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The US Small Car Market - September 2012

The Upper Tier segment represents the biggest segment in unit sales, however greater growth is shown in the Lower Tier and Specialty Tier segments with their smaller frames and greater fuel efficiency.

Rising gas prices and improved vehicle quality are driving consumers to small cars. These vehicles are no longer valued for their practicality but are being marketed more for their lifestyle component. This market picked up in 2011, when unit sales increased 12%, an increase that is expected to continue by the end of 2012. After remaining stable in 2013, this market is expected to pick up 15% in 2014. Between 2014-17, the small market is expected to grow 55.8% in unit sales.

The majority of all respondents to Mintel’s online survey (55%) neither own or lease a small car nor do they plan to buy one in the next six months or more. However, over one quarter (27%) currently own or lease a small car. Those respondents who are planning to purchase either in the next six months (3%) or more than six months hence (3%) is minimal. For automakers aiming to introduce new small car models, the best potential base is the 12% of consumers who do not currently own or lease a small car but are interested in purchasing one.

What's included in the US Small Car Market Report:

For the purposes of this report, Mintel considers the small car market as being for new vehicles only (not used), and has used the following segment definitions:

  • Lower Tier small cars typically run less than 170 inches in length and have a 2011 base MSRP between $12,500 and $16,000. Examples of cars of this type currently on the market include the Chevrolet Aveo, Kia Rio, and the Honda Fit.
  • Upper Tier small cars typically run between 170 and 180 inches in length with a 2011 base MSRP between $14,500 and $16,000. The Nissan Sentra, Volkswagen Golf, and Ford Focus fall into this category.
  • Specialty Tier small cars, a segment that includes two-seat vehicles, hybrids/electrics, and design-focused vehicles, is also measured here. Specialty compacts consist of vehicles in the $18,000-32,000 range. The BMW Mini Cooper, Volkswagen‘s Beetle, and the Nissan LEAF are prime examples of cars in this category.

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Table of contents

  1. Scope and Themes

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

                      • The market
                        • Figure 1: Fan chart forecast of U.S. unit sales of small cars, 2007-17
                      • Market factors
                        • New fuel efficiency standards alter future landscape of small car buying
                          • Rising fuel costs driving consumers to small cars
                            • Figure 2: Average U.S. regular gas price, 36-month average, Sept 2012
                          • Small cars redesigned to emphasize quality, technology, comfort
                            • Segmentation
                              • Market split into three segments based on vehicle size and price
                                  • Figure 3: Total U.S. unit sales of new compact cars, by tier, 12 months ending June 2012
                                • The consumer
                                  • Majority of respondents do not own or lease a small car
                                    • Figure 4: Small car ownership and plans to purchase a small car, June 2012
                                  • Those aged 45-54 most interested in owning/leasing small car
                                    • Figure 5: Small car ownership and plans to purchase a small car, by age, June 2012
                                  • High miles per gallon prime motivator to purchase small cars
                                    • Figure 6: Factors motivating small car purchase, by gender, June 2012
                                  • Respondents concerned most about safety, cargo capability of small cars
                                    • Figure 7: Concerns with small cars, by gender, June 2012
                                  • Asian respondents most likely to say they own/lease a small vehicle
                                    • Figure 8: Small car ownership and plans to purchase a small car, by race/Hispanic origin, June 2012
                                  • Rising gas prices most likely to motivate white, Hispanic respondents
                                    • Figure 9: Factors motivating purchase of a small car, by race/Hispanic origin, June 2012
                                  • What we think
                                  • Issues in the Market

                                      • Rising fuel prices helping consumers see value in small cars
                                        • Automakers positioning small cars as upgrades, not downgrades
                                          • Small cars infused with personality to attract hesitant Millennial buyers
                                          • Insights and Opportunities

                                            • Launch special-edition small car nameplate to target luxury buyers
                                              • Target municipalities with small car fleets to help cut congestion
                                                • Emphasize parking benefits of small cars to urban buyers
                                                • Trend Application

                                                    • Inspire trend: Immaterial World
                                                      • Inspire trend: The Nouveau Poor
                                                        • Inspire 2015 trends
                                                          • East Meets West
                                                          • Market Size and Forecast

