Sports cars are hot today, but who'll buy them tomorrow?
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A new SRT Viper and an upcoming Chevrolet Corvette Stingray, Alfa Romeo 4C and Acura NSX. If consumers didn't know better, they might think that all is well in the sports car business.
It's not.
American consumer tastes are changing and sports car buyers are aging. Fuel economy demands are threatening to take the fun out of revving engines. Segment definitions are blurring at the edges. And what worries automakers most is that kids seem more interested in their iPhones and Instagramming than in roaring roadsters and redlining tachometers.
"We're doing a lot to try and awaken the younger customer to Corvette," says John Fitzgerald, marketing manager for Chevrolet performance cars, whose job is to market the 2014 Corvette Stingray that goes on sale in late summer. "We want to change the conversation a little bit."
Once the image of 1960s youth expression, the Corvette is now seen by some as a reward car for older men. One fifth of its buyers are age 65 and older, according to R.L. Polk & Co.
In a bid to rekindle the Corvette's mystique among younger buyers, Chevrolet opened the market launch by planting the car in a video game. A pre-production Corvette appeared as a downloadable drive in the Sony game Gran Turismo 5. More than 500,000 gamers downloaded the car's data.
"That really influences your ability to get the attention of teenage boys and college kids and young adults," Fitzgerald says of the video cameo. "It influences whether people are out there talking about the car because it's relevant."
It's not just the Corvette.
Higher-end sports car buyers are getting older, according to J.D. Power and Associates. In 2008, 28 percent of those buying compact premium sports cars were age 56 and older. Last year, 36 percent of them were.
As models mutate and proliferate, defining "sports car" promises to become more difficult for the industry. Traditionally, the term referred to a two-seat performance car, such as a Ferrari 458 Italia.
But a sports car can also be in the eye of the driver. A Shelby Mustang GT500 capable of 200 mph? A Dodge Challenger R/T with a 372-hp, 5.7-liter Hemi V-8?
"There are more alternatives out there for young people now than there were 20 years ago," observes Jeff Schuster, J.D. Power's executive director of global forecasting, who tracks segment changes around the industry.
"Our point of comparison is a golden era of sports cars in the past. But today, young people get more excited about sporty crossovers. And other buyers are finding that sedans, like an Audi A4, give them all the sports car thrill they want.
"The challenge for Chevrolet and Chrysler and all the other sports car manufacturers," Schuster says, "is to lower the age of that buyer while they still can."
It is a long-term issue, not so much a problem for the promising 2014 model year, when Chevrolet will offer the first new Stingray since Gerald Ford was in the White House.
| Aging buyers | |||
| Percentage of buyers age 56 and older | |||
| Compact premium sporty cars | |||
| 2008: 28% | 2012: 36% | ||
| Mid-sized premium sporty cars | |||
| 2008: 38% | 2012: 47% | ||
| Large premium sporty cars | |||
| 2008: 28% | 2012: 38% | ||
| Source: J.D. Power and Associates | |||
The testosterone game
At the moment, sports car sales are up -- as are those for other performance segments. Sales rose 12 percent in 2012 for all sporty cars in all segments, from the Jaguar XK, topping out at more than $100,000, to the workingman's Dodge Challenger. Counting only nameplates at the compact end of the spectrum, such as the BMW Z4 and the Nissan 370Z, sales jumped 28 percent -- far outperforming the overall industry's 13 percent rise in 2012.
Chrysler Group has returned to the testosterone game with the 2013 SRT Viper, a 640-hp car with an 8.4-liter V-10 engine. The automaker is rumored to be planning a Viper convertible for the 2014 model year.
Chrysler also plans to import a limited number of Italian-made Alfa Romeo 4C sports cars, to be sold starting late this year through its affiliated Fiat brand.
BMW plans to bring in its new i8 Spyder plug-in hybrid next year. Acura has a new-generation NSX sports car slated for retailers in 2014. Infiniti is hinting that a new sports car is in the pipeline for that brand.
Subaru of America launched its BRZ sports car last year, a rear-wheel-drive sibling of Toyota Motor Corp.'s Scion FR-S, which also appeared to accolades last year.
"Automakers are assuming that as industry sales and the economy improve, consumers will have more disposable income and more willingness to buy performance vehicles," says Ed Kim, head of forecasting for automotive consulting firm AutoPacific. "So a lot of new products are coming into the sports car segment. But that doesn't necessarily translate into a lot more sales.
"There's going to be an effort to pass the torch from baby boomer consumers, who are declining, to Gen Y consumers," those born roughly between 1980 and 1998, Kim says. "And of course, there are hard-core sports car enthusiasts among Gen Y. There just aren't as many of them."
