to help drive up sales
                                              • Obama administration raises fuel economy standards 40% for new cars
                                                • U.S. new car dealership units plummet in 2009
                                                  • The showroom experience, test drive will matter most to high wage earners
                                                  • Insights and Opportunities

                                                    • Target women car buyers from marketing campaigns to the showroom
                                                      • Create nuanced messages emphasizing reliability following Toyota crisis
                                                        • Partner with neighborhood businesses to get new models on road
                                                        • Inspire Insights

                                                            • Trend: Rethinking Business, Capitalism and Consumerism
                                                              • Toyota crisis illustrates how to deal with responsibility
                                                                • Toyota bypassed crisis by taking responsibility and doing it credibly
                                                                • Market Size

                                                                  • Key points
                                                                    • Drop in car unit sales near doubles in 2009 from declines one year prior
                                                                      • Figure 1: Total U.S. car unit sales, 2003-09
                                                                    • Domestic unit sales outpace imports although both suffered in 2009
                                                                      • Figure 2: Total U.S. unit car sales, by domestic and import, 2003-09
                                                                  • Segment Performance

                                                                    • Key points
                                                                      • General Motors, Toyota share nearly 40% of total U.S. car market
                                                                        • Figure 3: Total North America car sales revenue, 2008 and 2009
                                                                    • Segment Performance—Domestic

                                                                      • Key points
                                                                        • March 2010 sales suggest slight rebound for domestic automakers
                                                                          • General Motors: Returning from bankruptcy to test coming Volt
                                                                            • North American GM sales fell 35% in 2009
                                                                              • Figure 4: GM total North America automotive sales revenue, 2006-09
                                                                              • Figure 5: GM North America vehicle unit car sales, 2006-09
                                                                            • Ford Motor Company: Gaining market share through recession
                                                                              • Ford revenues drop nearly 24% in 2008 from previous year
                                                                                • Figure 6: Ford total North America automotive sales revenue, 2006-09
                                                                                • Figure 7: Ford U.S. vehicle unit car sales, 2005-09
                                                                              • Chrysler: Struggling to re-freshen stale brands
                                                                                  • Figure 8: Chrysler U.S. vehicle unit sales, 2005-09
                                                                              • Segment Performance—Imports

                                                                                • Key points
                                                                                  • Toyota Motor Co.
                                                                                    • Toyota’s unit car sales in U.S. dropped almost 20% from one year prior
                                                                                      • Figure 9: Toyota motor sales U.S.A.’s U.S. vehicle unit sales, 2005-09
                                                                                    • Honda Motor Co.
                                                                                      • Competing against Toyota’s Prius with the Insight
                                                                                        • Honda’s unit car sales in U.S. dropped about 20% in 2009
                                                                                          • Figure 10: Honda’s U.S. vehicle unit sales, 2005-09
                                                                                        • Nissan Motor Co.
                                                                                          • Nissan planning to mass-market electric cars
                                                                                            • Unit car sales in U.S. dropped 13% in 2009 compared to one year prior
                                                                                              • Figure 11: Nissan North America’s U.S. vehicle unit sales, 2005-09
                                                                                            • Hyundai Motor Co.
                                                                                              • Figure 12: Hyundai U.S. vehicle unit sales, 2005-09
                                                                                          • Market Drivers

                                                                                            • Cut-rate financing, shorter loan terms trending to help drive up sales
                                                                                              • Obama administration raises fuel economy standards 40% for new cars
                                                                                                  • Figure 13: Average fuel economy required under federal clean car standards, by vehicle, 2011-16
                                                                                                • Steel industry raising production costs, passing onto carmakers
                                                                                                  • Recalls by top automotive manufacturers hurt public confidence in industry
                                                                                                  • Dealerships—Where Consumers Purchase New Cars

                                                                                                    • Key points
                                                                                                      • After gradual declines, dealership revenues plummet starting in 2008
                                                                                                          • Figure 14: Total sales at new car dealerships, at current prices, 2004-09
                                                                                                          • Figure 15: Total sales at new car dealership, at inflation-adjusted prices, 2004-09
                                                                                                        • U.S. new unit dealerships decrease the most in 2009 over the past 22 years
                                                                                                            • Figure 16: U.S. new car dealerships, 1987-2009
                                                                                                          • Where consumers are purchasing new cars
                                                                                                            • What it means:
                                                                                                              • Figure 17: Location of last car purchase, by gender, January 2010
                                                                                                            • Large auto malls most preferred by respondents aged 18-34
                                                                                                              • What it means:
                                                                                                                • Figure 18: Location of last car purchase, by age, January 2010
                                                                                                            • Dealerships—Factors Influencing Consumer Purchase

