What I learned about selling cars in the US, from the top-10 selling cars in the US

I got this article in my inbox from million-mile Saaber, Peter Gilbert. I don’t always get time to read every link that lands in my mailbox, but it’s a weekend and seeing the top 10 list for the US did hold some interest. And it did get me thinking.

Here are the top 10 selling vehicles for the US so far in 2011, as listed online by Forbes:

    10. Ram pickup – Spun off from Dodge, Ram pickups stand on their own now.

    9. Chevrolet Cruze – Chevy’s new small car has strong sales momentum.

    8. Toyota Corolla – Corolla is down 11% this year amid tougher small car competition and dealer shortages.

    7. Honda Accord – The only Honda model still in the top 10 due to inventory shortages.

    6. Ford Fusion – Ford’s mid-size sedans have led a product revolution at Ford.

    5. Ford Escape – Escape sales stayed strong, even with a redesign on the way for 2012.

    4. Nissan Altima – Nissan’s mid-sized sedan shot up the list as other Japanese makers struggled.

    3. Toyota Camry – Camry is still the nation’s best-selling car, and a redesign is coming for 2012.

    2. Chevrolet Silverado pickup – Chevy pickups are overdue for an update, but still selling well.

    1. Ford F-150 pickup – Ford’s workhorse pickups are the perennial best seller.

——

Now, I may be learning the completely wrong lesson here, but here’s what I saw in that list.

The most popular cars in the US are rather boring, vanilla sedans that are sold on a combination of features and price, with price being a big driver. None of the cars in that list are going to get anyone’s heart racing. They’re not going to turn any heads. They sell because they deliver what customers expect – a price-driven transportation appliance.

Fair enough.

The trucks on that list each have their own loyal following and sell on a combination of price and functionality. They hold a promise of delivering a certain degree of utility and they have a place in the semi-modern American automotive tradition. The fact that the F150 has been the best selling vehicle in the US since Adam wore short pants tells you just how deep that tradition goes, and how well Ford keep delivering on that F150 promise. The F150 is pretty much a brand in itself nowadays.

Both sets of vehicles, cars and trucks, make certain offerings to their customers. The customers know what they’re going to get, whether it’s a boring sedan or a functional pickup. They’re buying transportation, or reliability, or functionality. Whatever the promise is, the vehicles in the list deliver on it at a price that’s suitable for the American consumer (the most price-driven consumer on the earth, in my experience).

So that’s the first thing that stuck out to me – something we all know, really, but it stared me in the face as I looked at this list: You’ve got to have a brand/sales promise that you can deliver to your prospective clientele. Price is important, especially in the US, but delivering on your promise is crucial (especially if you’re a niche brand like Saab).

——

One company that’s not on that list, but may be by this time next year, is Volkswagen. They have a goal to increase their sales in the US by massive multiples and they’re on their way to doing so, recording a 40% increase in year-on-year sales in October, and recently being hailed as one of the most profitable car companies going around.

I made a video highlighting Volkswagen a few motor shows ago (in LA, I think, November 2011) where I famously described their stand a Das Boring (which it was). They’d just re-packaged their vehicle range in such a way as to drive down their list prices, de-contenting them like crazy (drum brakes?!) and they took a fair bit of criticism in the automotive press for doing so. They weren’t worried, though. Perhaps what they’ve learned, something that a few others haven’t yet, is that the first online price comparison is crucial in keeping you on a US shopper’s list.

Maybe this is something else that we have to learn. Saab will never be able to sell on price alone like Volkswagen can. That’s not where we are and as a small car company, it’s not likely a place where we’ll ever be. But maybe there are some things that we can learn about how we package vehicles and present them to the market.

Volkswagen have de-contented the heck out of their standard offerings but from an industry broadcast I saw last week, they’re still selling at very similar transaction prices to what they used to. People who are drawn in by the competitive list price are optioning them up once they see the car in the metal at the showroom.

Can we sell Saabs the same way? I’m not sure, but it was definitely food for thought for me on a lazy Saturday morning.