                                                            • Key points
                                                              • Small cars undergo quality transformation, which grows unit sales
                                                                  • Figure 10: Total U.S. unit sales and forecast of new small cars, 2007-17
                                                                • Small cars represented 35% of total car sales in 2011
                                                                  • Figure 11: Small cars as a share of all cars sold and all automobiles sold, 2007-11
                                                                • Fan chart forecast
                                                                    • Figure 12: Fan Chart forecast of U.S. unit sales of small cars, 2007-17
                                                                • Market Drivers

                                                                  • New fuel efficiency standards alter future landscape of small car buying
                                                                    • Potential higher EV/PHEV sales threaten small car market
                                                                      • Rising fuel costs make fuel-efficient small cars more attractive
                                                                          • Figure 13: Average U.S. regular gas price, 36-month average, Sept 2012
                                                                        • Poor consumer sentiment may threaten new car buying
                                                                          • Figure 14: University of Michigan Consumer sentiment, 1978-2012
                                                                        • Small cars redesigned as better equipped, distinctive vehicles
                                                                        • Segment Performance—Overview

                                                                          • Key points
                                                                            • Upper Tier vehicles dominate small car market
                                                                                • Figure 15: Total U.S. unit sales of new compact cars, by segment, 12 months ending June 2011 and June 2012
                                                                              • Majority of entry compact owners spent between $15,000 and $19,000
                                                                                • Figure 16: Total amount spent on purchase or lease of vehicle, by entry compact and premium compact owners, January 2011-March 2012
                                                                            • Segment Performance—Upper Tier

                                                                              • Key points
                                                                                • Compact vehicles offer consumers roominess, comfort
                                                                                    • Figure 17: Total U.S. unit sales of new upper tier vehicles, 2007-17
                                                                                • Segment Performance—Lower Tier

                                                                                  • Key points
                                                                                    • Recession drives gains in Lower Tier vehicles
                                                                                        • Figure 18: Total U.S. unit sales of new lower tier vehicles, 2007-17
                                                                                    • Segment Performance—Specialty Tier

                                                                                      • Key points
                                                                                        • Personality drives Specialty Tier segment
                                                                                            • Figure 19: Total U.S. unit sales of new specialty tier vehicles, 2007-17
                                                                                        • Leading Small Cars

                                                                                          • Key points
                                                                                            • Japanese brands rebound from supply shock following earthquake
                                                                                              • Majority of Toyota unit sales growth in Lower Tier segment
                                                                                                • Majority of Honda sales in Upper Tier segment
                                                                                                  • Fiat gains based on launch of the Fiat 500
                                                                                                    • Domestic automakers revitalized by small vehicle focus
                                                                                                      • Chevy Cruze becomes GM’s top-selling car
                                                                                                        • Ford offers SYNC connectivity in small vehicle lineup
                                                                                                          • Figure 20: Small vehicle sales and market share by manufacturer, YTD July 2011 and YTD July 2012
                                                                                                        • Civic overtakes Corolla to become best-selling small car
                                                                                                            • Figure 21: Top 10 best-selling small cars, YTD July 2011 and YTD July 2012
                                                                                                        • Innovation and Innovators

                                                                                                          • Fiat announces upscale coffeemaker option for 2013 Fiat 500L
                                                                                                            • Honda markets EV version of subcompact Fit with free insurance
                                                                                                              • Scion emphasizing iQ technology through PlayStation giveaway
                                                                                                                • Cadillac launches inaugural small car model to expand luxury market
                                                                                                                  • Chevrolet emphasizes trust in exchange, no-haggling promotions
                                                                                                                  • Marketing Strategies

