The established norm is no longer the norm
As we all know, the auto industry has gone through dramatic changes in the past few years. And they’re continuing. Not just at the manufacturer and dealer level, but at the consumer level.
Canadian car buyers are switching their allegiances as they have never done before. Brands and models that were guaranteed money in the bank are losing favour. And others that were the subject of derision just a decade ago are basking in the positive glow of public opinion that is translating into sales.
Perhaps the most dramatic illustration of this point can be found at the top of the passenger-car sales chart. The Honda Civic, which has been the best-selling car in Canada for 13 years running is in serious danger of losing its crown to the Hyundai Elantra – a vehicle that wasn’t even in the top ten just three years ago.
The Civic still held the lead through August, but by just over 100 cars, and Civic’s sales are on the decline while Elantra’s are climbing steadily.
Right behind those two, Chevrolet Cruze was within 300 units of overtaking Mazda3 for third place in the sales race. And Toyota Corolla, which has traditionally dueled with Mazda3 over second place, was relegated to fifth, albeit not by much.
Behind them, Ford Focus and Volkswagen Jetta were locked in a tight battle for sixth place, the latter improving its year-to-date sales by a phenomenal 260 per cent.
Hyundai’s Accent was in eighth place, followed by the Ford Fusion and Hyundai Sonata – the only two intermediates to crack the top ten.
Following them, within the intermediate class, were the Chevrolet Malibu, ahead of the Toyota Venza and Chevrolet Impala. Sixth among intermediates, and 19th overall among passenger cars was the Toyota Camry – which is still the best selling car south of the border. And behind it came the Honda Accord.
How the mighty have fallen!
Perfect storm for the Japanese
The pattern among all these changes is quite clear. The Japanese automakers are losing ground to their American, and European competitors.
It would be easy to write that situation off as only being a consequence of the Japanese earthquake and tsunami and all the repercussions thereof. And there’s no doubt that they played a significant role in restricting the supply side of the equation. The impact of Toyota’s recall woes, and the strength of the Japanese yen must bear some of the blame.
But, while all three may have been triggering events for what might be described as a perfect storm for the Japanese automakers, they don’t explain the whole phenomenon.
One has to look at the other side of the equation as well. Which is, without question, that the competition have upped their game.
Ford’s Fusion and all-new Focus are now solid competitors for anything in their classes, bar none. Ditto for the Chevrolet Cruze and the Malibu before it.
The Korean OEMs have refocused themselves on a combination of quality, reliability and durability (QRD), plus cutting-edge styling, that have effectively rebranded them.
And Volkswagen, by redesigning the Jetta specifically for the North-American market, as well as substantially reducing its price-point, has made it a real alternative in a lucrative market area that the Japanese once had all to themselves.
Vulnerability attracts consumers
So there’s more to the story than just the Japanese side. All the major competitors to the Japanese brands are rapidly gaining on them, if not equaling or surpassing them, in terms of QRD. Throw in the fact that they were also becoming bolder in terms of styling, and that the automotive press was singing their praises far and wide and the established order became vulnerable.
Those factors were enough to get consumers thinking that there might actually be real alternatives to the brands they’d accepted as superior and bought by default for two decades. Enough so to get them to actually try some of those alternatives. And when they tried them they liked them.
All that turmoil had begun well before the natural disaster hit Japan. The addition of supply constraints just exacerbated the situation.
All of which is not to say the Japanese brands are down and out. Far from it. They’ll be back and back strongly. There’s already strong evidence of that fact in products now coming to market.
But they’ll be back to a different game.
