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Hey guys, here is an article I published for my business. It reminds us that automakers were able to turn around the sporty coupe category, which was headed for extinction fifteen years ago. Hopefully, understanding how the domestics turned around the coupe category sparks some ideas on how to turn around sedans.

I shared this with my contacts FCA and seems to have been well received; it generated a good back-and-forth: https://www.linkedin.com/pulse/coupe-dead-again-aldo-martin/

For those who do not have a LinkedIn account, below is the text of the article.

Feel free to comment and ask questions.

Enjoy!


IS THE COUPE DEAD, AGAIN?
By Aldo Martin, EVP - Panalytics Research Group

Fifteen years ago the sporty coupe was given for dead. Chevrolet had discontinued Camaro a few years prior, and Dodge hadn’t offered a proper sporty coupe in decades. But everything changed when Ford launched the 2005 Mustang. “Retro” styling struck a chord with coupe buyers. As sales started to rebound, Dodge and Chevrolet responded with coupes of their own, reviving a category many had written off.

Soon enough higher-performing variants were being added, once more gracing the covers of magazines. Coupes were cool again. Even young Millennials were blogging about their favorite coupe and posting homemade reviews on social media.

But as Q1 2018 closes and the sales numbers get tallied, the story of how the dying coupe was revived and flourished for over a decade, is getting lost among headlines of the crossover vehicle (CUV) taking over the market from sedans.

Sales show that the sporty coupe category is down 12% compared to Q1 last year (from 60,600 in 2017 down to 53,400 in 2018). But notice that this decline is not affecting all coupes equally.




First let’s understand how coupe demand works:

In general, practicality is one of the most powerful determinants of vehicle demand. This is the reason 4-door vehicles are much more popular than 2-door vehicles –usually at a 10-to-1 ratio.

Coupe demand, in particular, is the result of a tension between practicality on the one hand, and a want for more attractive styling and higher performance on the other. This tension has traditionally pulled 2-door coupes away from practicality, resulting in low sales. Nevertheless, recent history shows sporty coupe can be a dynamic and profitable category.

Combined sales of the top-3 selling sporty coupes, Mustang, Camaro and Challenger, have ranged between 150,000 and 220,000 annual units. Despite obvious differences, these vehicles are usually seen as direct competitors. But sales of each model show different patterns: while Camaro and Mustang sales show instability, Challenger sales show a sustained growth pattern. Below are trended annual sales for the top-3 selling coupes:


There are a million different variables impacting sales of each model, including the current market shift from cars to CUVs and trucks, demographic forces like Millennials starting their own families, and the product and marketing strategies each automaker chooses to follow. But we know that, ultimately, this tension between practicality vs. styling and performance determines the bulk of sales for the category as a whole.

Using this framework we can assess –qualitatively or quantitatively—how each of these automakers has tackled this tension, and see the result on the market.

STYLING

Styling is one of the key reasons to buy a coupe. The 2-door configuration requires such significant compromise in comfort and everyday practicality, that styling needs to stand out sufficiently to overcome this lack of practicality.

There’s no doubt that “retro” styling helped revive this segment. The reason why retro styling worked needs further investigation. My hypothesis is that “retro” styling that has “heritage” is distinctive –in a positive way—which offers value to consumers.

The issue with “retro” styling, though, is after one or two product generations, it confines designers into a box. Because of this, Camaro and Mustang are trying to evolve their styling from that confinement into more globally-accepted designs, but sales —in North America at least— are being negatively impacted. Meanwhile Challenger has stayed truer to its iconic look, and buyers are rewarding it with their purchases.

Mustang and Camaro styling is trying to evolve from the confinements of "retro"


PERFORMANCE

Performance is another key reason to buy a coupe. Mustang and Camaro have raised their traditional muscle car performance cred to a global standard. The two are getting compared against world-class sports cars with long pedigrees and showing favorable reviews.

Meanwhile, Dodge has been content with expanding Challenger’s performance credentials around the traditional definition of the muscle car. No doubt adding the 707 horsepower Hellcat and 840 horsepower Demon variants cast a halo to the rest of the Challenger lineup, but despite its remarkable performance, Challenger retains a more traditional muscle car path.

