LOS ANGELES (Bloomberg) -- Executives for the Smart and Mini small-car brands expect interest in the U.S. subcompact segment to heat up with the arrival of the Fiat 500 from Italy.
Chrysler Group LLC, Fiat SpA's alliance partner, begins production next month and the small car should begin arriving in showrooms in January with a starting price of $15,500.
“A lot of people come looking at small cars when there's a new entrant,” Jim McDowell, head of Mini's U.S. operations, said at the Los Angeles Auto Show.
“It is really a darling little car, but I don't know that people are looking for a car that much smaller than a Mini hardtop,” McDowell said. “And $15,000 sounds attractive, but when you start to equip the cars the same, it's not much more expensive to get a Mini.”
BMW AG's 2011 Mini Cooper has a starting manufacturer's suggested retail price of $20,100, while Daimler AG's 2010 Smart ForTwo Pure Coupe starts at $11,900, according to the companies' websites.
The subcompact and specialty small-car segments are likely to grow to 1.4 million in 2015 from about 515,500 this year, said researcher IHS Automotive. McDowell said an improving industry and increasing gasoline prices should drive new sales.
‘Poised for growth'
“The market is actually poised for growth,” said Jesse Toprak, an analyst with TrueCar.com, a website that tracks sales. “Consumers' preferences have changed permanently” in the wake of a recession and in the midst of a slump, and they are more likely to continue buying “value-oriented cars.”
Mini's U.S. sales fell 1.6 percent in the first 10 months of this year to 38,538, according to Autodata Corp. In the same period, sales of Smart's U.S. model, the ForTwo, declined 61 percent to 5,146, the New Jersey-based researcher said.
“U.S. consumers are still getting used to this size vehicle on America's highways and byways,” said Jill Lajdziak, president of Smart USA. “More competitors just kind of stir the market place and bring more awareness to the smaller cars.”
Smart sales have fallen with the decline in the U.S. economy, especially because the brand is often a household's third or fourth vehicle, she said.
“Smart isn't in a position right now to sustain any more pressure,” said Rebecca Lindland, an IHS Automotive analyst.
In October, Smart USA, a Penske Automotive Group unit that has the distribution rights for Smart in the U.S., announced a deal with Nissan Motor Co. for the Japanese automaker to provide a five-door small car during the fourth quarter of next year.
Mini already has some credibility after being in the market for several years, Lindland said.
The brand is expanding in the U.S. with a new model, more showrooms and plans to boost dealerships to 115 from 102, McDowell said. Its largest car, a four-door crossover called the Countryman, is for consumers who need more room than Mini's two- door models and should be in showrooms by Jan. 12, he said.
Chrysler expects to market the Fiat 500 to people looking for Italian design, customization and value, said Laura Soave, head of Fiat brand in the U.S. The target is 50,000 sold in the U.S. and Canada during its first year, she said.