Non-luxury large sedans used to be a staple of the U.S. auto market. Once ubiquitous on American highways across the land, the segment has been in decline over decades. Even so, large sedans still comprised 7.3% of the total light vehicle market ten years ago in 2006, selling over 1.2 million units. However, industry forecaster AutoPacific estimates that large sedans will make up a scant 2.3% of the light vehicle market this year, with just over 400,000 units moving off new car dealer lots. In five years, AutoPacific forecasts that large sedans will represent just 1.7% of the light vehicle market, with just over 280,000 units expected to find homes in 2021.
What is behind the decline of the quintessential large sedan? First, sedans in general are declining in popularity as the market continues to migrate to crossover SUVs. With more slippery aerodynamics and advanced powertrain technologies, today’s crossover SUVs offer fuel economy tantalizingly close to that of equivalent sedans. For example, a 2016 Toyota Camry achieves 28 mpg combined, compared to 26 mpg combined for a similarly priced Toyota RAV4. With crossover SUVs offering better visibility, easier ingress/egress, more utility, and a more youthful attitude, with little to no fuel economy penalty, it’s not hard to see why consumer preference is shifting from sedans.
Second, large sedans in particular attract an older customer. AutoPacific’s 2016 New Vehicle Satisfaction Study shows that the median age of today’s large sedan buyer is 61. This means that each year, more people who would be in the market for these traditional large sedans are retiring and buying vehicles less frequently, and some are simply getting out of the market because they have stopped driving altogether.
And so we come to the second generation Kia Cadenza, all new for the 2017 model year. Unveiled at the 2016 New York International Auto Show, it is positioned above the mid-sized Optima and below the K900 luxury sedan. It features attractive and distinctive styling and lots of premium features and finishes for the money. I drove the new Cadenza this week at the national media launch for the car in Middleburg, Virginia, completely relaxed as the big cruiser wafted effortlessly down the state’s scenic highways. I was impressed at the car’s overall refinement, as well as the car’s impressive interior materials and amenities that made it feel like a real luxury car. What other car at its price point offers an Alcantara (synthetic suede) headliner and rear package shelf? None come to mind.
Yet, given the large car segment’s decline and its appeal to older customers, what does Kia, which prides itself on being a dynamic and edgy brand, see in continuing to compete in this market space? From the perspective of Hyundai Motor Group (which oversees both the Hyundai and Kia brands), market realities of the large car segment are being addressed because the similarly sized Hyundai Azera is expected to be withdrawn from the U.S. market soon. Thus, between the Hyundai and Kia brands, only the new Cadenza will go after large sedan buyers in the U.S.
No comments:
Post a Comment