NEW YORK (CNN/Money) - The most popular cheap cars in America might surprise you.
They're not from South Korea or Japan. The most popular car with an average transaction price under $12,500 is the Chevrolet Cavalier, with about 17 percent of that market segment. Number 2 is the Ford Focus, with about 12 percent of the segment, according to final sales price data from the Power Information Network (PIN), a J.D. Power affiliate.
Despite Kia's and Hyundai's attention to the low-price end of the market, their most popular models rank only third and fourth among the best-selling models under $12,500, about half the average price of a new car today. Hyundai's Elantra is No. 3, the best-selling import on the list, with 11.1 percent of the segment, while the Kia Spectra is No. 4 with 8.5 percent.
Japan's Toyota, Honda and Nissan, which established beachheads in the United States with low-cost economy cars, have now virtually abandoned the under $12,500 part of the market. The best-selling Japanese car on the list is the Nissan Sentra, with only 2 percent of that segment, making it No. 12 on the list.
General Motors Corp. and Ford Motor Co. both have somewhat greater market share in the under-$12,500 segment than they do in the overall market. GM has nearly 30 percent of the low end compared with about 28 percent overall; Ford has just under 24 percent, compared with 22 percent overall through the first 10 months of this year.
Meanwhile Japanese automakers, which have 29 percent of the overall market, have only 8.6 percent of the under-$12,500 segment. Chrysler Group, the North American unit of DaimlerChrysler that concentrates on light trucks such as sport/utility vehicles (SUVs), minivans and pickups, also has little presence under $12,500, with only 4.3 percent of the market. Its Neon compact car is its best selling vehicle in the segment, No. 9 with 3.7 percent of sales.
Where the money isn't
GM and Ford officials say the low-priced segment is an important one to their business plans.
"The market below $12,500 is almost a million units. It's too big to ignore," said Paul Ballew, GM's executive director for market and industry analysis. "We think long term that market will shrink a little further. It may be only a half-million units at some point. But with our global position and product, it's a half-million-unit market we can go after."
GM plans to stop production of the Cavalier next year, replacing it with the Chevrolet Cobalt. And even if the Cobalt's pricing takes it out of the under-$12,500 segment, GM will go after the low-price buyer with a new car, the Avevo, due in showrooms later this year. It's being built by the former Korean automaker Daewoo, which GM now owns and operates as GM-Dat.
"From a cost standpoint, it certainly does help [to build in Korea]," Ballew said. "We also will leverage that product globally, selling in other markets. It will give it a very broad scope where existing Cavalier does not."
Still, Detroit has had trouble making money on low-priced vehicles, even as they hung on to sizable market share there, said Tom Libby, an analyst with PIN.
"They don't seem to be able to make money there," Libby said. The profitability of the segment is one of the reasons Toyota and Honda aren't selling many vehicles in that price range, he said.
"Those two are gaining everywhere. Why bother with this area where margins are so low?" he said.
GM and Ford are offering more incentives on the low-priced models than the Japanese manufacturers because of excess capacity at some of their small-car assembly plants. Those plants cannot easily be shifted to produce profitable light trucks. They also can't be closed economically under existing labor deals.
"Whenever production and demand are out of balance, you have incentives," said George Pipas, Ford's manager of sales analysis. "Toyota and Honda have the advantage of a more clean-sheet approach, so they have capacity more in balance with demand."
Pipas and Ballew say there still is an advantage to automakers to have a low-priced model and build relations with entry-level car buyers.
"The person who buys a Focus is more likely to stay with us to move into a mid-size car or SUV or pickup trucks," Pipas said.
The Koreans obviously are depending on the low-price sector to make inroads into the lucrative U.S. market. Hyundai has nearly 19 percent of sales under $12,500, compared with only 2.4 percent of the overall market, while Kia has 14.4 percent of low-end sales, about 10 times its total market share. They also believe that making a big push in the low-price sector will help them build sales on pricier models.
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"The growth of Hyundai has really come from the Santa Fe SUV," said Mike Anson, spokesman for Hyundai Motor America. "That transaction price is closer to $20,000. The [low-priced] Elantra is part of the reason for that growth."
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