                                                                                                                    • Strategy: Using multiple platforms to relaunch, freshen vintage brand
                                                                                                                        • Figure 22: Dodge Dart ReverbNation contest, July 2012
                                                                                                                        • Figure 23: Dodge Dart Soldier Field “Dealer Drive Away” event, June 2012
                                                                                                                      • Strategy: Targeting Millennial buyers through game-oriented campaign
                                                                                                                          • Figure 24: Toyota Prius c website, July 2012
                                                                                                                          • Figure 25: Toyota The Game of LIFE campaign, July 2012
                                                                                                                        • Strategy: Emphasize the underdog value of being small
                                                                                                                            • Figure 26: Mini “Win Small” campaign, July 2012
                                                                                                                          • Strategy: Create stealth viral campaign online to reach Millennials
                                                                                                                            • Strategy: Using humor to make small cars appealing to Millennial buyers
                                                                                                                              • Figure 27: God of Okay Scion ad, October 2011
                                                                                                                            • Strategy: Using visual perspective to show that small is relative
                                                                                                                              • Figure 28: Mini “Let’s Ride” ad, October 2011
                                                                                                                            • Strategy: Use spectator footage to make small car look dangerous
                                                                                                                              • Figure 29: Ford Focus Spectator ad, July 2012
                                                                                                                          • Small Car Ownership and Plans to Purchase

                                                                                                                            • Key points
                                                                                                                              • Majority of respondents do not own or lease a small car
                                                                                                                                • Figure 30: Small car ownership and plans to purchase, by gender, June 2012
                                                                                                                              • Those aged 45-54 most likely to show interest in purchasing small car
                                                                                                                                • Figure 31: Small car ownership and plans to purchase, by age, June 2012
                                                                                                                              • Respondents from households earning $75K-99.9K most interested in small cars
                                                                                                                                • Figure 32: Small car ownership and plans to purchase, by household income, June 2012
                                                                                                                              • Singles, married most likely to say they currently own small car
                                                                                                                                • Figure 33: Small car ownership and plans to purchase, by marital/relationship status, June 2012
                                                                                                                            • Familiarity with Small Car Brands

                                                                                                                              • Key points
                                                                                                                                • Respondents most aware of heritage small car/compact models
                                                                                                                                  • Figure 34: Familiarity with specific small car brands, by gender, June 2012
                                                                                                                                • Oldest respondents least familiar with listed small car/compact brands
                                                                                                                                  • Figure 35: Familiarity with specific small car brands, by age, June 2012
                                                                                                                                • Respondents from wealthiest households most familiar with top brands
                                                                                                                                  • Figure 36: Familiarity with specific small car brands, by household income, June 2012
                                                                                                                              • Attributes Associated with Small Cars

                                                                                                                                • Key points
                                                                                                                                  • Majority respondents attribute small cars as “practical,” “thrifty”
                                                                                                                                      • Figure 37: Attributes associated with specific brands of small cars, June 2012
                                                                                                                                    • Kia Soul associated most with “practical,” “thrifty,” “fun”
                                                                                                                                      • Figure 38: Attributes associated with specific brands of small cars, June 2012 (continued)
                                                                                                                                    • Fiat 500 considered “cute,” “fun,” “stylish”
                                                                                                                                      • Figure 39: Attributes associated with specific brands of small cars, June 2012 (continued)
                                                                                                                                  • Factors Motivating Small Car Purchase

                                                                                                                                    • Key points
                                                                                                                                      • High miles per gallon prime motivator to purchase small cars
                                                                                                                                        • Figure 40: Factors motivating small car purchase, by gender, June 2012
                                                                                                                                      • High miles per gallon a prime motivator for those aged 18-24
                                                                                                                                        • Figure 41: Factors motivating small car purchase, by age, June 2012
                                                                                                                                      • Middle-income households most likely motivated by high miles per gallon
                                                                                                                                        • Figure 42: Factors motivating small car purchase, by household income, June 2012
                                                                                                                                      • Rising gas prices a factor for most respondents living with a partner
                                                                                                                                        • Figure 43: Factors motivating small car purchase, by marital/relationship status, June 2012
                                                                                                                                    • Concerns with Small Cars

                                                                                                                                      • Key points
                                                                                                                                        • Respondents concerned most about safety, cargo capability of small cars
                                                                                                                                          • Figure 44: Concerns with small cars, by gender, June 2012
                                                                                                                                        • Respondents aged 45+ most concerned about safety of small cars
                                                                                                                                          • Figure 45: Concerns with small cars, by age, June 2012
                                                                                                                                        • Respondents from wealthiest households most concerned about safety
                                                                                                                                          • Figure 46: Concerns with small cars, by household income, June 2012
                                                                                                                                        • Married, divorced/separated respondents most concerned about safety
                                                                                                                                          • Figure 47: Concerns with small cars, by marital/relationship status, June 2012
                                                                                                                                        • Those planning to purchase more likely to be concerned about value
                                                                                                                                          • Figure 48: Concerns with small cars, by ownership of and interest in owning a small car, June 2012
                                                                                                                                      • Engine Size Preference for Small Cars

