PLAYING SMALL BALL

Chevy's making a big splash with Sonic, Spark

GM sold 34,130 Chevy Sparks in the United States in 2013.
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DETROIT -- Chevrolet is staging a big coup at the small end of the car market.

First, Chevy turned out a respectable subcompact, the Sonic, in fall 2011, replacing the humdrum Aveo. Then, it defied conventional wisdom a year later by launching the Korea-built Spark minicar, making Chevy one of just two brands -- along with Scion -- to sell both a subcompact and a minicar in the United States.

The Spark has been a hit: Sales of 34,130 units in 2013, its first full year on the market, breezed past IHS Automotive's estimate of 27,000. Important for General Motors, its success doesn't appear to be coming at the expense of its bigger sibling. Sonic sales rose 5 percent in a flat subcompact market last year. Through May, the Sonic had the second-highest average transaction price ($17,585) among the top seven subcompacts this year, behind the Kia Soul, according to TrueCar.

Long an also-ran in small-car sales, Chevy now outsells Toyota, Honda, Ford and Hyundai in the subcompact market while boasting incremental minicar volume. Granted, those are small segments compared with the compact category, which is dominated by the Toyota Corolla and Honda Civic. But Chevy is positioned for further success if it can graduate those buyers through its lineup, says IHS analyst Tom Libby.

Chevy Sonic sales rose 5 percent last year.

"It's striking to see Chevy doing so well and beating Japanese competitors in a small-car segment," Libby says. 

The competition could stiffen, Libby warns, as Honda this month rolls out a redesigned 2015 Fit that is garnering critical praise. 

GM's decision to bring the Spark to the United States was made back in 2008, as gasoline prices were rising past $4 a gallon and the Smart brand was getting surprising sales traction, a sign that some Americans were ready to embrace tiny, inexpensive, fuel-sipping cars. 

Dora Nowicki, marketing manager for Spark and Sonic, said Chevy saw the chance to add another fuel-efficient entry to its lineup, one that already had become a hit in Korea, Latin America and other global markets. Since the current Spark was launched overseas in 2009, GM has sold more than 900,000 units.

Chevy's tag team
Despite being positioned differently, the Spark and Sonic are routinely cross-shopped against each other and have similar buyer demographics.
 SparkSonic
Jan.-May U.S. sales18,591 (+28%)40,672 (+8%)
Average transaction price*$14,516$17,585
Top cross-shopped vehicles*Sonic/Mirage/VersaFiesta/Spark/Cruze
% customers ages 18-34**13%14%
% customers female**50%48%
% customers with income greater than $50K**46%46%
*YTD through May **YTD through April Source: TrueCar, Edmunds, IHS Automotive, GM

The Chevy Sonic is positioned as "the more premium player" among subcompacts, says AutoPacific analyst Dave Sullivan. The Sonic interior is shown at left, next to the Spark interior.

GM has tried to carve out a distinct positioning for each car: the sporty Sonic, with performance-oriented RS and Dusk models; and the quirky Spark as an urban commuter car that comes in colors such as "jalapeno" green and "techno" pink. 

"The Spark complements the Sonic, but it doesn't overlap," Nowicki says. "It has exceeded our expectations." 

Dave Sullivan, a product analyst at AutoPacific Inc., says the addition of the Spark has allowed Chevy to position the Sonic as "the more premium player" among subcompacts. 

With the Spark's base sticker price of $12,995 including the destination fee, GM isn't forced to discount the Sonic to compete with lower-priced small cars, such as the top-selling Nissan Versa, whose average transaction price runs about $2,200 below the Sonic's, TrueCar says. 

Sullivan says the Spark's slick infotainment system makes it a compelling option for people who would otherwise be wandering the used-car lot. The car has a 7-inch touch screen MyLink system that includes Siri voice recognition; 2015 models also will get a built-in 4G LTE wireless connection. 

"That system alone can sell that vehicle," Sullivan says. "You can't find anything like that on any other car below 15 grand." 

At Findlay Chevrolet in Las Vegas, the Spark has drawn young shoppers who work at the headquarters of online retailer Zappos.com, many of whom live in the city and need a car for short commutes, says General Sales Manager Doug Fleming. 

"Anyone who does a lot of driving would want the Sonic instead," he says. "It's got so much more space and power." 

Despite their differences, the Spark and Sonic are routinely cross-shopped against each other. On Edmunds.com, 20 to 30 percent of visitors researching the Spark in recent months also kicked the digital tires on the Sonic, by far its most cross-shopped nameplate. 

The buyer demographics also are strikingly similar. For example, exactly one-third of buyers of each nameplate are 44 or younger, IHS says. 

For each, 23 percent of buyers have household incomes of between $50,000 and $75,000. Both have relatively high percentages of female buyers, with the Spark (half) having slightly more so than the Sonic (48 percent), GM says. 

"With that much demographic overlap, you'd expect to see cannibalization," Libby says. "Somehow, they've managed to avoid that."

Small and smaller
Chevy is one of just two brands to field both a subcompact and a minicar in the U.S. market.
   
 2014 Chevy Spark2014 Chevy Sonic (hatch)
Wheelbase94 in.99.4 in.
Length145 in.159 in.
Width63 in.68.3 in.
Height61 in.59.7 in.
Curb weight2,237 lbs.2,690 lbs.
Base engine1.2-liter inline 4-cylinder1.8-liter inline 4-cylinder
Horsepower83 @ 6,000 rpm138 @ 6,300 rpm
Torque, lbs.-ft.83 @ 4,200 rpm125 @ 3,800 rpm
EPA mpg31 city/39 hwy.26 city/35 hwy.
Base price*$12,995$15,595
*Includes shipping

You can reach Mike Colias at mcolias@crain.com.


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