The first four months of the year see's the European Small car segment have lots of up's and down's.

European minicar sales – especially at Fiat Chrysler Automobiles -- are getting a lift from the continuing economic rebound in Italy, which is the top market for the region's smallest, most affordable vehicles. Through April, Italy’s minicar sales were up 20 percent to 129,770 vehicles, giving the models a 25 percent share of the market, according to figures from JATO Dynamics.

The car that has benefited most is the Fiat Panda, which has overtaken the Fiat 500 to become the segment's best-seller with a volume of 74,018 units across Europe, an increase of 21 percent.

Rising demand in Italy, as well as growth in Spain and Portugal, have boosted Europe's overall minicar segment by 3.8 percent after four months, but the sector (also called the A-segment) will level off at about 1.2 million annually from 2016 to 2020, analysts at IHS Automotive predict.

IHS believes that demand has stabilized following significant sales increases and decreases between 2009 and 2014. Minicar volume rose to more than 1.6 million in 2009, which is when small, affordable cars became even cheaper to buy because a number of European governments started offering trade-in incentives to support automakers during the height of the global financial downturn. The surge was followed by a decline to about 1.13 million minicar sales in 2013 and 2014 because so many purchases were pulled forward by the incentive offers.

Highs and lows

The recent highs and lows, the predicted flatness of the segment as well as the difficulty most automakers have had turning a profit from minicars has convinced manufacturers such as Ford Motor and Nissan to leave the sector.

Ford will end sales of the Ka after a two-decade run and offer a pair of vehicles in the subcompact segment: the Ka+ and the Fiesta. The Ka+, which is just a few millimeters shorter than the Fiesta, will be Ford’s entry model for Europe. The current Ka shared a platform and factory with the Fiat 500, but it never came close to matching the success of its sibling model. "Either you partner with someone in this segment or you’re out," said a Ford official, who didn’t want to be named.

The Ka+, which is 3929mm long compared with 3620mm for the current Ka, goes on sale in the autumn. Ford says the arrival of the Ka+ allows it to reposition the next-generation Fiesta more upmarket when it debuts early next year. Ford said it will drop the Fiesta's Ambiente base trim line to leave the subcompact segment's entry price level to the Ka+.

Disappointing sales of the Ka, which had a volume of just 12,975 units through April compared with 68,068 for the Fiat 500, was "partly our fault," said a Ford source who declined to be named. "Fiat really turned the 500 into its own brand and we could have done more with the Ka, too. But when you're completely focused on returning to profitability [which Ford of Europe did in 2015 after three years of losses], investing more time and effort into a segment that on good days barely makes money is just not a priority," the source said.

Nissan, meanwhile, is reluctant to rejoin the segment after dropping the India-built Pixo in 2013. "If you look at the volume and expected profit from those vehicles, I'm not convinced there's a significant place for an A-platform car in Europe," Trevor Mann, Nissan's chief performance officer, told Automotive News Europe. Nissan and alliance partner Renault have also said they don't plan to re-engineer the successful India-built Kwid for Europe.

Troubled Twingo?

Renault is struggling in the minicar segment with the rear-wheel-drive Twingo as sales of the car fell by 20 percent to 29,081 in the first four months, according to JATO's figures. The decline dropped the Twingo to fifth place behind the similarly aged Toyota Aygo. The dip came despite the popularity of minicars in Renault's home market of France, which ranks fourth in Europe behind Italy, the UK and Germany. French minicar sales rose 2 percent to 54,415 in the period.

Renault's expectations for the car haven’t been met, said IHS analyst Ian Fletcher. IHS reports that last year Renault cut a shift at its Twingo factory in Novo Mesto, Slovenia, where the car is built alongside its platform mate, the Smart ForFour. Fletcher believes some customer are put off by the Twingo's rear-engine design, which reduces trunk space. Another problem is that the Twingo is facing competition from its larger sibling, the Renault Clio. "Some deals Renault has at the moment don't put the Clio that far away from the Twingo [in price]," Fletcher said.

Sales of the Aygo, meanwhile, are holding up because Toyota is meeting strong demand for personalization options. "Customization in that segment is very, very popular," Toyota Europe CEO Johan van Zyl said on the sidelines of the Automotive News Europe Congress in Munich last month. The Aygo's wide choice of colors and features is attracting a younger crowd, van Zyl said.

Other automakers are adapting their models to try to win new buyers. Renault, for example, will launch a GT version of the Twingo later this year that boosts power from the car's 1.2-liter turbocharged gasoline engine to 110 hp compared with 90 hp for the base Twingo.

Volkswagen showed a face-lifted version of the Up at this year's Geneva auto show featuring a 1.0-liter turbocharged TSI gasoline engine for the first time, as well as a dashboard dock for a smartphone to create an inexpensive infotainment system via a VW app.

Meanwhile, Hyundai will use the Paris auto show in September to unveil a face-lifted version of its i10 minicar that has been redesigned to attract younger buyers, a company source said.

As the segment's sales level off minicars are expected to have a market share of about 9 percent within Europe, making it the region's third-largest segment after subcompacts and compacts.

