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Customer LoginsThere are 33 new vehicle segments in the U.S. market, but...
Drive on any U.S. highway for more than 10 minutes and you can't help but notice the wide variety of vehicles on the road. There appear to be dozens of colors, wheels, designs and body types from which to choose, not to mention the variety of less visible features such as engines, transmissions and connectivity technologies. A visitor to the U.S. could rightfully be overwhelmed by the plethora of different cars and light trucks on the road.
Yet, a review of body type registration data reveals that while there are indeed many body types from which to choose, just a handful dominate the U.S. markets for mainstream and premium vehicles. And, these dominant segments are growing and "squeezing out" the smaller, more peripheral categories.
Polk divides the non-luxury market into 30 segments but just five account for two thirds of all mainstream deliveries (June 2013 CYTD). These dominant segments include compact car, midsize car, compact CUV, half-ton pickup and three-quarter/one ton pickup. Further, the segments' combined share of the non-luxury business has grown more than five points from 60% five years ago to almost 66% today. As these categories grow, others are being increasingly marginalized, including compact and large SUV, midsize pickup and van, fullsize car and sporty car. All of these categories were relatively small in 2008 and have retreated since then.
An imbalance among segments exists to an even greater degree in the premium market. Polk recognizes 13 luxury categories but just four of these capture almost 80% of all premium new vehicle registrations. These segments include compact car, midsize car, compact CUV (all of which also dominate the non-luxury market) as well as midsize CUV. And, again as in the non-luxury market, these dominant luxury segments are gaining ground at the expense of the more and more marginalized segments. These diminishing premium categories include large SUV, midsize SUV, fullsize car and sporty car (three of which are also among the mainstream losers).
The implications of these findings are straightforward. It is crucial for mainstream and premium makes to offer competitive entries in their respective dominant segments. While this may seem obvious, currently only three mainstream makes (Chevrolet, Ford and Toyota) and four premium makes (Mercedes-Benz, BMW, Acura and Audi) offer competitive products in their respective core categories. The flip side is also true: offering a competitive product in a marginal - and diminishing - category is nice but will not do much for a make's market share. As an example, Mitsubishi offered a competitive Eclipse for years, but the sporty car space was and still is a minor piece of the pie.
Tom Libby is manager, loyalty practice and industry analysis, IHS Automotive
Posted on August 28, 2013