Blog: Dave LeggettIs small the new big?

Dave Leggett | 29 June 2009

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?

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