Forecast: Opportunity Lies In Supercharged CUV Segment
One thing that was certain is the supercharged crossover (CUV) market and how it will define automakers' sales in coming years.
Auto analysts Tom Libby, who directs industry analysis at J.D. Power's Power Information Network, and Jeff Schuster, executive director of global forecasting and product analysis at the consultancy, said consumer perception, lack of the right products at the right time--meaning crossovers in the compact, compact premium, and mid-sized areas--will hurt many domestic and at least two import brands.
Schuster said the market will see the most feverish activity within the sub-compact and crossover markets at least through 2011, with some 28 new crossover compacts by then.
"But as we look at other aspects of the CUV market, in luxury with compact premium crossovers, we are seeing a tremendous amount of growth," he said. "The largest opportunity in volume is the growing mid-sized CUV segment and smaller premium CUVs." He noted Toyota's RX, BMW's X3, and forthcoming products in the category from Infiniti, Cadillac and others--predicting huge growth numbers for compact premium crossovers, in particular.
The consultancy predicts that the compact, compact premium, mid-sized, and mid-sized premium crossover markets will experience 0.9%, 538%, 258% and 23% growth, respectively.
The mid-sized crossovers will grow market share at the expense of mid-sized SUVs and vans, per Schuster. Libby said that Nissan, Dodge, and Volkswagen are among the brands that have suffered at retail for not having a vehicle in the compact CUV growth segments of the market. Nissan is solving that problem with Rogue, due out this fall, and Dodge, which Libby says is the only mass-market nameplate without a crossover, is preparing to roll out its own, called Journey.
Schuster pointed out that the other huge growth market is basic cars--entry-level compacts like Hyundai Accent, Ford Focus, and Toyota's Scion cars, with 100% increase from very little volume to several products in the lineup. He says the growth of that segment has surprised the consultancy. "That segment will grow," he said, "because of prices, a shift in consumer preferences and the green movement. So our view has changed: It's not a fad. It's here to stay," he says.
Libby says that the danger for domestic automakers is cannibalism of new products, particularly crossovers which steal sales from mid-sized SUVs and minivans. Ford has promoted its Edge as an emblem of its turnaround, and Libby says it has proven to garner higher conquest buyers, who own competitive vehicles.
However, he notes that the top trade-ins for Edge are other Ford vehicles like Explorer, F-Series, Escape, Expedition and Taurus. "Conquest is not as high as it should be." He added that Mercury is a weakness for Ford.