We are at a kind of transition point for the US small car market at the moment.
Recovery from a 35 percent slump in new vehicle sales between 2007 and2009; transition in terms of the size/typeof vehicles being sold and the respective market shares of domestic and foreign brands. Jeff Schuster, executive director of J.D. Power & Associates, a US-based global marketing information firm, says industry estimates for US new light vehicle sales this year will be around the11.5–12 million-unit mark. “We recently raised our own estimate for 2010 from 11.5 million to 11.8 million as we think there is now less downside risk for the market than there was at the beginning of the year,” he says.“Various incentive programmes and other deals may distort the figures from month to month.
Generally, though, we are looking at an upward pattern to get progressively stronger as the year goes on, following a recovering economy and a consumer who is gaining confidence in that recovery.”
J.D. Power expects this year’s upwardtrend to form part of a four-year recovery process taking sales back up to the 16million level achieved in 2007. “For 2011, our current forecast is for 13.7 million, rising to hit 16 million by 2013,” comments Schuster.
Coinciding with that general recovery, the industry also expects to see the continuation of two other trends which have become increasingly apparent over the last couple of years. The first is a stronger move towards smaller cars, which in the US market includes vehicles classed globally as both ‘B’ size, for example the Toyota Yarisor Nissan Versa, and ‘C’ size, such as the Ford Focus.“We are at a kind of transition point for the US small car market at the moment.There are a lot of new small cars coming in and it is not entirely clear how the American consumer is going to react to this flood of new products,” says Schuster.
The second trend is a switch from traditionalSUVs (sport utility vehicles) suchas the Chevy Tahoe or Toyota 4Runner,which are generally based on pick-uptrucks, to lighter and more fuel-efficient CUVs (cross-over utility vehicles) like the BMW X3 or Toyota RAV4. Another area of market “transition” could be the relative shares held by domestic and foreign brands.
With major US names General Motors and Chrysler now partially owned by US taxpayers and many of the new vehicles being introduced by those companies, and fellow US “big three”member Ford, widely seen as being more competitive, there is a feeling in the industry that US brands might now start to arrest their decline of the last decade. At the same time, adds Schuster, more foreign manufacturers are looking to hedge the influence of currency factors on their own competiveness by building additional production plants in North America.
In summary, then, while the US light vehicle market may take a while to getback to its previous peak of just over 17million new vehicle sales in 2000/2001, it does appear to be on the road to recovery.