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16 Comments

  1. I made a comment in a previous thread that what SAAB needed was customers who bought new cars and that I’d have a tough time justifying buying a new SAAB in future because of the damage that had been done to the trade-in value of my three year old 95. In his early days Victor Muller said SAAB needed to convince previous customers to return to the brand. For me, SAAB need to find a way to get my trade-in value back up so I can afford to think about buying new AND demonstrate that the value of the new vehicle isn’t going to drop like a stone. Only when the vehicles really demonstrate exceptional virtues will strong demand make discounting unnecessary, thereby protecting resale values. In my opinion, having not seen a 9-4X, is that the current 93 and new 95 are pretty lacklustre. The new 95, especially the estate, shows great promise in its looks but the interior is typical low-rent GM (hard nasty plastics, non-SAAB seats) and the driving experience (at least of the standard 2.0TiD saloon I drove) was crashing and uncomfortable on UK A and B roads. I just hope that the production stop time has been used to make improvements because the market has moved on; if not, the vehicles can only be sold as they have always been in the UK ie to fleets, on price – a disaster. I recognise that the 93 Griffin hasn’t made it to the UK yet and a review of an early 95 estate in Autocar some months ago seemed to hint that improvements had been made to the ride. The review also said that the cabin plastics were un-grained and produced with prototype tooling so maybe the perceived quality of those materials is being improved. I’d appreciate some comments from Steve about these issues.

    1. I’m on my 5th Saab, a 2003MY 9.5 Aero Estate, and it’s clocked up a fairly reliable and exquisitely comfortable and enjoyable 240.000 kms in almost 9 years…  From a Belgian tax perspective, this is a horribly expensive car, but it’s the best car I’ve had so far (out of 8 cars I’ve owned, and many, many more I’ve rented or borrowed), and sadly, I cannot see myself replacing it anytime soon, short of the wheels dropping off.  The 2.3 turbo is extremely fuel efficient for an albeit heavy car.  I still like it’s classically beautiful looks after nine years, much more so than the facelift that followed, and many colleagues who know I used to change cars a lot sooner find it hard to believe mine is already almost 9 years old.  The style of the new 9.5 Estate is definitely appealing, but I want to see and drive the car first.  That is, of course, hoping, like all of you, that it will get produced…  And then we’ll see…  So, here’s to hoping this all comes to pass…  There are some other beautiful cars out there, but so far, none has given me real pause to go and replace my trusty Aero…  

  2. Warming to my theme … the best SAAB (amongst 10 of them) was undoubtedly my 95 Aero auto estate. What a fabulous car. I loved it to bits but it was 5 years old and fuel prices in the UK had shot up so I decided to change it for a diesel. I took delivery of my 95 Turbo Edition 1.9TiD auto and was shocked at what had been done. My dealer didn’t have a demo model or any trade-ins of this face-lifted model so I bought unseen. The car still looked great (silver is a good colour for what some have unkindly called the trout-pout model because of the chrome highlights round the headlights). It was the interior which really disappointed me: the plastics are very hard and scuff easily. They’re also black which makes it look worse. And the leather seats are made with poor quality leather – not like those in my previous SAABs and the Aero in particular. I paid extra for the dark walnut dashboard like I’d had in my Aero and found that it had been skimped – it doesn’t surround the gear lever. Somehow I’ve managed to puncture the speaker cover on one of the rear doors and no wonder because the plastics are thin, hard and brittle. I love the car, but it’s a bit of a disappointment. Some cost accountant, presumably from GM, obviously decided that cost had to come out of the car. My wife had a new pre-facelift 93SS and it was a similar story. We never did manage to eliminate the rattles coming from the dashboard and headlining round the windscreen no matter how hard we tried. And that was a fully specified Arc model. I think the current models show the results of this GM cost accounting and use of the GM parts bin. I don’t think SAAB can’t wait until the new 93/91 to fix it.

    All of these comments are meant to be constructive because, believe it or not, I still have a soft spot for SAAB. They don’t have to say: GM screwed us over, didn’t allow us to release the models we wanted, forced us into some ridiculous alliances (Saabaru, for goodness sake) etc. They do need to start talking to us, their fans, their die-hards and be SPECIFIC about what’s going to be done about it.

  3. Not everyone can be the low cost leader. Not every one can appeal to the masses. The largest market is for a sedan that offends no one, but its also one of the most crowded. 

    It is a different kind of person that buys a Saab. And identifying the personas of Saab drivers is difficult. But within this niche, there is room for expansion. What Saab has going for it already is there in spirit, but there may be too many doubts to lure people away from the appliance market… just yet.

    Reliability ratings, warranty, maintenance requirements, standard features, “quality”; these are things that drive value in the low cost segment. 

    Soul, performance, heritage, exclusivity, design, passion, lifestyle; these are things that drive value in Saab’s niche… And these are things that Saab does really well. But doubts about warranty, reliability, the future of the company, leave only true enthusiasts willing to take a risk.

    Eliminating this feeling or risk is the key to luring people away from the “safe” luxury brands like lexus, infiniti, cadillac, audi. The key is in maintaining the brand’s spirit while at the same time competing with the value drivers in other segments. 

