SEMA eNews Vol. 10, No. 22, May 31, 2007

SUBCOMPACT SALES SOAR

It has been a year since the Japanese Big Three reintroduced B-cars in the United States, and the segment has been growing ever since. According to a recent WardsAuto.com article, year-to-date sales suggest that subcompact sales will reach levels not seen in more than 11 years.

First-quarter sales for subcompacts are running 95.1% ahead of the same quarter in 2006 at 107,942 units versus 53,328. "B-car deliveries are tracking at an annual rate of 535,105 units, nearly double last year's 274,272-unit total," states the article. Ward's Auto data indicates that the last time sales of subcompacts surpassed the half-million mark in the United States was in 1995, when 567,210 vehicles were sold. In 1996, sales dropped 48.5% to 291,860 units, as vehicles either moved up a segment due to an increase in size and/or price or were discontinued in favor of a new model.

Since the mid-'90s, sales of subcompacts have been on a "downward trajectory," reaching a 26-year low of 120,616 units in 1998. Rebecca Lindland of Global Insight says that upcoming new vehicles from Ford Motor Co., General Motors and BMW should keep subcompact sales high. She also said that "auto makers missed the ball when they aimed the latest crop of B-cars at the youth market." Lindland went on to say that manufacturers are under the impression that Generation Y wants to drive small cars, when in fact they would rather have their parents buy them a truck or an SUV.

Even with the growth in this market, the subcompact segment remains small compared with other vehicle categories, such as Ward's Auto Middle/Cross Utility and Large Pickup classes. In 2006, subcompact sales peaked in July and August at 33,530 and 33,667 units, when the national average for regular unleaded gasoline was near $3 per gallon. As this segment continues to grow, demand for aftermarket accessories for subcompacts will rise as well.

Source: Schweinsberg, Christie. (May 22, 2007). "Subcompact Sales Poised to Hit Levels Not Seen in More Than Decade." WardsAuto.com. Retrieved May 23, 2007 from www.wardsauto.com.