The incoming buyer wave also thinks differently from the classic baby boomer sports car owner. To gauge the psychology of sports car buyers, AutoPacific last year asked what kind of sports car they ideally wanted -- 48 percent said they wanted the sports car with the lowest possible operating cost. When asked the same question in 2009, just 37 percent preferred the low-end cost. About a fourth of sports car consumers told AutoPacific in 2009 that they would rather have a trip around the world than a new vehicle. Most recently, the survey found that half would prefer the trip to the car.
Three-fourths of sports car buyers also now want the latest entertainment equipment in their cars, according to AutoPacific, up from half of buyers just three years ago. The implication of that may be symbolic of a new era: The image of the classic baby boomer sports car enthusiast is a driver who wants to hear the growl of the engine and the rugged shifting of the manual transmission. Now the enthusiast just wants to hear Pandora.
• Chevrolet Corvette Stingray goes on sale in late summer
• SRT Viper on sale; convertible rumored for 2014 model year
• Alfa Romeo 4C arrives late this year
• BMW i8 arrives next year
Photo credit: LINDSAY CHAPPELL
The lure
Amid this changing psychological landscape, automakers' longer-range worry is what kind of sports cars will be in demand in the next decade. In truth, many high-end sports cars are mainly halo cars for their brands. They sell in such low volumes that their larger value is stimulating desire for other cars in the lineup, either through their presence under a tent at a dealership weekend sell-a-thon, or through photos and descriptions circulating on the Internet as consumers shop for family sedans.
That's what has product planners pondering the future. If sports cars aren't lighting up Gen Y consumers' eyes today, what will it take to light them up tomorrow?
Nissan North America spent the past year pursuing this question through a racing partnership with Atlanta entrepreneur Don Panoz. Panoz funded the development of a quirky race car called the DeltaWing, which despite its modest 1.6-liter engine, light weight and unconventional design, performed side by side with traditional race cars on the American Le Mans Series racing circuit.
Nissan officials welcomed having the automaker's name on the side of a headline-grabbing racer as crowds lined up to see it. But more than that, Nissan believed the DeltaWing pointed the way to future street-legal performance cars.
"This is where performance cars are going to be going in the future, with all the pressures vehicles are facing," says Steve Yaeger, Nissan spokesman for technology and racing. "A lightweight performance car with a four-cylinder turbo engine that gets 34 miles to the gallon. But you have to prove it on the racetrack."
Nissan and Panoz have just ended their DeltaWing partnership, but Nissan continues to probe into future sports models for younger buyers. The company revealed in February that it will expand its Nismo performance subbrand in an effort to imbue less expensive vehicles with sports car performance and components.
Nissan, which has long championed affordable sportiness, now markets the GT-R -- with a back seat -- starting at more than $100,000, including delivery. In an improbable pairing of competitors, Nissan is pitching the GT-R against the Porsche 911 Turbo. And at the same time, one of the leading brands of sports car performance, Porsche is outgrowing its roadster identity. Its top seller is the Cayenne SUV, and the Panamera four-door sedan is running neck-and-neck with its 911. Porsche said late last year it will spend $100 million to create a new U.S. headquarters in Atlanta to support its broadening image in North America.
Other automakers are looking for new approaches, especially to address fuel economy perceptions. The Alfa Romeo 4C will roll in at around just 2,000 pounds, a curb weight that is a third less than a Porsche 911 or a Nissan 370Z, and about 750 pounds lighter than the compact Subaru BRZ.
The concern is bleeding over to muscle cars. Similar thoughts are on the mind of John Luft, president of Shelby American Inc., the Las Vegas producer of thundering souped-up 850-hp Shelby-edition Ford Mustangs. At the Detroit auto show in January, Luft unveiled a concept for the market's consideration: a smaller, lighter, less-expensive four-cylinder-powered Shelby Ford Focus ST. At 252 hp, the tuned-up model still promises 32 mpg.
Stingray
Chevrolet's Fitzgerald says that, in marketing the new Corvette Stingray, Chevrolet will talk up some selling points that its other 75-year-old buyers probably care little about -- such as its fuel economy.
"The current Corvette gets 26 mpg highway," Fitzgerald says. "And we expect to beat that on the new model. So that's something we'll keep reminding consumers. We live in an age when manufacturers have to consider CAFE and their carbon footprint."
The new generation also sports more sophisticated audio equipment, phone and infotainment features, and promises smoother handling. It hopes to rival Chevrolet's European luxury competitors with leather and performance seating.
"We want to look forward," he says. "We have to work hard on the perception that a lot of people have of the Corvette. But as long as there are people out there who want the thrill of the freedom of the road, sports cars will always exist."
| Sporty segments | |||
| U.S. sales by segment | |||
| 2012 | 2011 | CHANGE | |
| Compact sporty | 66,157 | 51,855 | 28% |
| Mid-sized sporty | 211,217 | 202,681 | 4% |
| Premium sporty | 47,730 | 36,567 | 31% |
| Exotic | 9,683 | 8,655 | 12% |
| Source: Automotive News Data Center | |||
You can reach Lindsay Chappell at lchappell@crain.com.