PRACTICALITY

This is another area where Challenger has carved its own path. The same size and weight that hinders Challenger’s performance numbers, gives the coupe more comfortable front and rear quarters, a more usable trunk and greater visibility.

It is because practicality is such a powerful driver of demand, along with styling that has remained iconic and distinctive at the same time, that Challenger has been able to carve a more sustainable sales path despite lacking world-class performance.


Performance is hindered by larger size and weight, which ironically, result in Challenger’s greater practicality –and road presence

THE PUNCH LINE

Sporty Coupes reveal that automakers have the power to revive a declining category. Just like with coupes, maybe understanding what drives demand for 4-door cars, and uncovering the underlying tension, can help turn around the ongoing decline in sedans.
 

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As usual, I appreciate your insight into these trends.

As much as I like the Camaro, I don't think it shares much resemblance to the classic Camaro. The Mustang has even less resemblance to its original. As you noted, the Challenger is the only one that has really remained true to its form. Buyers obviously care about that and the practicality. There is a lesson in somewhere here for the sedan segments if automakers will pay attention rather than just dropping their entire lineup of cars.
 

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Discussion Starter #3 (Edited)
Indeed. Styling and performance are arguably more important for coupe than for sedan buyers, but looking at sales trends over the first four months of this year, I found an interesting insight: sales of FWD sedans are down 15%, sales of RWD sedans are down only 1%.

Some of this is due to the fact that most RWD sedans are premium models, while most FWD sedans are mainstream. But putting the motor wheels in the front invariably ends impacting vehicle proportions (i.e., styling), and driving dynamics (i.e., performance).

I don't know the answer. But as "retro" appears to play a key role in coupes' styling --by visibly connecting modern coupes to their rich heritage, proportions perhaps play a role in sedan design. As horsepower and 0-60 numbers play a role in coupe performance, a more spirited, confident handling perhaps plays a role in sedan performance.
 

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Discussion Starter #6
What, if any feedback did you receive concerning reviving the sedans? Great info sir. A good read.
Automakers have not shared their intentions, and I don't expect them to. They simply expressed appreciation for the dots it connects.
 
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Discussion Starter #8 (Edited)
Here is a print ad Cadillac run in 1975 on the all-new Seville.

In my mind, this one shot highlights the proportions that make a sedan look attractive: a long dash-to-axle ratio, a short front overhang, a long hood and a short deck, among other things.



I must have been 10 years old growing up in Peru when I saw this photo in an American architectural magazine. I was struck by the simplicity of the lines. I didn't know anything about sedan proportions back then, but I remember staring at this photo to no end. The cleanly designed wheels accentuate the circles and semi-circles of the wheel wells against straight lines. The long hood and short deck give it a swept-back feel.
 

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I won't be one to resist change if it offers improvements. From the moment i owned my Cherokee I've been thinking Dodge was missing the boat with a SRT version. Stelvio ( i think its styling could have been better) with ultra aggressive Dodge styling would make us forget about an Avenger or the dyeing sedan market. I'm a sedan guy, but their short coming are very clear. Upright seating position is so much more practical. FCA saw the writing on the wall and did well to exit sedans, just didn't offer anything other than Jeep for the void. I get the resources and plant shuffle thing.

I think styling is the key. CUV styling is all similar. We need CUV styling to take a leap, creating emotional connections to enthusiasts. Trackhawk is a great example of how the performance can be there.
 

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With all due respect, I don't know what you mean by the revival of the coupe market. Current Mustang, Camaro, Challenger sales are a tiny fraction of the pony car market in the mid to late 60's. They are a tiny fraction of personal luxury coupe sales from 1970 to 1985. There will always be a small market for coupes. There will always be a market for sedans, but not large enough for everyone to make profits in it.
 