    At that point, a buyer is willing to spend more to buy into the Saab driver lifestyle, especially when there is little risk involved.. And there is no need to compete on price alone. 

    No one ever picked a Mercedes over a BMW because they were haggling over a few dollars at the dealer. They picked the Mercedes over the BMW because their persona meshes better with that brand. The same cannot necessarily be said for the accord vs altima driver. 

  4. Yes, yes, yes.  Early in its history, Saab delivered on BOTH promises in the U.S.:  Unique, practical car AND entry level price.  Do the research:  They advertised Saabs in the 1960s as the “Under $2000.00 Car” and touted the functionality, safety feature of front wheel drive (unusual at that time) and Swedish image.  At the time, Saabs were in roughly the same price range as Volkswagen.  It’s okay that Saab repositioned to compete with higher end cars—-but it’s not okay that they abandoned the lower end of the market altogether.  Even for a niche marketer, grabbing first time buyers at the low end is critical—-and as they move up in life, they’re in the family and might just buy the higher end models.  If the clowns at GM “allow” the sale of Saab to Pang Da/Youngman, I truly hope the first Saab’s assembled in China are nice little entry level hatchbacks that get exported to America.  I drive a 2004 9-5 Wagon that I bought new, and it stickered at around $37,500. in 2004.  Not chump change.  But I can’t emphasize enough how important it is to Saab’s survival to go back to basics in their line—offer a lower priced model too.  

    1. So they should be competing with companies with that have lower manufacturing costs, higher profit margins, and better reliability, in a more crowded market place? What Saab did in a market 50 years ago is not relevant today, at all. 

      They need to target niche lifestyles and grow from there. 

  5. About drum brakes: they last a long time (over 100,000 miles in some applications), and they’re cheap to replace. Not that illogical in a land of low speed limits and flat, wide-open spaces.

    About the list: first, I can’t believe that Toyota is doing as well as it is. They’ve really become cheap, nasty cars with hideous interiors, plus their reliability aura is long gone. Mind you, I’ve seen lots of them in rental lots lately, so they may be “moving the metal.” Hyundai’s already passed them in Canada. It’s just a matter of time before they do the same in the US.

    Second, the mid-size sedan is a sweet spot in the market. 4 out of 10 cars are between 4.7 and 4.9 meter long (190 inch), priced in the low-to-mid $20K range. That means that the 9-3, being a little smaller and more expensive, is not far off target. It’s certainly attainable to anyone who wants something nicer than the average sedan. A price-competitive next-gen 9-3 with better packaging (more rear leg room and trunk space) has tremendous potential.

    Third, pickups. They are the blue jeans of the American automotive landscape. You can wear them anywhere, and you’re not afraid of getting them dirty. Americans own 2.28 vehicles per household; that usually means at least one truck.

    Fourth, VW. They may seem dull to you, but they’re more exciting than Chevy, Ford, Toyota, Nissan, and a bunch of others. The old VW lineup was smaller and more expensive than the median. The new lineup hits the mark on size and price, plus has a bit of European style that many Americans appreciate. VW’s customers want Audis and BMWs, but they’re not taking a chance on a used car.

    Fifth, list price is very significant. It builds dealership traffic, even if no one buys the base model. Saab made a big mistake pushing the $50K V6 AWD 9-5 when the real starting price is $38K for a Turbo4. They would have sold a lot more of both specs had they pushed the lower price. It’s no accident that the best sales years for the 9-3 coincided with the availability of a cheaper 9-2. “Those who try them buy them,” but you can’t sell to a customer who drives right past the dealership.

    Sixth, the market has changed a lot since the mid-1980s. What worked when the classic 900 was in it’s prime won’t work now. Baby Boomers are retiring, Gen X’ers are in their prime spending years (but are afraid for their jobs). Gen Y doesn’t even equate the automobile with freedom; all they’ve experienced is repressive traffic enforcement, potholes, gridlock, and prohibitive insurance/fuel costs. You can still sell them dreams, but not dreams of doing 150mph on the Autobahn, or of driving without a destination. They want to be connected at all times, and their cars need to have reasonable running costs. Poor residuals and outrageous service costs won’t cut it with them. Bonus points if you can make the car software-updatable, and zombie-apocalypse ready. Unlike previous generations, they fully appreciate that they are buying cars not because they want to, but because they have to, like an appliance. You won’t sell them an appliance-car that’s wasteful or that doesn’t fulfill its fundamental purpose of reliable, predictable, convenient transportation. Mind you, Gen Y is also much more aware of UI and style, so there’s lots of room to up-sell with a well designed product.