That number won't be declining any time soon, JATO Dynamics global analyst Felipe Munoz said: "The segment will always appeal to a variety consumers: first-time car buyers, single people, or simply because of parking reasons," he said. "And it doesn't face direct competition from the SUV segment, at least not for now."

Nick Gibbs

Automotive News Europe

REPORT HERE

USA SALES NOVEMBER - HYUNDAI - The Korean brand has its best November ever.

Hyundai Motor America posted its best November ever, with sales of 60,007, up 12 percent compared with one year ago. Small cars and CUVs lead the charge.

“With the combination of a strong economy, lower gas prices and improving crossover inventory, Hyundai experienced a record November,” said Derrick Hatami, vice president of national sales for Hyundai Motor America. “In addition to our Tucson nearly doubling its sales over November 2014, a number of our products experienced double digit sales gains.”

Hyundai’s small cars, Accent, Veloster and Elantra were up 44, 70 and 26 percent, respectively, while Tucson was up 90 percent and 6/7 passenger Santa Fe up 55 percent.

CARLINE	NOV/2015	NOV/2014	CY/2015	CY/2014
ACCENT	5,041	3,499	58,768	54,743
SONATA	16,732	18,515	190,483	199,012
ELANTRA	17,634	14,002	227,464	203,163
SANTA FE	9,156	9,787	108,616	97,511
AZERA	299	272	5,181	6,535
TUCSON	6,906	3,642	55,280	44,192
VERACRUZ	0	0	0	1
VELOSTER	2,204	1,296	21,999	25,913
GENESIS	1,837	2,431	28,280	27,069
EQUUS	198	228	2,131	3,072
TOTAL	60,007	53,672	698,202	661,211

Chevrolet’s small and compact car sales are up 229 percent year over year

Chevrolet’s small and compact car sales are up 229 percent year over year, from the second quarter of 2010 to the same quarter this year, evidence of the brand’s continuing success in attracting buyers of all ages including millennials, whose purchase priorities include advanced technology, fuel economy, functionality and affordability.

Chevrolet’s share of buyers under 35 continues to increase year over year, led by vehicles such as the Cruze, Sonic, and, most recently, the Spark mini car. Leading the segment is the Cruze, which is among the top-selling Chevrolet vehicles to those under 25. One in four Sonic and Spark buyers are also under 25, while nearly seven in 10 buyers of those cars are new to Chevrolet.

“The opportunity this new generation represents is enormous,” said Cristi Landy, Chevrolet marketing director, Small Cars and Electrified Vehicles. “The only way for Chevrolet to deliver the products, technology and services they want most is to really listen to what is important in their lives today and help enable them to reach their full potential.”

Part of this dialogue happens online through Chevrolet’s social media channels. Successful online campaigns, including the Effie-winning Sonic “Let’s Do This” campaign, propelled the Sonic to the forefront with young buyers. Chevrolet’s newest campaign features the Cruze Diesel through lighthearted Vine videos on Twitter that last less than seven seconds each. Chevrolet is the first automotive manufacturer to use the Vine platform for an original advertising campaign.  

Research shows that younger buyers rank vehicle technology among the top features influencing purchase decisions. Both the Spark and Sonic feature Chevrolet MyLink infotainment systems powered by smartphones including apps such as BringGo Navigation, Pandora, Tune in and Siri in Eyes Free Mode, which helps them stay safely connected at a fraction of the price of in-dash navigation.

Chevrolet dealers also play an important role in helping to better understand the wants and needs of the younger buyers. By providing access to resources, such as credit, dealers are helping to make the process of purchasing a car easier.

“Nearly four in 10 millennial buyers are purchasing within the compact car segment,” said Dora Nowicki, Chevrolet Sonic marketing director. “As a brand, we recognize the importance of partnering with next-gen buyers and engaging with them before, during and after purchase.”

VW and Suzuki explore options to resolve legal battle, report says.

Volkswagen and Suzuki are exploring options to either revive cooperation efforts or enter a settlement to end a two-year legal battle, people familiar with the matter said.

VW Chairman Ferdinand Piech and Suzuki President Osamu Suzuki are involved in the effort to reach an agreement, said the people, who asked not to be identified because the talks are private.

VW and Suzuki continue to view the industrial logic for the cooperation as compelling, one person said.

The effort may still fall apart and legal proceedings at a London-based arbitration court over the future of the disputed alliance will go ahead if the talks fail, the people said.

Eric Felber, a VW spokesman, and Ei Mochizuki, a Suzuki spokesman, declined to comment on any possible discussions between the two companies.

"Both companies stand to benefit if they can overcome the disagreements over leadership claims," said Frank Biller, a Stuttgart-based analyst at LBBW. "VW and Suzuki would still complement each other very well."

VW became Suzuki's largest shareholder when it acquired a 19.9 percent stake for 1.7 billion euros in 2009. Suzuki in return bought VW stock worth about 770 million euros as part of the deal, which was brokered by Suzuki and Piech.

The plan to join forces to cooperate on small cars for emerging markets collapsed two years later, with both carmakers accusing each other of breaching the agreement.

Suzuki demanded VW return its stakeholding and filed a lawsuit at a London arbitration court.

VW said in its 2012 annual report the court case "is not expected to reach a decision until mid-2013 at the earliest."

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