                                                                                                                                        • Key points
                                                                                                                                          • Female respondents less clear than men about ideal engine size
                                                                                                                                              • Figure 49: Engine size preference for small cars, by gender, June 2012
                                                                                                                                            • Those aged 35-44 most likely to prefer 3-3.49 and 4.0+ liter engine sizes
                                                                                                                                              • Figure 50: Engine size preference for small cars, by age, June 2012
                                                                                                                                          • Number of Doors Preferred in a Small Car

                                                                                                                                            • Key points
                                                                                                                                              • Majority of respondents envision driving small cars with four doors
                                                                                                                                                • Figure 51: Number of doors preferred in a small car, by gender and age, June 2012
                                                                                                                                              • Four-door small cars preferred most by suburban respondents
                                                                                                                                                • Figure 52: Number of doors preferred in a small car, by urban status, June 2012
                                                                                                                                            • Preferred Features for Small Cars

                                                                                                                                              • Key points
                                                                                                                                                • Roominess, cargo utility, and accessibility top preferred features
                                                                                                                                                  • Figure 53: Preferred features for small cars, by gender, June 2012
                                                                                                                                                • When respondents reach 35+ utility/room becomes more important
                                                                                                                                                    • Figure 54: Preferred features for small cars, by age, June 2012
                                                                                                                                                  • Respondents from $100K+ households most prefer GPS, stereo
                                                                                                                                                    • Figure 55: Preferred features for small cars, by household income, June 2012
                                                                                                                                                  • Married respondents most likely to prefer roominess as “must have”
                                                                                                                                                    • Figure 56: Preferred features for small cars, by marital/relationship status, June 2012
                                                                                                                                                  • Suburban respondents most likely to prefer roominess as “must have”
                                                                                                                                                    • Figure 57: Preferred features for small cars, by area, June 2012
                                                                                                                                                • Automaker Most Likely to Make a Respectable Small Car

                                                                                                                                                  • Key points
                                                                                                                                                    • For the majority of respondents Honda most likely to build respectable small car
                                                                                                                                                      • Figure 58: Automaker most likely to make a respectable small car, by gender, June 2012
                                                                                                                                                    • For respondents aged 65+ preference even among Honda, Ford, Toyota
                                                                                                                                                      • Figure 59: Automaker most likely to make a respectable small car, by age, June 2012
                                                                                                                                                    • Preference for Honda increases as household income rises
                                                                                                                                                      • Figure 60: Automaker most likely to make a respectable small car, by household income, June 2012
                                                                                                                                                  • Features Owned by Compact Vehicle Owners

                                                                                                                                                    • Key points
                                                                                                                                                      • Entry compact owners most likely to have airbags, service contract
                                                                                                                                                        • Figure 61: Features in respondent’s vehicles, by entry compact and premium compact owners, January 2011-March 2012
                                                                                                                                                    • Future Auto Purchase Plans of Compact Vehicle Owners

                                                                                                                                                      • Key points
                                                                                                                                                        • More than half of compact owners say households considering car purchase
                                                                                                                                                          • Figure 62: Type of vehicle considering for next vehicle purchase, by entry compact and premium compact owners, January 2011-March 2012
                                                                                                                                                        • Entry compact owners uncertain about type of vehicle
                                                                                                                                                          • Figure 63: Origin of next vehicle considering for future purchase, by entry compact and premium compact owners, January 2011-March 2012
                                                                                                                                                        • Entry compact owners most likely to plan purchase 4+ years from now
                                                                                                                                                          • Figure 64: When next vehicle will be bought, by entry compact and premium compact owners, January 2011-March 2012
                                                                                                                                                      • Impact of Race and Hispanic Origin