    As a side note, I think that the days of selling any car without Bluetooth and sat-nav are over. That’s like selling a phone that just has a number pad and 12 character display.

    I think I’ve drawn a Venn diagram of where the US market stands in late 2011. The bad news is that Saab isn’t currently in the important intersections of that diagram. The good news is that they are also not too far away. I can certainly see the 9-4, 9-4x and 9-5 being targeted at the sweet spot of their respective markets with minimal changes, and the 9-3 replacement has a great shot at becoming an iconic car to the next generation of customers.

    1. Re: Hyundai. I would bet dollars to doughnuts that they’ll pass both Honda and Toyota soon. It seems just about every other car on the road now is one of those toasters built by soulless robots. Throw in Kia as well (owned by Hyundai) and you have cars that appeal to a vast majority of the vehicle owners in the US — being cheap, relatively safe transportation appliances with just enough tacky styling to appeal.

      Saab needs to appeal to the 

    2. This is an outstanding analysis of the US market.  Everything is take-it-to-the-bank correct, especially opinions of VW and the generational issues of auto purchases.

      I will add one thing and one thing only (the thing I always say in these threads): The list you gave Swade (and the analysis above) does NOT include luxury cars, and that market is apples to the Top 10’s oranges.  I’m a professional in my 30’s making good money, and I work in an environment where the men and women working are from their low 30’s to upper 60’s, all also making good money.  I’ve watched hundreds of these folks over the years buy cars, and I’ve advised many.  It comes down to this:

      ** Americans buy luxury cars based upon image and what they believe that vehicle speaks about them to their family and, very often, their friends. ** 

      That’s it, period.  No one talks about mileage.  No one talks about quality.  People DO talk about how they’ll look in a particular brand.  They do talk about what their potential dates will think.  They talk about how they do and don’t want to look.  People decide whether they want a sedan or SUV, and then choose the suit (re: brand) that fits them. There usually is very little comparison shopping, almost no comparison driving.    

      I’d love to see Bernard’s opinion of the luxury market, but here is my pro/con list that I hear people balancing when deciding what to buy:

      BMW: 
           Pro: Oozes success, projects power, says you’re a go getting, a master of the universe type…  Great new lease deals and excellent CPO deals
           Con: Has developed an a**h*** image in the US that’s starting to bother potential buyers, people starting to question the value proposition in pricing and packages, terrified to own past warranty.

      Audi:
           Pro: It’s become the successful “smart person’s” choice, a way to whisper your success without screaming it, kind of because the default upscale version of what Honda used to be.  Considered a way to show you have good taste.  A lot of people troubled by the BMW a**h*** issue come here…
           Con: Starting to be viewed as a bit of a snooty, superior choice, uppity in a negative way.  As prices leap up people are starting to wonder if they’re worth the premium over VW.  

      MB: 
           Pro: Screams your wealth and success to everyone around you, associated with bling to a degree, AMG had done a lot to halo the entire brand in the US and the AMG image has surprising mainstream marketing penetration.  Lots of AMG appearance packages sold here…
           Con: Associated with bling to a degree, some guys view it as a chick car (minus AMG), a bit too flashy for some, people terrified to own post-warranty.

      Volvo: 
           Pro: An earthy, progressive customer base.  Speaks to the same group as Audi more or less, but this group seemingly doesn’t care quite as much about projecting their success to others (same crowd as Subaru, but more money).  Often, like Saab, families have been buying them for decades.  SUV’s seen as sleek, practical, stylish choice…
           Con: People wonder if it’s too stealthy a choice, has no sex appeal.  I don’t know anyone considering a sedan at all…  Might Volvo become an SUV company in the US like Ford was during the 90’s?  

      Acura: 
            Pro: People buying want to show they have money but don’t like cars that much.  They want an upscale, reliable appliance they never have to think again the minute after purchase.  Technophiles tend to be drawn to Acura’s Tokyo nightclub interiors…
            Con: No aspirational aspects at all.  No one desires one…  Has no soul, no reputation…  Too stealthy for many.