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I don't get the point...CUV's are today's sedans just a more functional and better family vehicle based on a sedan platform. Only reason to buy a sedan today is if you're looking for low cost transportation.
Comfort, ease of entry/exit, storage capacity, visibility...CUV's have clear advantages over Sedans and now with little FE penalty. Back in '75, trucks were pretty crude compared to sedans with pretty limited choices. Pickups were all 2 doors. If you had more than 4 in your family you probably had a Van....or maybe a station wagon...which the mini-vans killed.
Sedans will be around...just not in the same numbers again...ever IMO.
 

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I won't be one to resist change if it offers improvements. From the moment i owned my Cherokee I've been thinking Dodge was missing the boat with a SRT version. Stelvio ( i think its styling could have been better) with ultra aggressive Dodge styling would make us forget about an Avenger or the dyeing sedan market. I'm a sedan guy, but their short coming are very clear. Upright seating position is so much more practical. FCA saw the writing on the wall and did well to exit sedans, just didn't offer anything other than Jeep for the void. I get the resources and plant shuffle thing.

I think styling is the key. CUV styling is all similar. We need CUV styling to take a leap, creating emotional connections to enthusiasts. Trackhawk is a great example of how the performance can be there.
Back in the full 60's the full size car was called the "standard" size and it out sold all others. Into the 70's after the gas crunch more people bought mid and small cars then full size. The CUV are just tall wagons and hatch backs.
 

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People buy muscle cars and luxury cars - they don't want mundane "cars". Those who buy muscle and luxury also have a truck or SUV. @OP what would it take to get you into a brand new (hypothetical) 2019 Chrysler 200 sedan. FWD, 2.4L ??? Yeah - it isn't happening. Nor is a Honda Accord or a Toyota Camry.

As much as they want to say otherwise - people are actually EXCITED about cars again. Build them and they will come.
 

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Discussion Starter #15 (Edited)
I don't get the point...CUV's are today's sedans just a more functional and better family vehicle based on a sedan platform. Only reason to buy a sedan today is if you're looking for low cost transportation.
Comfort, ease of entry/exit, storage capacity, visibility...CUV's have clear advantages over Sedans and now with little FE penalty. Back in '75, trucks were pretty crude compared to sedans with pretty limited choices. Pickups were all 2 doors. If you had more than 4 in your family you probably had a Van....or maybe a station wagon...which the mini-vans killed.
Sedans will be around...just not in the same numbers again...ever IMO.
The argument that the CUV is better than the sedan implies that all buyers want is practicality. What about styling? What about driving dynamics?

I don’t recall the last one anyone referred to an SUV as beautiful...? —then again, it’s also been a long time since anyone described a sedan that way...

Interestingly, as impractical as Panamera looks inside, Porsche is one of the few automakers currently growing sales of both sedans AND CUVs. Arguably, Porsche is one of the few automakers that still focuses on performance and styling on its sedan as much as offering greater practicality through CUVs.
 

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Discussion Starter #16 (Edited)
People buy muscle cars and luxury cars - they don't want mundane "cars". Those who buy muscle and luxury also have a truck or SUV. @OP what would it take to get you into a brand new (hypothetical) 2019 Chrysler 200 sedan. FWD, 2.4L ??? Yeah - it isn't happening. Nor is a Honda Accord or a Toyota Camry.

As much as they want to say otherwise - people are actually EXCITED about cars again. Build them and they will come.
Believe it or not, people also get excited about buying a Prius or a Yaris.

But your point remains: when a category declines, a way to grow consumer interest is by injecting more emotion through better styling and greater performance. That’s part of what Pacifica is trying to do in minivans.

The question then is: is what Toyota and Honda did to Camry and Accord the way to revive the category? Judging by sales trends*, the answer appears to be NO.
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* Sales of all-new Accord are down 14%; sales of all-new Camry are up 5%... —reportedly Toyota has massive incentives on Camry to get it to stick
 

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Discussion Starter #17 (Edited)
BTW, this suggests that Alfa Romeo Giulia, with its emphasis on styling and performance, is the correct approach.

But Giulia —or Stinger— is too marginal a player to stop the sedan decline. Just like Miata or BRZ were in no position to turn around sporty coupes, change had to come from a category leader like Mustang.

From this perspective, change needs to have come from Toyota and Honda, or at least from another well-established sedan competitor —L-cars...?
 
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