                                                                                                                                                        • Key points
                                                                                                                                                          • Asian respondents most likely to say they own/lease a small vehicle
                                                                                                                                                            • Figure 65: Small car ownership and plans to purchase, by race/Hispanic origin, June 2012
                                                                                                                                                          • Honda Civic, Toyota Corolla most familiar to Asian respondents
                                                                                                                                                            • Figure 66: Familiarity with small car brands, by race/Hispanic origin, June 2012
                                                                                                                                                          • Rising gas prices most likely to motivate white, Hispanic respondents
                                                                                                                                                            • Figure 67: Factors motivating purchase of a small car, by race/Hispanic origin, June 2012
                                                                                                                                                          • White respondents most likely to agree that small cars are not as safe
                                                                                                                                                            • Figure 68: Concerns with small cars, by race/Hispanic origin, June 2012
                                                                                                                                                          • White, black respondents most likely to not know ideal engine size
                                                                                                                                                            • Figure 69: Ideal engine size for a small car, by race/Hispanic origin, June 2012
                                                                                                                                                          • White respondents most likely to say roominess, easy access ideal
                                                                                                                                                            • Figure 70: Must have features for a small car, by race/Hispanic origin, June 2012
                                                                                                                                                          • Asian respondents feel Honda, Toyota ideal to build respectable small car
                                                                                                                                                            • Figure 71: Manufacturer considered most likely to make a respectable small car, by race/Hispanic origin, June 2012
                                                                                                                                                        • Appendix

                                                                                                                                                          • Factors motivating small car purchase and region
                                                                                                                                                            • Figure 75: Factors motivating small car purchase, by urban status, June 2012
                                                                                                                                                          • Engine size preference for small cars
                                                                                                                                                            • Figure 76: Engine size preference for small cars, by household income, June 2012
                                                                                                                                                            • Figure 77: Engine size preference for small cars, by urban status, June 2012
                                                                                                                                                          • Automaker most likely to make respectable small car
                                                                                                                                                            • Figure 78: Automaker most likely to make a respectable small car, by marital/relationship status, June 2012
                                                                                                                                                            • Figure 79: Automaker most likely to make a respectable small car, by ownership of, and interest in, owning a small car, June 2012
                                                                                                                                                        • Appendix—Trade Associations

                                                                                                                                                          Companies Covered

                                                                                                                                                          • AB Volvo
                                                                                                                                                          • Alliance Of Automobile Manufacturers, Inc.
                                                                                                                                                          • American Honda Motor Co., Inc.
                                                                                                                                                          • Audi of America Inc
                                                                                                                                                          • Automotive Aftermarket Industry Association
                                                                                                                                                          • Automotive Industry Action Group (AIAG)
                                                                                                                                                          • Automotive Oil Change Association (AOCA)
                                                                                                                                                          • Automotive Trade Association Executives (ATAE)
                                                                                                                                                          • BMW of North America, LLC
                                                                                                                                                          • Chrysler LLC
                                                                                                                                                          • Connected Vehicle Trade Association (CVA)
                                                                                                                                                          • Facebook, Inc.
                                                                                                                                                          • Fiat Auto
                                                                                                                                                          • Ford Motor Company (USA)
                                                                                                                                                          • Hasbro Inc
                                                                                                                                                          • Jaguar Cars North America
                                                                                                                                                          • Kia Motors America, Inc.
                                                                                                                                                          • Major League Baseball
                                                                                                                                                          • Mercedes-Benz USA
                                                                                                                                                          • Mitsubishi Motors North America, Inc.
                                                                                                                                                          • National Automobile Dealers Association (NADA)
                                                                                                                                                          • National Independent Automobile Dealership Association (NIADA)
                                                                                                                                                          • Nissan North America, Inc.
                                                                                                                                                          • Porsche Cars North America, Inc.
                                                                                                                                                          • Rubber Manufacturers Association (RMA)
                                                                                                                                                          • Saab Cars North America
                                                                                                                                                          • Suzuki Motor Corporation
                                                                                                                                                          • Tire Industry Association
                                                                                                                                                          • Toyota Motor Corporation USA
                                                                                                                                                          • U.S. Bureau of Labor Statistics
                                                                                                                                                          • U.S. Department of Transportation
                                                                                                                                                          • U.S. Environmental Protection Agency
                                                                                                                                                          • University of Michigan, The
                                                                                                                                                          • Volkswagen of America, Inc.

                                                                                                                                                          The US Small Car Market - September 2012

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