      Lexus:
           Pro: Seen as the pinnicle of peace-and-quiet luxury by some.  Screams success.
           Con: Seen as an “old man’s” car right now by many, I’ve yet to meet one person under 55 considering one…

      Hyundai: 
           Pro: Seen as a smart, intelligent, value choice.  People have attitude of outsmarting other upscale buyers, thinking them idiots for paying 1/3rd more for less features and style than they have…  I’ve seen a lot of ex-Saab and Volvo 50+ buyers go here…
           Con: It’s, well, Hyundai…  Luxury models seen as being bought by retirees, and thus a danger of being seen as a value old man’s car…  No one who cares about images buys one…

      Saab:
           Pro: Buyers tend to loyal to the brand, tend to have latched on to one or two prototypical Saab features that keep them coming back…  Don’t seem to care about what people think, “march to their own drummer” types…
           Con: People don’t know the brand at all.  They don’t know the drama happening now, they don’t think it’s gone, they don’t think ANYTHING.  Most people under 45 know Saab because they had a used one along the way climbing their ladder of success (maybe a used 900 or 9-3 in grad school) and haven’t thought about it since…

      And that’s the market.  What worries me about reading that Saab can’t/won’t do much advertising in the future in mainstream media is that Americans buy cars by image.  If you have no mainstream image, you won’t sell cars…

      By the way, the #1 purchase in my workplace is a CPO BMW 3-series.  Even for high earning young professionals well into 6 figures, the sweet spot is still between $28-$38K in this market and everything that Bernard said above regarding starting prices is correct (which is why the 9-5 was DOA in the US initially advertised at 50K).  Do you know the 3 Series here is usually listed as starting at $35K?  How many roll off the lots within 10K of that?  None…  But that’s how media outlets list starting price… 

      Ok, that’s enough for now… 🙂

      1. I think you hit all the makes right on the head. Slight disagreement here and there with your analysis, but pretty much dead-on!

  6. Saabs aren’t economy cars that owners aren’t going to mind getting dinged up or put through hellion kids. Nor are they particularly workhorses, to be loaded up with stuff day-in and day-out. There’re always exceptions, of course–but I’m talking about the general Saab customer. I’d say Saabs were more in between. My parents had a Saab each, raising my brother and I. They’d occasionally use them to carry home large/long purchases–but mostly they were comfortable modes of transportation in style. Just luxurious and sporty enough to be comfortable and fun (in my opinion). I wonder how true that is with the current Saab lineup.

    I don’t see Saab doing what you mentioned VW doing, especially with the complaints about materials and quality. I don’t see Saab selling anything cheap enough that will appeal to the economy-car “don’t care about cars; they’re just transportation” segment. Saabs can be very durable, but I don’t see them replacing a truck to do the same amount of work.

    I think Saab has evolved with its market in that they still seem to be that in-between econo-car and pricey luxury car… but I think perhaps not different enough as far as looks/style goes to keep Saab fans coming back for more. The second-generation 9-3 took a long time to grow on me, so I wonder if that might be the point where people started to lose interest (as far as styling goes). I’m also curious whether a return to such radical styling (like everything up to the second-gen 9-3 time) would be enough to capture the attention and curiosity of that niche market they had not TOO long ago.

  7. It seems to me that SAAB had the beautiful lead-in model during the C900 days:  a relatively inexpensive, safe, but interesting base model, a nicer but still practical S, then the turbo model for those more interested in the performance side, all surmounted by the SPG.  

    A base level 9-3 should be priced to compete with VW and Mazda 3 in the $23-$25K range then upsell, upsell, upsell.

  8. With all due respect, let’s step back for a minute and study this list from a different angle.

    1.  Even though these vehicles are the top 10 vehicles in the United States, none of them registered more than about 1.5% of the overall market.  That is, more than 90% of US buyers bought something other than these ten vehicles.

    2.  Lexus, Mercedes, Infiniti, Hyundai’s Genesis, BMW and Jaguar are all enjoying brisk sales as well.  These cars are NOT de-contented.

    3.  The top ten best-selling European cars don’t look that different than the US list (minus the pickups, of course)
    VW Golf, VW Polo, Ford Fiesta, Ford Focus, Renault Clio, Opel/Vauxhall Astra, Opel/Vauxhall Corsa, VW Passat, Renault Megane, Peugot 207.  These are pretty pedestrian small cars.
    (Source: The Telegraph UK)

    4.  Low-priced, average-content vehicles will always lead the pack.  Saab isn’t there and shouldn’t aspire to be.

  9. De-contented yes.   Many Toyotas come with drum brakes and plastic hubcaps on steel wheels.  If one wants carpet in the hatch area/trunk it’s a option or accessory. And they sell like hotcakes.     
    The Ford Fusions are very well equiped though and people like them.  

    Lately I see a lot of Hydundai Sonotas on the road.   I’ve even seen several of the 2 door
    Veloster (and they just came out).  Their ads here in magazines and TV are quite effective;
    up to 40 MPG a neat looking car.  

    A tought market for sure here in the USA  but always room for better cars.

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