                                                                                                              • Key points
                                                                                                                • Consumers want test drives to help determine vehicle purchasing
                                                                                                                  • What it means:
                                                                                                                    • Figure 19: Factors influencing consumer purchasing, by gender, January 2010
                                                                                                                  • Incentives for purchasing making greatest impact on those aged 35-54
                                                                                                                    • What it means:
                                                                                                                      • Figure 20: Factors influencing consumer purchasing, by age, January 2010
                                                                                                                    • Highest household earners most concerned about dealership aesthetic
                                                                                                                      • What it means:
                                                                                                                        • Figure 21: Factors influencing consumer purchasing, by household income, January 2010
                                                                                                                    • Brand Qualities

                                                                                                                      • “Fiesta Movement” unique for hyping car’s launch, then continued impact
                                                                                                                        • Phase One: Brand exposure on the ground
                                                                                                                          • Phase Two: Brand exposure through multimedia interaction
                                                                                                                            • Ford also targeting Fiesta to black car buyers through branded site, contest
                                                                                                                              • Toyota adopts retro luxury approach in creating awareness around Avalon
                                                                                                                              • Innovation and Innovators

                                                                                                                                • Chevrolet re-styles economy cars to shift buyer perceptions
                                                                                                                                  • GM launches test drive centers that allow buyers to drive the competition
                                                                                                                                    • Ford and Microsoft partner to launch energy monitoring system in cars
                                                                                                                                      • GM, Segway partner to create concept car tailored to curb city congestion
                                                                                                                                      • Advertising and Promotion

                                                                                                                                        • Companies embrace incentives to move inventory in a recession
                                                                                                                                          • Integrated social media, online video campaigns becoming more essential
                                                                                                                                            • Honda borrows underlying appeal of social media for broadcast ad
                                                                                                                                              • Figure 22: Honda ad, 2010
                                                                                                                                            • Showing empathy—and confidence—in a recession follows fine line
                                                                                                                                              • Figure 23: Honda ad, 2010
                                                                                                                                              • Figure 24: Hyundai ad, 2010
                                                                                                                                            • Jeep campaign stresses individuality through nuanced confidence
                                                                                                                                              • Figure 25: Chrysler Jeep ad, 2010
                                                                                                                                              • Figure 26: Chrysler Jeep ad, 2010
                                                                                                                                          • New Car Purchasing Participation

                                                                                                                                            • Key points
                                                                                                                                              • A fifth of respondents purchased cars over the last 24 months
                                                                                                                                                • What it means:
                                                                                                                                                  • Figure 27: New car purchasing participation, by gender, age and household income, January 2010
                                                                                                                                                • Consumers who are purchasing are replacing previous cars bought new
                                                                                                                                                  • What it means:
                                                                                                                                                    • Figure 28: Vehicle replaced by new car purchase, by gender, January 2010
                                                                                                                                                  • Oldest respondents most likely to purchase new cars as a pattern
                                                                                                                                                    • What it means:
                                                                                                                                                      • Figure 29: Vehicle replaced by new car purchase, by age, January 2010
                                                                                                                                                  • Plans to Purchase a New Car

                                                                                                                                                    • Key points
                                                                                                                                                      • A quarter of respondents unsure if they will purchase a new car this year
                                                                                                                                                        • What it means:
                                                                                                                                                          • Figure 30: Plans to purchase a car, by gender, January 2010
                                                                                                                                                        • Respondents in oldest age group least likely to purchase new vehicles
                                                                                                                                                          • What it means:
                                                                                                                                                            • Only households earning $75K+ want to purchase new in coming year
                                                                                                                                                              • What it means:
                                                                                                                                                                • Figure 32: Plans to purchase a car, by household income, January 2010
                                                                                                                                                              • Female respondents desire to purchase new at higher rate than men
                                                                                                                                                                • What it means:
                                                                                                                                                                  • Figure 33: Vehicle expected to replace, by gender, January 2010
                                                                                                                                                                • Starting at age 35, respondents likely to want to purchase new vehicles to replace new vehicles
                                                                                                                                                                  • What it means:
                                                                                                                                                                    • Figure 34: Vehicle expected to replace, by age, January 2010
                                                                                                                                                                  • The lowest-earning households most likely to desire purchasing new to replace a car purchased used
                                                                                                                                                                    • What it means:
                                                                                                                                                                      • Figure 35: Vehicle expected to replace, by household income, January 2010
                                                                                                                                                                  • Type of New Car Consumers Last Purchased

