{"id":21000,"date":"2017-08-22T18:22:21","date_gmt":"2017-08-22T22:22:21","guid":{"rendered":"http:\/\/henrypayne.com\/?p=21000"},"modified":"2017-08-26T18:23:40","modified_gmt":"2017-08-26T22:23:40","slug":"detroits-big-3-japan-diverge-on-small-cars","status":"publish","type":"post","link":"https:\/\/henrypayne.com\/index.php\/2017\/08\/detroits-big-3-japan-diverge-on-small-cars","title":{"rendered":"Detroit\u2019s Big 3, Japan diverge on small cars"},"content":{"rendered":"<p><div align=\"left\"><img decoding=\"async\" src=\"https:\/\/www.gannett-cdn.com\/-mm-\/4b8805394d9eef1aab789e52b7b99deaf4a46032\/c=128-0-1273-859&amp;r=x404&amp;c=534x401\/local\/-\/media\/2017\/08\/22\/DetroitNews\/B99565927Z.1_20170822204739_000_GQB1K6KD6.1-0.jpg\" alt=\"FIt_compactSportXOUT\" \/><\/p>\n<\/div><p class=\"speakable-p-1 p-text\"><i>Los Angeles<\/i>\u00a0\u2014 Amid a market shift away from sedans to SUVs, major Detroit and Japanese automakers appear to be charting different courses for the future of their entry-level compact-car lines.<\/p>\n<p class=\"speakable-p-2 p-text\">Fiat Chrysler Automobiles has stopped production of both its small cars, the Chrysler 200 and Dodge Dart. And The Detroit News has reported that\u00a0<a title=\"http:\/\/www.detroitnews.com\/story\/business\/autos\/ford\/2017\/07\/24\/sources-say-ford-gm-looking-kill-slow-selling-sedans\/103973922\/\" href=\"http:\/\/www.detroitnews.com\/story\/business\/autos\/ford\/2017\/07\/24\/sources-say-ford-gm-looking-kill-slow-selling-sedans\/103973922\/\">General Motors Co. and Ford Motor Co. are looking to end production<\/a>\u00a0of compact cars as they see a fundamental shift to more profitable five-door crossovers.<\/p>\n<p class=\"p-text\">But while Japanese giants Honda and Toyota have capitalized on the ute craze with hot-selling crossovers like the CR-V and RAV-4, they remain bullish on the future of small cars. Toyota is even expanding it compact offerings, for what it and Honda see as continued demand for cars, especially among young, first-time buyers.<\/p>\n<p class=\"p-text\">\u201cWe established our roots in this market with sedans,\u201d said Jeff Conrad, executive vice president of American Honda, as the Japanese carmaker introduced its refreshed Fit subcompact for media here. \u201cSedans have always been the mainstay of our business. They continue to do very well. We intend to build sporty, performance-oriented cars, and we think there are a large group of buyers for it.\u201d<\/p>\n<div id=\"ad-position-275\" class=\"partner-placement partner-spike\" data-monetization-id=\"native-article_link\" data-monetization-sizes=\"fluid,3,3\">\n<div id=\"ad-slot-7103-mi-detroit-C1561-native-article_link-money-autos-277\" class=\"ad-slot\">\n<div id=\"google_ads_iframe_7103\/mi-detroit-C1561\/native-article_link\/money\/autos_0__container__\"><iframe id=\"google_ads_iframe_7103\/mi-detroit-C1561\/native-article_link\/money\/autos_0\" title=\"3rd party ad content\" name=\"google_ads_iframe_7103\/mi-detroit-C1561\/native-article_link\/money\/autos_0\" width=\"100%\" height=\"0\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/div>\n<\/div>\n<\/div>\n<p class=\"p-text\">The versatile Fit hatchback is getting a mid-cycle update for 2018\u00a0<a title=\"http:\/\/www.detroitnews.com\/story\/business\/autos\/ford\/2017\/07\/24\/sources-say-ford-gm-looking-kill-slow-selling-sedans\/103973922\/\" href=\"http:\/\/www.detroitnews.com\/story\/business\/autos\/ford\/2017\/07\/24\/sources-say-ford-gm-looking-kill-slow-selling-sedans\/103973922\/\">even as Ford may quit selling\u00a0<\/a>its subcompact Ford Fiesta in the U.S.<\/p>\n<p class=\"p-text\">\u201cIt comes back down to shareholder value,\u201d said Joe McCabe, CEO of AutoForecast Solutions. \u201cIf you can push more-profitable crossovers, SUV and trucks, basic math says that you\u2019re going to improve profitability and therefore shareholder value.\u201d<\/p>\n<p class=\"p-text\">Industry analysts say Detroit automakers don\u2019t find it makes economic sense to build small cars amid changing demand and cheap gas.