Customer Logins
Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Customer LoginsNew Product Cannibalization of Existing Models is Muted
New products, including all-new introductions and major re-designs, are the lifeblood of the auto industry. They lift up model and brand year-over-year results, which in turn strengthen the corresponding marketing messages. Yet one frequent, and understandably rarely mentioned, consequence of product launches is cannibalization of contiguous products (those products positioned next to the new model based on either specifications or price or both). This is a normal occurrence in any industry, since shoppers originally interested in an existing product will be drawn to the new product at the expense of the ongoing model, something that would not occur the year before when the new product was not on the market.
That is why it is noteworthy that of the nineteen all-new or re-designed models launched in the first ten months of 2015 for which there was a clear and vulnerable contiguous product, only eleven cannibalized the existing product to the extent that the existing product lost sales. Eight of the new models' impacts on existing models was so minor or non-existent that the ongoing car or light truck still eked out a sales gain. Two of the new models' influence was marginal.
This strength of the existing products is attributable to at least two factors, including today's growing new vehicle industry and the types of products vulnerable to cannibalization. Industry new vehicle sales were up 5.7% in 2015, marking the sixth consecutive year of sales increases. This string of consecutive year-over-year gains is the longest of the past ninety years. Such an influx of new customers to the market would help to offset the defection of existing customers to a new product.
Secondly, of the eight contiguous products listed on the table above, six are either pickups or SUV/CUVs, the two categories enjoying the strongest year-over-year growth this year. The interest in products such as the Sierra, Silverado, and Equinox, for example, has been so great that it has been sufficient to drive up sales despite some desertion to new products.
Tom Libby is Manager, Loyalty Solutions and Industry Analysis, IHS Automotive
Posted 12 January 2016