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Sedans and SUVs most popular choices among those who bought new cars
                                                                                                                                                                        • What it means:
                                                                                                                                                                          • Figure 36: Type of vehicle last purchased, by gender, January 2010
                                                                                                                                                                        • Sedans most popular new vehicle last purchased across all age groups
                                                                                                                                                                          • What it means:
                                                                                                                                                                            • Figure 37: Type of vehicle last purchased, by age, January 2010
                                                                                                                                                                          • More than half of households earning $50K or less purchasing four-door sedans
                                                                                                                                                                            • What it means:
                                                                                                                                                                              • Figure 38: Type of vehicle last purchased, by household income, January 2010
                                                                                                                                                                          • Type of New Car Consumers Plan to Purchase

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Majority of respondents plan to purchase sedans, but open to variety
                                                                                                                                                                                • What it means:
                                                                                                                                                                                    • Figure 39: Type of vehicle consumers plan to purchase, by gender, January 2010
                                                                                                                                                                                  • SUV/truck purchasing will appeal most to middle-age new car buyers
                                                                                                                                                                                    • What it means:
                                                                                                                                                                                        • Figure 40: Type of vehicle consumers plan to purchase, by age, January 2010
                                                                                                                                                                                      • Highest household earners most likely purchasing sedans
                                                                                                                                                                                        • What it means:
                                                                                                                                                                                            • Figure 41: Type of vehicle consumers plan to purchase, by household income, January 2010
                                                                                                                                                                                        • Vehicle Components Influencing New Car Purchasing

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • Price, comfort, fuel efficiency biggest considerations when buying new cars
                                                                                                                                                                                              • What it means:
                                                                                                                                                                                                • Figure 42: Vehicle components influencing car purchasing, by gender, January 2010
                                                                                                                                                                                              • Price most significant for under-55s; over-55s most influenced by comfort
                                                                                                                                                                                                • What it means:
                                                                                                                                                                                                  • Figure 43: Vehicle components influencing car purchasing, by age, January 2010
                                                                                                                                                                                                • Households earning $100K+ most likely influenced by range of choices
                                                                                                                                                                                                  • What it means:
                                                                                                                                                                                                    • Figure 44: Vehicle components influencing car purchasing, by household income, January 2010
                                                                                                                                                                                                • Options Purchased At Time of New Car Purchase

                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                    • Most popular amenities included tinted windows and security systems
                                                                                                                                                                                                      • What it means:
                                                                                                                                                                                                        • Figure 45: Options purchased at time of new car purchase, by gender, January 2010
                                                                                                                                                                                                      • Respondents aged 35-54 splurged more on premium features
                                                                                                                                                                                                        • What it means:
                                                                                                                                                                                                          • Figure 46: Options purchased at time of new car purchase, by age, January 2010
                                                                                                                                                                                                        • Households earning $100K+ most likely to purchase leather seats, sunroof
                                                                                                                                                                                                          • What it means:
                                                                                                                                                                                                            • Figure 47: Options purchased at time of new car purchase, by household income, January 2010
                                                                                                                                                                                                        • Race and Hispanic Origin

                                                                                                                                                                                                          • Key point
                                                                                                                                                                                                            • Most respondents did not purchase a new car regardless of race
                                                                                                                                                                                                              • What it means:
                                                                                                                                                                                                                • Figure 48: New car purchasing participation, by race, January 2010
                                                                                                                                                                                                            • Cluster Analysis

                                                                                                                                                                                                                • Opters
                                                                                                                                                                                                                  • Who they are
                                                                                                                                                                                                                    • Opportunity
                                                                                                                                                                                                                      • Comforters
                                                                                                                                                                                                                        • Who they are
                                                                                                                                                                                                                          • Opportunity
                                                                                                                                                                                                                            • Stockers
                                                                                                                                                                                                                              • Who they are
                                                                                                                                                                                                                                • Opportunity
                                                                                                                                                                                                                                  • Cluster characteristics
                                                                                                                                                                                                                                    • Figure 49: New car clusters, January 2010
                                                                                                                                                                                                                                    • Figure 50: Incentive components influencing new car purchasing, by new car clusters, January 2010
                                                                                                                                                                                                                                    • Figure 51: Vehicle components influencing new car purchasing, by new car clusters, January 2010
                                                                                                                                                                                                                                    • Figure 52: New car options purchased by consumers, by new car clusters, January 2010
                                                                                                                                                                                                                                  • Cluster demographics
                                                                                                                                                                                                                                    • Figure 53: New car clusters, by gender, January 2010
                                                                                                                                                                                                                                    • Figure 54: New car clusters, by age, January 2010
                                                                                                                                                                                                                                    • Figure 55: New car clusters, by household income, January 2010
                                                                                                                                                                                                                                    • Figure 56: New car clusters, by Hispanic origin, January 2010
                                                                                                                                                                                                                                  • Cluster methodology
                                                                                                                                                                                                                                  • Appendix: Other Useful Consumer Tables

