Light car sales are in the doldrums right now, but key market player Honda is convinced things will turn around — it’s just not quite sure when it’ll happen, and why it’s happening in the first place.
Sales of light vehicles are in relative freefall this year, down 16 per cent within a total market up three per cent. The market share of these vehicles has dipped substantially from 10.1 per cent this time last year to only 8.2 per cent in 2016 to date.
What are light cars? The segment is led by the Hyundai Accent, Mazda 2, Toyota Yaris, Suzuki Swift, Honda Jazz, Volkswagen Polo and Kia Rio. Not all of these individual vehicle are down this year (Accent sales have more than doubled thanks to huge discounts), but the overall pattern is damning.
We caught up this week with Honda Australia director Stephen Collins, whose company sells the Jazz, which has 9.5 per cent market share in this still-important segment. He was asked why light car — and Jazz — sales were down this year (the Honda is down by 12 per cent, below the market average).
“The honest answer is I don’t know if it’s a blip or not,” Collins said. “It’s certainly been the last six-to-nine months, it’s been backward quite significantly. I think they’ll come back, there’s lots of new activity [coming] and I think good value small cars are putting pressure on.
“I don’t see it as a continuing drop of 20 per cent, there’s fundamentally a market, we’re trying to get to the bottom of why it’s down.”
Collins said the question needed to be answered because “we’re starting planning now for the next Jazz, and it’s important the volume is good so we can get what we need on that car”, though he added the sportier next-generation model was still a few years away (due about 2020).
“We’re not pushing the panic button on light car segment,” he added.
“I would say there will always be Jazz, there will always be a light market, it’s absolutely concreted into our plans. It just gets down to what volumes we can do and that might have an implication how many grades we offer etc.”
Why are light car sales down, exactly?
Most suspect that many factors are playing a role in their decline, notably big discounts in the small car segment (such as the Hyundai i30 at $19,990 drive-away with auto), with the knock-on effect being that small car sales are being leeched by medium SUVs in turn.
“As brands launch new models (such as the new Hyundai i30 due early next year) can they sustain heavily discounted new models?,” asked Honda Australia general manager of customer and communications, Scott McGregor.
Relatively low fuel prices and a bustling demonstrator and used vehicle market are also obvious issues, given sales of even smaller micro cars (such as the Holden Spark and Kia Picanto) are down an even greater 21.5 per cent.
Have you been convinced away from the light car market? If so, why?