April 24, 2024

Chevrolet’s Cheap Minicar, the Spark, Is a Surprisingly Strong Seller

The Spark, made in South Korea, seats four, has room for groceries — and starts at $12,170, significantly less than the Fiat 500’s starting price of $16,100. It’s also inexpensive to run, getting about 35 miles to the gallon.

In July, sales of the Spark increased 163 percent over the previous year, its introductory month, to a record 3,847, showing that a stripped-down minicar can succeed in a market crowded with costlier rivals like the Fiat 500 that have more features and technology. Its July sales outpaced the Fiat 500’s 2,821, which was a 24 percent decline from a year earlier. Through July this year, Spark sales were 21,435, behind only the Fiat 500’s 23,892 among minicars.

“To me, it’s an appliance,” said William Wortman of Ohio City near Cleveland, who in April bought a Spark with manual transmission for his weekly 250-mile commute to his job as a toolmaker. The Spark’s 1.2-liter, four-cylinder engine makes it the smallest in the Chevrolet lineup.

“It gets me back and forth,” he said. “All I wanted was a radio.”

Even G.M. did not expect it would resonate this way with consumers. “We’re very surprised with how well the vehicle has been selling,” said Cristi Landy, Chevrolet marketing director.

Beyond its cost, what separates the Spark, buyers say, is that it’s the only minicar sold in the United States with four doors.

“The ability to get four adults in a minicar like that is what sells the vehicle,” said Andy Lilienthal, of Portland, Ore., who has run a blog on small cars, called Subcompact Culture, since 2008.

G.M.’s decision to market a minicar like the Spark was a logical one, analysts said. With gasoline routinely topping $4 a gallon, many Americans are seeking better mileage. But automakers also need to make their fleets more efficient to meet strict new federal fuel economy standards that take effect in 2016, said Michelle Krebs, a senior analyst for Edmunds.com.

“Everybody’s going in that direction,” Ms. Krebs said, “but no one expected G.M. to do it as well as they have.”

More broadly, minicars and subcompacts, which like the Chevrolet Sonic are slightly bigger, now make up 5.9 percent of overall vehicle sales, according to Edmunds.com. That is compared with 3.1 percent in 2007.

For the automakers, smaller cars have become a profitable niche in an area where they have often been outdone against foreign competition.

“There was skepticism in general that Detroit could not make small cars and compete with the Japanese market, but we’re over that,” Ms. Krebs said.

Beyond better fuel economy and cost savings, the styling and technology are helping change the perception of cars like the Spark, known as “penalty boxes” in the 1980s, implying that the driver was being punished for not affording a larger car. In the 1980s and ’90s, junkyards across America quickly became littered with duds like the Yugo GV, Daihatsu Charade and Geo Metro.

“You were basically buying these slow, underpowered vehicles with the only advantage being that they were cheap,” Mr. Lilienthal said.

The Spark and its competitors, including the best-selling Nissan Versa subcompact and No. 2 Kia Soul — which are slightly bigger and have four doors but cost about the same — come with features that were never included in subcompact cars, from air conditioning and power locks to Bluetooth and smartphone navigation.

Now, buyers ask themselves, “Do I need to buy a full-size sedan, or can I get away with a Nissan Versa?” Mr. Lilienthal said.

Automakers have also taken a different tack in marketing the cars, promoting them as fun to drive and easy to maneuver around the city, as well as the cost advantage.

Article source: http://www.nytimes.com/2013/08/17/business/chevrolets-cheap-minicar-spark-is-a-surprise-hit.html?partner=rss&emc=rss

VW Says Bentley Will Build S.U.V. in Britain

The new model, billed as the world’s most expensive SUV, will go on sale in 2016, VW said on Tuesday. The project will create over 1,000 jobs in the UK, Europe’s second-largest auto market, and require over 800 million pounds of investment over the next three years.

Crewe, England-based Bentley aims to replicate the success that Porsche has had with the Cayenne SUV, which was launched over a decade ago and now accounts for half the sports-car maker’s global sales.

The push towards off-roaders is aimed at boosting profitability at Bentley, which accounted for no more than 1 percent of the VW group’s first-quarter earnings of 2.34 billion euros.

“SUVs continue to be in high demand and Porsche has shown that plush sport-utility vehicles have great potential,” said Frankfurt-based Equinet AG analyst Tim Schuldt.

But the Bentley SUV may face competition from VW stable mate Lamborghini, which recently won the backing of parent Audi to launch the Urus SUV in 2017, Maserati’s Jeep-based Kubang and Land Rover’s Range Rover Sport, analysts said.

