New models, increased technology and a strong focus on personalization are helping volume automakers such as Volkswagen, Ford and Nissan boost sales and improve their bottom lines by selling more expensive versions of their subcompacts, data shows.
The subcompact hatchback remained Europe's most popular car in the first half with 1.8 million sold, figures from market researcher JATO Dynamics show. Sales increased 5 percent, with share rising slightly to take 21 percent of the European market.
The increase came despite market upheaval as the second- and third-biggest sellers – the Volkswagen Polo and Ford Fiesta, respectively – were replaced by new generations. Both new cars are now on sale, which will put pressure on Europe's top-selling subcompact, the Renault Clio.
The new Polo and Fiesta are being marketed with a range of high-tech options as VW and Ford bet on customers in the segment wanting equipment usually available in higher segments. Market evidence shows they're right to take this risk.
"We've seen more demand for better-equipped and more expensive subcompacts," said Felipe Munoz, a global analyst for JATO Dynamics. Figures collected by the firm showed that in Germany subcompacts costing between 17,000 and 20,000 euros, near the top of the price scale, took 34 percent of the market in the first half of the year, up from 29 percent during the same period last year.
Demand was also up for models priced between 17,000 and 18,000 euros, but fell for those costing below that. Sales in the UK showed a similar price pattern, with the 16,000 to 20,000 pound (18,000 to 23,000 euro) price range accounting for 29 percent of sales, up from 24 percent the year before.
"It’s a traditional segment but consumers still want better-equipped, more refined cars," Munoz said.