<\/p>\n<p class=\"p-text\">\u201cGM is looking at every aspect of its portfolio, and if it\u2019s not making money then they are going to get rid of it,\u201d said AutoPacific auto analyst Dave Sullivan. \u201cThere\u2019s no reason pickup truck sales should subsidize low-margin small cars. Dealers don\u2019t want them because they can\u2019t sell.\u201d<\/p>\n<p class=\"p-text\">Both GM and Ford declined comment, saying they don\u2019t discuss future product plans.<\/p>\n<p class=\"p-text\">Yet, amid the same market realities and slackened sales for their small cars, Toyota has added two entries this year: the subcompact Yaris iA and compact hatchback Corolla iM. The additions come as Toyota shifted product from its axed Scion youth brand experiment.<\/p>\n<div id=\"ad-position-270\" class=\"partner-outstream\">\n<div id=\"ad-slot-7103-mi-detroit-C1561-outstream_video-money-autos-272\" class=\"ad-slot\">\n<div id=\"google_ads_iframe_7103\/mi-detroit-C1561\/outstream_video\/money\/autos_0__container__\"><iframe id=\"google_ads_iframe_7103\/mi-detroit-C1561\/outstream_video\/money\/autos_0\" title=\"3rd party ad content\" name=\"google_ads_iframe_7103\/mi-detroit-C1561\/outstream_video\/money\/autos_0\" width=\"1\" height=\"1\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/div>\n<\/div>\n<\/div>\n<p class=\"p-text\">The $16,816 Yaris iA sedan gives Toyota a double threat in the subcompact segment along with the tiny Yaris hatchback. Toyota also introduced a subcompact crossover this year,\u00a0<a title=\"http:\/\/www.detroitnews.com\/story\/opinion\/columnists\/henry-payne\/2017\/07\/07\/payne-review-toyota-hr-crossover\/103514378\/\" href=\"http:\/\/www.detroitnews.com\/story\/opinion\/columnists\/henry-payne\/2017\/07\/07\/payne-review-toyota-hr-crossover\/103514378\/\">the $23,460 C-HR<\/a>. Despite its name, the Yaris iA shares little with the Yaris and is built on a different platform shared with the Mazda 2 (that Mazda is not sold in the U.S.).<\/p>\n<p class=\"p-text\">\u201cYou need product across all economic status,\u201d Toyota spokesman Curt McCallister said. \u201cSmall cars get our buyers hooked from cradle to grave. If you get them into the family early, then you can keep them on up the family tree.\u201d<\/p>\n<p class=\"p-text\">Honda\u2019s Conrad echoed that strategy for the $17,065 Fit which has gained a \u201cSport\u201d trim to take advantage of the subcompact\u2019s inherent handling advantages over taller compact SUVs.<\/p>\n<p class=\"p-text\">\u201cSeventy percent of Fit buyers are first-time buyers,\u201d he said. \u201cIt is critical to bringing youth into the brand. We\u2019re interested in an entry point for cars and trucks. The Fit is that product for cars and H-RV is that for trucks.\u201d<\/p>\n<p class=\"p-text\">Last year Fit sold 56,630 units while the HR-V sold 82,041.<\/p>\n<p class=\"p-text\">Many analysts feel a sense of d\u00e9j\u00e0 vu as U.S. automakers retreat from small cars. They remember the early 1980s when Japanese automakers made huge inroads into the U.S. by capitalizing on American demand for small, fuel-efficient cars amid rising gas prices and a dearth of reliable offerings from Detroit\u2019s Big Three.<\/p>\n<p class=\"p-text\">But\u00a0<a title=\"https:\/\/twitter.com\/karlbrauer\" href=\"https:\/\/twitter.com\/karlbrauer\">Kelley Blue Book auto analyst Karl Brauer<\/a>\u00a0said that that was then and this is now. He said that Detroit automakers are correct in assessing a fundamental change to SUVs \u2014 and not just because they ride high for better visibility. Compact utility vehicles are filling a niche formerly dominated by small cars.<\/p>\n<p class=\"p-text\">\u201cThe next time an economic shift comes, I think a careful analysis will reveal consumers won\u2019t lose much mpg with modern CUVs,\u201d he said. \u201cCrossovers now are much more car-like in their engines and in their mpg.\u201d<\/p>\n<p class=\"p-text\"><a title=\"https:\/\/twitter.com\/dfsullivan?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor\" href=\"https:\/\/twitter.com\/dfsullivan?