Japanese Small Cars hitting U.S. Market !!
Toyota's top seller Vitz in the European marrket has hit U.S. showrooms as Japanese automakers prepare to flood the market with new subcompact cars. And that could mean more trouble ahead for U.S. automakers such as General Motors and Ford.
Toyota starts to roll out its Vitz subcompact car to U.S. dealers this spring. It will be closely followed by the Honda Fit and Nissan Versa, as all three of the big Japanese automakers begin their first major push in years to sell the fuel efficient, extra-small, cars in the United States. The cars generally have base prices between $12,000 and $13,000.
The low-priced segment was where the Japanese made inroads into the U.S. market after the oil shocks of the 1970s and 80s. But as gas prices stabilized, the Japanese moved away from the segment, as did American car buyers and automakers, to concentrate on larger, more profitable light trucks such as SUV's. Even the compact cars offered by the Japanese grew in size and price; the Toyota Corolla can now have a list price of $19,000 if upper-end options are included.
The small car segment has been left mainly to the Koreans and to GM's Chevrolet, which used its own Korean-built vehicle, the Aveo, to become a leader in the low-priced part of the subcompact market over the last two years. The low-priced small car segment overall grew between 6 and 10 percent last year, to about 200,000 U.S. sales, depending on how it's counted, and Toyota sees the segment growing by another third this year due to all the new entries.
Higher gasoline prices are an important, but only partial, factor driving the interest in smaller cars. Buyers are being more practical with what might be their second or third car. Even more conservative growth estimates put expected U.S. sales growth in the small car segment at about 25 percent this year. But even that might not be enough to absorb all the new entries.
Toyota has competed here with the Echo, but it did not sell well and Toyota pulled the car off the market for the 2005 model year.
The Vitz has been very successful overseas -- it is Toyota's best-selling model in Europe, where gas is far more expensive, and streets and parking places can be much tighter than in most of the United States. It's also been a success in Japan. Honda's and Nissan's new entries into the U.S. market also are models with strong overseas sales.
Experts say that Aveo is still a basic utilitarian interior. The Vitz does a much better job presenting a look and feel of being more upscale. You don't get in and immediately think that you're in one of the cheapest cars on the market. Also, the segment is being helped by the look of the new subcompacts. While the Mini Cooper is priced well above these entry-level economy vehicles, it helped open American car buyers' eyes that small cars could be attractive, and the new models build on that. The new sub-compacts are a lot more easy on the eyes than the Toyota Echo and the Ford Fiesta,
Meanwhile Ford and DaimlerChrysler have chosen to stay out of the market, at least for now, despite having some offerings in their overseas brands. So the major players will be the Japanese small cars.
