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Customer LoginsWhich vehicles do Canadians love to buy?
Seeing the Signs
Every new vehicle sold is a signal to OEMs that customers want more of that type of car or truck. In essence, customers are voting with their wallets and with business interests ever focused on customer loyalty and customer retention, an OEM should be seeing the market signs.
National Trend: Consumers Continue to Buy New
Through the second quarter of this year (2013 Q2), new vehicle sales are once again on the rise in Canada. New vehicle registrations indicate that volumes have made a strong recovery and continue to show a predictable consumer preference toward specific segments. To sufficiently explore industry trends further, I've highlighted the most popular vehicle segments (based on market share) and observed their growth over the past 10 years to aid in projecting future success.
Purchasing Trends: Which Segments Are Dominating the Market?
Looking at 2012 year end volumes, it is clear that the compact segment remains the most popular with 22% market share. Other major segments include the compact SUV (crossover) at roughly 17%, large pickup with 16% and the intermediate at 10%. All segments and their corresponding market share are depicted in the figure below.
More importantly than focusing solely on the current industry snapshot is to observe trends of growth and decline over recent years. Observing changes over the past 10 years helps to explain current market share control and provides critical insight for predicting future growth and investment opportunities.
The following graph highlights the growth and decline of market share for the top five segments. It can be seen, that while the compact segment continues to dominate the market, holding at roughly 22-25% over this time period, it is truly the compact SUV and the large pickup segments that have shown the greatest growth over the past decade. Particularly, since early 2003, the compact SUV (crossover) segment has shown remarkable success with over 256% growth in market share, an astounding increase of presence and unmatched by any other segment over this time frame. This is the fastest growing segment.
The large pickup segment shows an interesting pattern of increased growth every three years followed by alternating years of decline. Meanwhile, the intermediate and small van segments are are showing a different pattern and losing their presence year-over-year, perhaps demonstrating consumers' affinity toward smaller compact designs and away from full-sized vehicles. While the compact segment has proven to remain relatively uncontested, it shows signs of decline, making room for the aforementioned compact SUV and large pickup segments to gain momentum.
Compact SUVs - Which Brands do Customers Love?
With the focus placed on the rapid expansion of the compact SUV (crossover) segment, we analyze which OEMs are currently participating in this segment. The following chart illustrates 2012 year-end registration volume by OEM, a snapshot of customer loyalty. Chrysler, GM, Ford, Honda and Toyota are the major players holding over 10% market penetration and as high as 21% in the case of Chrysler Canada.
There is no questioning the popularity of the crossover in recent years, perhaps in part due to the looks of a sport utility vehicle but ride and feel of a car. However, looking toward future growth prospects - will this segment continue to grow or has it plateaued?
Future Projections: What are the future prospects for the Compact SUV?
With business focused on lead management, information about could happen next is crucial. While the compact SUV (crossover) has been the fastest growing segment, it is now showing signs of slowing. As for an automotive forecast, we observe the rate of growth for each year over the past decade. The pattern shows that market share will continue to expand, however at a slowing rate. This is based on the observation that the fastest rate of growth was experienced in 2006, and since then, the rate has been steadily declining, particularly in most recent years. In other words, the market share for the compact crossover seems to have plateaued. Unless OEMs change consumer perception, this segment may continue to hold at roughly 17% market share or even be surpassed by the large pickup segment, as preliminary 2013 Q2 volumes are suggesting.
Posted by Ben Garden, GIS Programmer/Analyst, R. L. Polk Canada, Inc. (09.09.2013)