Shift in consumer demand from large to small vehicles

Feb 10, 2010

It’s no news that the new-car market across North America suffered the full force of recession in 2009, but behind the headlines of U.S. government intervention and the “cash for clunkers” program lies a shift in consumer demand that has hit upper segment cars and domestic U.S. brands hardest.

“The recession of demand and simultaneous, sudden shift to smaller, more economical vehicles has been felt keenly across North America,” said David Di Girolamo, head of consult for JATO Dynamics, a provider of automotive data and intelligence. “This has created even more of an opportunity for those lower-volume, importing manufacturers who already offer such vehicles and puts even more pressure on the big, domestic auto makers.”

Overall, U.S. car and truck sales were down 20.5% and 22% respectively, with small and lower medium cars seeing smaller drops in demand, evidence of downsizing amongst those U.S. customers buying new cars.

With 2009 U.S. sales down by 2.8 million (21.2%) vehicles, the top five models in the United States new-car market were held by import brands: Toyota, Honda and Nissan, with the year’s best-selling car the Toyota Camry.

Across the region, those brands weathering the storm best were lower-volume imported marquees, with Hyundai (+11.6 %) and Kia (+11.3%) increasing sales volumes. Other winners were Subaru (+15%) and Audi, which achieved 5.4% growth in the second half of the year, though with smaller volumes.

By contrast, the three biggest brands, Ford, Toyota and Chevrolet, ended the year 13.8%, 18.2% and 25.8% down respectively.

The Canadian market (2009 total sales: 1.5 million) fared better, dropping only 10.8%, with truck sales actually rising 3.6% in the second half of the year. This was perhaps helped by the notion that Canadian customers seem to prefer smaller cars, with the Honda Civic, Toyota Corolla and Mazda3 heading the sales list.

Significantly, however, truck sales in Canada grew through the second half of the year, with the Ford F150 topping the list, with total sales up 20.2%.