The U.S. market for small cars has grown in recent years, especially as fuel prices have fluctuated, according to ALG’s January-February 2012 Industry Report. Since BMW’s MINI brand entered the market in 2002, it has been on top of the small car segment. Cars which have followed, like the Smart Fortwo and Fiat 500, have not seen the same results, and the future of the segment in North America is unclear.
Sales for “B Cars,” which include the Ford Fiesta and Honda Fit, are up and the segment shows strong, long-term prospects, “but the minicar portion of small car sales is less proven,” ALG said.
According to the report:
Until 2008, residuals consisted solely of models from MINI, one of the strongest brands in the industry. With the addition of the smart and Fiat models, which have much weaker forecasted retention, residuals have declined. Retail sales among minicars spiked in 2008 when Smart debuted with over 24,000 sales, but the brand quickly dropped off, and Fiat has been slow to contribute.
Additionally, the report points out the link between the average price of gasoline and the demand for fuel-efficient vehicles as seen in the chart below. “As ALG expects gas prices to hover around $4/gallon in the longer term, fuel economy will continue to increase in its importance for buyers,” the company said.
The chart also includes a comparison of vehicle sizes and offerings as well as minicar entries into the marketplace.
Source: ALG