Small autos is main event on Detiot auto show
19 January 2011
Get ready for a heavy battle in the small-car segment. Compacts and subcompacts grabbed the attention at the Detroit auto show.
The wraps came off several Asian models, including a redesigned Honda Civic, a downsized Toyota Prius and a small sporty coupe from Hyundai called the Veloster. But this time those traditional small-car stalwarts face competition from the Detroit 3's most serious offerings in decades.
General Motors showed the subcompact Chevrolet Sonic, which will take on the Honda Fit, the recently launched Ford Fiesta and others.
Ford will put its refreshed Ford Focus up against the recently launched Chevrolet Cruze, Hyundai Elantra and others. Chrysler Group partner Fiat is rolling out its 500 minicar.
The US brands are putting down roots in a small-car segment that should grow faster than the broader market in coming years -- especially if gasoline prices continue marching higher. And small cars will help with fuel-economy standards that get steadily tougher through 2016.
The entries also highlight automakers' fresh view of small cars. These are no longer loss leaders that car companies tolerate so they can meet corporate average fuel economy standards, allowing them to sell higher-margin, gas-thirsty pickups and SUVs. High-end content on the latest small cars -- think elaborate infotainment systems and heated steering wheels -- are nudging prices and profits higher.
“It's an area of the market that's just exploding,” says Margaret Brooks, Chevrolet's small-car marketing director. “The ones doing best in the segment are much more upscale than anything that was available just one or two years ago.”
Luxury brands also are seeking growth in small cars. Upcoming debuts include the Lexus CT 200h hybrid hatchback and BMW AG's front-drive compact, code-named the UKL. Buick will try to undercut most premium compacts on price with its new Verano, which goes on sale late this year.
Some mainstream brands are hoping the added content on small cars will command higher prices. The 2011 Chevrolet Cruze, for example, is priced at $16995 8 percent higher than the 2010 Cobalt it replaces. It will go up against Hyundai's redesigned Elantra compact, which went on sale this month starting at $15625
Ford has no qualms about charging nearly $23,000 for a fully loaded 2011 Fiesta, which is smaller than the Focus. The Fiesta sedan, which went on sale in May, starts at $13,995.
Ford plans to be similarly aggressive with high-end 2012 Focus prices, Jim Farley, Ford's group vice president of global marketing, sales and service, said in an interview last year.
“In the past, because of our uncompetitiveness in quality and fuel economy, we've been unfortunately discounted,” Farley said. The 2012 Focus sedan will start at $16995 and the hatchback will start at $18790.
“We intend to be deadly serious about competing for the small group of customers at the very high end of the segment by offering them features and series that they have never seen from Ford,” Farley said.
Whether consumers will accept those higher prices remains a question. In more than six months of sales in 2010, Ford sold just 23273 Fiestas.