The moves by Bentley and Lamborghini have dismayed some automobile fans, who fear that the push into four-by-fours betrays their history and will dilute the brands’ exclusivity.

Bentley is known for sleek models with a racing pedigree. Its redesigned Flying Spur has a 6-litre, 12-cylinder engine generating 616 horsepower and a top speed of 200 miles per hour.

It is targeting annual sales of between 3,000 and 4,000 SUVs priced at above 150,000 euros. The new model would be key to almost doubling Bentley’s worldwide deliveries to 15,000 autos by 2018.

The company has had extremely positive feedback on the SUV from customers in the past 16 months, VW said.

“This decision will ensure sustainable growth for the company,” said Bentley Chief Executive Wolfgang Schreiber.

(Reporting by Andreas Cremer; editing by Christoph Steitz and Tom Pfeiffer)

Article source: http://www.nytimes.com/reuters/2013/07/23/business/23reuters-vw-bentley.html?partner=rss&emc=rss

Carmakers Back Strict New Rules for Gas Mileage

On Friday, when President Obama is scheduled to announce even stricter standards — in fact, the largest increase in mileage requirements since the government began regulating consumption of gasoline by cars in the 1970s — the chief executives of Detroit’s Big Three are expected to be in Washington again.

But this time they will be standing in solidarity with the president, who will also be surrounded by some of Detroit’s highest-tech — and most fuel-efficient — new vehicles.

While the American carmakers, as well as their Asian rivals, once argued against even minimal increases in government fuel rules, they are acquiescing without protest to an increase to 54.5 miles per gallon by 2025, from the current 27 miles per gallon.

The new standards are seen by the Obama administration as critical to reducing oil consumption and cutting consumer expenses at the pump, and the White House made it clear to Detroit executives that the changes were coming and they needed to cooperate.

It is an extraordinary shift in the relationship between the companies and Washington. But a lot has happened in the last four years, notably the $80 billion federal bailout of General Motors, Chrysler and scores of their suppliers, which removed any itch for a politically charged battle from the carmakers.

And the auto companies have gotten a lot better at building popular small cars that are fuel efficient — thanks to gas-electric hybrids and advances in battery technology — and consumers are responding. Six of the 10 best-selling vehicles in America are small or midsize cars, and one of the most popular pickup models on the market is a Ford F-Series with a high-mileage, six-cylinder engine.

Still, the industry’s meek acceptance of what are considered extremely challenging fuel-economy goals is a marked retreat from years past, when the companies argued that consumers would not be willing to pay for the technology needed to meet higher mileage requirements.

“The auto companies’ level of vitriol and rhetoric has changed,” said Dan Becker, director of the Safe Climate Campaign, a group that works to mitigate global warming. “We welcome all epiphanies.”

The new mind-set in Detroit has been helped by some give and take on the government’s side. G.M., Ford and Chrysler pressed for less onerous mileage goals for their profitable pickup trucks and got them. And the administration agreed to revisit the new requirements halfway through their course, with the possibility of adjusting them.

In the end, though, Detroit was faced with an undeniable political reality: there was no graceful way to say no to an administration that just two years ago came to its aid financially.

“This was no time to fight these regulations,” said one Detroit executive, who spoke on condition of anonymity because of the nature of the closed-door negotiations. “And you’re starting to see these fundamental shifts in the market that play a huge role in this.”

Environmental groups find themselves in the unusual position of lauding the automakers for making fuel economy a priority in virtually all their newest products, from the tiniest subcompact to the heaviest pickup.

“These proposed standards can be met using well-known technologies such as better engines, lower-cost hybrids and electric cars,” said Roland Hwang, transportation program director at the Natural Resources Defense Council.

The proposal to be introduced by the president calls for a 5 percent annual increase in fuel economy for cars from 2017 to 2025. The gains are more modest for the light-truck category, which includes sport utility vehicles — 3.5 percent a year through 2021, and then 5 percent annually in the next four years. The standards announced four years ago run through 2016, requiring a corporate average of 36 miles per gallon by then.

Over all, the new standards will require a 54.5 miles per gallon corporate average for 2025. That standard will be made more easily achievable by credits that automakers can earn by producing battery-powered vehicles, hybrids and alternative-fuel models. Details of how the credits will work have not yet been made public, but the intention is to encourage the development of cars with far lower emissions.

Initially, the White House floated a much more aggressive target of 62 miles per gallon by 2025. It reduced that twice before agreeing on the final number.

Nick Bunkley contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=fadf61b69ad4615100fefd30ef4ce11a