                                                                                                                                                                                                                                    • Vehicle purchasing and household income
                                                                                                                                                                                                                                      • Figure 57: Vehicle replaced by new car purchase, by household income, January 2010
                                                                                                                                                                                                                                    • Where consumers purchase new cars and household income
                                                                                                                                                                                                                                      • Figure 58: Location of last car purchase, by household income, January 2010
                                                                                                                                                                                                                                  • Appendix: Trade Associations

                                                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                                                    • Alfa Romeo
                                                                                                                                                                                                                                    • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                                                                                                    • American Honda Motor Co., Inc.
                                                                                                                                                                                                                                    • American Petroleum Institute (API)
                                                                                                                                                                                                                                    • Apple, Inc
                                                                                                                                                                                                                                    • Audi of America Inc
                                                                                                                                                                                                                                    • Automotive Aftermarket Industry Association
                                                                                                                                                                                                                                    • Automotive Industry Action Group (AIAG)
                                                                                                                                                                                                                                    • Automotive Oil Change Association (AOCA)
                                                                                                                                                                                                                                    • Automotive Trade Association Executives (ATAE)
                                                                                                                                                                                                                                    • Bloomberg L.P.
                                                                                                                                                                                                                                    • BMW of North America, LLC
                                                                                                                                                                                                                                    • CBS Corporation
                                                                                                                                                                                                                                    • Chrysler LLC
                                                                                                                                                                                                                                    • Connected Vehicle Trade Association (CVA)
                                                                                                                                                                                                                                    • Daimler AG
                                                                                                                                                                                                                                    • Discovery Channel
                                                                                                                                                                                                                                    • Economist Group Limited (The)
                                                                                                                                                                                                                                    • Edmunds.com, Inc.
                                                                                                                                                                                                                                    • Facebook, Inc.
                                                                                                                                                                                                                                    • Fiat Auto
                                                                                                                                                                                                                                    • Flickr
                                                                                                                                                                                                                                    • Ford Motor Company (USA)
                                                                                                                                                                                                                                    • General Motors Corporation
                                                                                                                                                                                                                                    • Greenfield Online
                                                                                                                                                                                                                                    • Hyundai Motor America
                                                                                                                                                                                                                                    • Jaguar Cars North America
                                                                                                                                                                                                                                    • Kia Motors America, Inc.
                                                                                                                                                                                                                                    • LinkedIn
                                                                                                                                                                                                                                    • Mazda North American Operations
                                                                                                                                                                                                                                    • Mercedes-Benz USA
                                                                                                                                                                                                                                    • Microsoft USA
                                                                                                                                                                                                                                    • Mitsubishi Motors North America, Inc.
                                                                                                                                                                                                                                    • National Academy of Sciences
                                                                                                                                                                                                                                    • National Alliance for Advanced Transportation Batteries (NAATBatt)
                                                                                                                                                                                                                                    • National Automobile Dealers Association (NADA)
                                                                                                                                                                                                                                    • National Broadcasting Company, Inc. (NBC)
                                                                                                                                                                                                                                    • National Highway Traffic Safety Association (NHTSA)
                                                                                                                                                                                                                                    • National Independent Automobile Dealership Association (NIADA)
                                                                                                                                                                                                                                    • NEC Corporation
                                                                                                                                                                                                                                    • Nissan North America, Inc.
                                                                                                                                                                                                                                    • OnStar Corporation
                                                                                                                                                                                                                                    • Porsche Cars North America, Inc.
                                                                                                                                                                                                                                    • Reuters Group PLC
                                                                                                                                                                                                                                    • Sirius Satellite Radio Inc.
                                                                                                                                                                                                                                    • Toyota Motor Corporation USA
                                                                                                                                                                                                                                    • Turner Broadcasting System, Inc.
                                                                                                                                                                                                                                    • Twitter, Inc.
                                                                                                                                                                                                                                    • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                                                    • U.S. Department of Transportation
                                                                                                                                                                                                                                    • U.S. Environmental Protection Agency
                                                                                                                                                                                                                                    • United Auto Group, Inc.
                                                                                                                                                                                                                                    • Volkswagen of America, Inc.
                                                                                                                                                                                                                                    • WORLDCOM Public Relations Group
                                                                                                                                                                                                                                    • XM Satellite Radio Holdings Inc.
                                                                                                                                                                                                                                    • Yahoo! Inc
                                                                                                                                                                                                                                    • YouTube, Inc.

                                                                                                                                                                                                                                    New Cars - US - April 2010

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