Is small the new big?

By: Dave Leggett - 29 June 2009 12:32

Are relatively mature car markets going to become fertile ground for highly specified small cars? It is perhaps a niche that has proven difficult to crack for manufacturers in the past. The Mercedes A-class, Daimler Smart and Audi A2 spring to mind. Each of those had a rough ride – for different reasons, perhaps – but the highly specced small car area is one to be treated with care.

BMW handled it well with Mini, but that success based on a modern take for a retro-brand is something of a special case and perhaps serves as a lesson on how difficult it is to hit the premium small car sweet spot.

However, markets change and it could be that the market environment is becoming better for well specified small cars. The regulatory/tax framework in urban areas, volatile/high fuel prices and changing societal attitudes to vehicles generally are all perhaps pointing towards higher sales of small cars.

And a proportion of the 'new' consumers who consider small(er) cars will want something comfortable and relatively highly specified. In the future, the argument goes, the small car area will be less dominated by low-cost driven 'econoboxes'.

In this context, Toyota's initiative with its IQ small car is certainly an interesting one. The car has attracted some flak on the basis of its relatively high price, but some people will be prepared to pay a little more for something that isn't a low-cost Aygo. There are discrete customer sets for those two small cars with their different prices, spec and 'feel'.

Things can get even more interesting when considering 'sub-brands', which is a part of Toyota's strategy with IQ.

Even more intriguingly, Toyota is planning a collaboration with Aston Martin for a 'luxury commuter vehicle'.

As ever, execution and properly aligning brand values with the product proposition and price will determine how successful future products will be. Is this a step too far for Aston Martin? Maybe not, but it is a gamble. If they get it wrong, it would be an expensive mistake with adverse consequences for brand image. At least they are trying new things and I think that is to be applauded. Collaborating like this also keeps costs down for Aston while Toyota gets an association that is potentially very positive indeed.

But the really big question is a great big fat unknown: just how many people out there will opt for a highly specced small car?

BELGIUM: Toyota gives Aston Martin an iQ boost

Comments on this blog post

AML has a history of understandable rises and falls with the economic cycle, but suspect the photo is really a teaser for something else. (My very basic research the younger Kings Road set indicates that even the V8 Vantage pushes the boundaries of a eal Aston). So what to make of the iQ agreement? If I may Dave, some may be interested in the following link to provide an alternative take: http://investment-auto-motives.blogspot.com . This iQ move may seem odd, but provides a counter-cyclical business model for the AML Group...to adapt a 'Fordology', "history is not always bunk!". Bez has shown AML how to escape the misfortunes of its past.

Turan Ahmed - investment-auto-motives.com, United Kingdom