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor\">AutoPacific\u2019s Sullivan<\/a>\u00a0agrees. He points to the runaway success of Fiat Chrysler\u2019s strategy in producing more small Jeep compact utilities \u2014 the compact $18,990 Jeep Renegade and $22,090 Compass have both debuted in the last two years \u2014 as the automaker abandoned small cars. Even if gas prices top $4 a gallon as in 2008, he said buyers will stick with compact utilities because they get similar gas mileage as cars. A 4-cylinder Renegade, for example, gets 25 mpg combined city\/highway; that nearly matches the fuel economy of Fiat Chrysler\u2019s outgoing, comparably priced 27 mpg Dart sedan.<\/p>\n<p class=\"p-text\">\u201cFiat Chrysler doesn\u2019t have small cars? Oh, yes they do,\u201d said Sullivan. \u201cSubcompact crossovers like the Renegade have displaced the small car. Renegade sales are far exceeding Jeep\u2019s expectations.\u201d<\/p>\n<p class=\"p-text\">Honda\u2019s Conrad still likes to have small cars in his lineup if gas prices rise. \u201cIn today\u2019s environment I don\u2019t think people look at CUVs vs. sedans as a fuel economy argument,\u201d he said, echoing auto analysts. \u201cBut there are buyers who have seen peaks and valley in gas, so some&#8230; want the highest fuel efficiency they can get. Sedans still get better fuel economy.\u201d<\/p>\n<p class=\"p-text\">KBB\u2019s Brauer said a Big Three abandonment of compact segments could be risky.<\/p>\n<p class=\"p-text\">\u201cEven if the sedan market doesn\u2019t come back, the Japanese are making a good investment,\u201d he continued. \u201cIf you make a good product, customers will come. Companies like Honda and Toyota and Nissan are very good at making cars that sell at high volumes. And that breeds customer loyalty from an early age.\u201d<\/p>\n<p class=\"p-text\">Honda\u2019s Conrad looks at the market as an endurance race, with Honda\u2019s patience paying off as trends come and go.<\/p>\n<p class=\"p-text\">\u201cPeople have abandoned segments for a long time,\u201d he said. \u201cA few years ago a lot of manufacturer sold minivans. How many manufacturers really make a serious run at selling (them) anymore? Not many, but we\u2019re still in it and we sold over 120,000 last year.\u201d<\/p>\n<p class=\"p-text\">The Fit has also sold steadily, holding on to the No. 3 spot in the segment behind Nissan\u2019s Leaf and Hyundai\u2019s Accent. \u201cWe think you need balance in your business,\u201d said Conrad. \u201cPeople run towards what\u2019s hot \u2014 the shiny object \u2014 on one side of the ship and abandon something else. Well, we like to keep the ship from listing.\u201d<\/p>\n<p class=\"p-text\">KBB\u2019s Brauer said that, as the market undergoes a fundamental shift to SUVs, different automakers are taking different approaches: \u201cWe\u2019ll find out who did it right.\u201d<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Los Angeles\u00a0\u2014 Amid a market shift away from sedans to SUVs, major Detroit and Japanese automakers appear to be charting different courses for the future of their entry-level compact-car lines. Fiat Chrysler Automobiles has stopped production of both its small cars, the Chrysler 200 and Dodge Dart. And The Detroit News has reported that\u00a0General Motors [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"_links":{"self":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/21000"}],"collection":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/comments?post=21000"}],"version-history":[{"count":1,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/21000\/revisions"}],"predecessor-version":[{"id":21001,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/posts\/21000\/revisions\/21001"}],"wp:attachment":[{"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/media?parent=21000"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/categories?post=21000"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/henrypayne.com\/index.php\/wp-json\/wp\/v2\/tags?post=21000"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}