Monday, December 27, 2004

Untapped Auto Niches

Within the American auto industry, there are several classes of cars, where there is only one product for that class. That means that the company who makes that product, can basically do little or nothing to update that vehicle, and make a nice, fat profit. Here are the niches I've discovered while I was day dreaming over the Christmas holiday:

The Rugged Bare Bones SUV--This is a market niche totally dominated by the Jeep Wrangler. The only competitor on the horizon would be the Crosslander SUV, something that keeps being delayed, and is made in Romania. Something tells me that it won't have much of an impact. The Wrangler could increase sales dramatically if it offered a diesel engine, or perhaps updated its interior and exterior. I don't think the latter will happen unless crash testing requires it, but I definitely think the former will happen, now that Daimler owns the Chrysler group and there is access to Mercedes Diesels. Car companies once did compete in this area; you may remember the old Toyota Landcruiser, which is now another leather interior bloated SUV. It's an area ripe for competition.

The Small/Cheap Roadster--Here's a market that is about to be blown open, but is currently dominated by the Mazda Miata. GM will introduce in a few months, the Pontiac Solstice, and the Saturn Sky. The Toyota MR2 was hardly ever a competitor, with a non-existent trunk, and few amenities. My dream is for someone with gumption to import the MG TF from Britain, and make a killing. Probably won't happen.

The Muscle Car--Some would say that there is competition to the Ford Mustang. It's called the Pontiac GTO. But like the Toyota MR2, if it isn't marketed or priced correctly, it's not going to work. The GTO is a great idea: take an existing Australian RWD v8 platform, make some tweaks, and watch it sell in the US. The problem? It's too bland, and too expensive. The Ford Mustang is going to clean its clock. The solution for the GTO, and upcoming Dodge Charger? Lower the price, make it look good, even if that means lowering the performance. People don't want to pay a gas guzzler tax. Hopefully the next generation GTO will work. The muscle car is also an area that the Japanese could make an impact, but their philosophy of smaller engines, big output probably makes that an unrealistic expectation.

The Cheap RWD Full Size Sedan--There's only one of these, the Ford Crown Victoria. Sure, there's also the Mercury Grand Marquis, but it's really the same vehicle. The Dodge Magnum, and Charger might threaten, but we'll have to see. It's a lucrative market for a couple reasons. One, police stations all over America want this car, and two, the Crown Victoria is seen as wildly unsafe if hit in the rear. It's another area ripe for the taking. If the Charger is cheap enough, I predict most police stations will be driving them in five years. Barring peak oil of course.

The Cheap Sub-sub-Compact--There are only two cars that are in this niche as far as I can tell. The Chevrolet Aveo, and the Scion Xa. I don't consider the the Mini in this class, because it is goes for a premium price, and a different market altogether. I read over and over that this is a niche with low profit, but GM directly importing a Daewoo and rebadging it an Aveo was a clever move. No research and development, higher profit. Perhaps Ford can import the Fiesta, and the Japanese car companies their European small car fare. With gas prices creeping up, this is a market that is set to boom. The Aveo needs to work on fuel efficiency though.

That's all I can think of now, know any others?

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