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Small Car Market Faces Potentially Large Problems

Drivers frustrated with lack of amenities

January 8, 2009

• Race To Replace Gas With Green Batteries • Honda Settles Civic Hybrid Mileage Suit • Tax Credits On Ford Hybrids Phasing Out • Small Car Market Faces Potentially Large Problems • Ford Plans Car That Parks Itself • Drivers Wanted: Mini Developing Electric Model • GM Invests In Electric Car Engine Plant • GM Increasingly Viewed As "Green" By Online Consumers • Honda Plans New Hybrid for Earth Day 2009 • Hybrid Technology a Presidential Campaign Issue --- • More ...

Small, it seems, isn't always beautiful. As Detroit struggles with a disappointing year-end, market research firm Mintel has uncovered another problem for automakers: consumer dissatisfaction with small cars.

In a new consumer study, Mintel found that only half of small car-buying respondents say they feel "extremely happy" with their small car purchases. This pales when considering that 80 percent of all respondents report feeling just as happy with their vehicle purchases.

"Our survey revealed a surprisingly high number of small car drivers who aren't fully satisfied by their vehicles, suggesting that today's small cars may not have the amenities people want," said Mark Guarino, senior analyst at Mintel. "This is a key insight for Detroit manufacturers as they revisit business and development plans for 2009."

Guarino notes that, "small cars offer many benefits, including lower purchase costs and better fuel efficiency than larger models." Indeed, Mintel research shows that most small car buyers choose to go compact because of fuel economy. Across income groups, 79 percent of respondents who purchased small cars say they selected their current vehicle because of gas mileage.

Moreover, 42 percent of small car owners bought their vehicle to replace a similar-sized vehicle in the same category, according to Mintel. "There is great potential for growth in the small car market," said Guarino. "Automakers just need to figure out how to best package and sell the benefits of small cars to consumers."

Guarino believes making luxury features such as surround sound stereo and heated seats standard in small cars could help lure drivers to the market. "The transition from expensive, gas-hogging SUV to cheaper, fuel-efficient compact will feel like less of a sacrifice if the smaller car offers similar luxury features," he said. "Automakers need these innovative strategies to show consumers they are committed to change."

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