Low gas prices and excellent SUVs are making the market tough for small car advertisers, not to mention a wide range of manufacturers and dealerships. Today, we’ll explore recent numbers and talk about how to effectively advertise those small cars on the lot.
Auto Sales Dipping, Especially for Smaller Cars
At the end of July, Kelley Blue Book shared a press release on summer car sales. Let’s take a look at the highlights.
New light-vehicle sales, including retail and fleet, are expected to drop almost 6 percent (year-over-year), hitting 1.43 million unit sales in July. The resulting seasonally adjusted annual rate (SAAR) would be 16.7 million. One possible reason for the overall decline is that July 2016 had one more selling day than July 2017 did.
July’s sales are projected to keep the SAAR beneath 17 million as sales continue to dip from levels seen in May (when sales tend to hit a peak) and June. Just over 84 percent of July’s sale volume is from retail, which is a slight uptick from July 2016. Sales are expected to climb a bit in August and September of 2017.
2016 was a record year for vehicle sales, and at the end of a seven-year streak of year-over-year sale increases. According to Kelley Blue Book’s forecasts, 2017, with total sales expected to be somewhere between 16.8 and 17.3 million units, will see sales decrease between 1 and 4 percent.
Hyundai-Kia and General Motors are forecasted to experience the greatest drop in vehicle sales with decreases of about 11 and 9 percent respectively. For General Motors, one reason is lowered production to counter rising inventory of slower-selling models. GM also has the greatest loss when it comes to market share, losing 0.6 percent.
Subaru, on the other hand, is the lone major vehicle manufacturer expected to see sale increases in July. Sales could rise by almost 4 percent, and market share could follow with a 0.3 percent boost. Credit is given to fast-selling models such as Outback, Impreza and Crosstrek.
Mid-size and compact cars saw the greatest losses in both sales (down 14.5 and 10.6 percent respectively) and market share (down 1.1 and 0.7 percent respectively).
In keeping with recent trends, compact SUVs dominate market share and are expected to continue doing so. These vehicles are affordably priced, have modest fuel consumption and offer considerable utility, making them widely attractive.
Mid-size SUVs and full-size pickup trucks saw the smallest drops in sales volume. For full-size trucks, one of the reasons is a general, steady improvement in real estate and new home construction.
Kelley Blue Book provided an update in early August, saying that July’s sales dropped closer to 7 percent. While a major downturn isn’t expected, the drop reflects consumer preferences for fewer cars and more crossover SUVs and trucks.
Toyota unexpectedly saw 3 percent gains, thanks mostly to a strong month for the RAV4. Subaru exceeded expectations with an almost 7 percent gain. GM saw a significant drop of 15 percent, which the company attributes to an 80 percent cut in rental deliveries.
USA Today chimes in with a reminder that deals on small and mid-size cars are going to get sweeter as dealers try to clear them off the lots. Thousands of dollars in discounts are countering transaction price increases, and interest rates are falling in this space. Further, these cars are sitting on the lot longer. For those looking for smaller cars, now is the time to buy.
Ideas for Advertising Smaller Cars
Of course, this buyers’ market for small vehicles isn’t as easy for those trying to advertise them. Are there some unconventional ideas that might help?
Last year, Chevrolet tried something new to advertise three of its smallest vehicles. It brought the Spark, Sonic and Trax together for a campaign that pushed them through a lifestyle approach. Since the individual cars don’t have the budgets for massive launches, this provided a way for Chevy to get more bang for its buck. The target audience is young, urban and may not have a history with Chevrolet. The small car lifestyles is a way to start the conversation across social media sites.
We’ve discussed vehicle advertising a few times over the spring and summer. In May, we emphasized the importance of digital auto advertising, even in a climate where shoppers still like to buy on the physical lot. YouTube and the Store Visits AdWords feature are ideal places to get started.
In June, we addressed the concepts of trust and artificial intelligence when it comes to buying vehicles. Small vehicles are already thought to be less safe by many drivers, so adding AI to that can make things even more challenging. This article talks about using predictability, dependability and faith in AI car advertising.
Then in July, we examined a comScore report on the auto industry in the digital space. Online advertising and shopping has greatly changed how people go through the car-buying process. It’s important to reach them in the right moments, and for small car advertisers, it’s also about local competition and small vehicle deals.
Perhaps gas prices will one day put smaller cars back on top, but for now, vehicle advertisers need ideas for promoting their products. Whether you try a new approach or simply push great deals, continue refreshing that digital strategy and keeping pace with the local competition.