Declining sales signal end for subcompacts

Subcompact cars are heading for the compactor.

After years of declining sales of passenger cars, several automakers have recently decided to give up on the subcompact body style as SUVs increasingly win over North Americans.

General Motors this month became the latest company to discontinue a subcompact car, saying it would end production of the Chevrolet Sonic in October. The Sonic went from a fuel-efficient, youthful symbol of GM’s comeback in the aftermath of the company’s 2009 government-funded bankruptcy to mostly forgotten in an era of surging SUV sales.

Put simply, most North Americans are no longer willing to squeeze into small cars despite their affordability and fuel efficiency.

With gas prices low and SUVs providing the allure of a higher stance and more cargo space, subcompact car sales fell 50% in the first half of 2020, compared with the same period a year earlier. That drop was worse than the overall industry’s 23% sales decline, which was attributable largely to the COVID-19 pandemic.

Jessica Caldwell, analyst for car-research site Edmunds, said the subcompact car is unlikely to go away altogether, but only the strong will survive. For now, that includes vehicles such as the Honda Fit, Hyundai Accent, Kia Rio and Nissan Versa.

But soaring sales of SUVs in recent years show we may never go back to small cars, Caldwell said. Several compact cars also have been discontinued in recent years, including the Chevrolet Cruze and Ford Focus.

“Car sizes have evolved so much in the past 12 years to be so much bigger, so can we really go back to a life when we were driving subcompact cars? I don’t think so,” she said. “It just doesn’t seem to match the psyche anymore.”

In 2019, subcompact cars made up 2.7% of vehicle purchases, down from 5.5% in 2012, according to car-research site Edmunds.

Many buyers of subcompact cars have upgraded to relatively new subcompact SUVs — such as the Honda HR-V, Jeep Renegade and Hyundai Kona — which have a similar wheelbase and length but greater height. Subcompact SUV market share increased from 0.8% in 2012 to 4.9% in 2019, according to Edmunds.

In June, Toyota, once known largely for disrupting the American market with its small cars, announced it was discontinuing the Toyota Yaris subcompact car. And last year, Ford announced it would no longer make the Ford Fiesta subcompact car.

It’s not that subcompact cars lack sufficient technology or quality. The Chevy Sonic, for example, was named in June as the best vehicle in the U.S. in the 2020 J.D. Power Initial Quality Study.

But GM said it couldn’t justify continuing to make the Sonic anymore “due to declining demand.” Sales of the Sonic fell 85% from their peak of 93,518 in 2015 to 13,971 in 2019.

Not everyone is ditching small cars. Nissan recently redesigned the Sentra compact car — and the company’s chief operating officer, Ashwani Gupta, said the company still believes in the subcompact segment, as well.

“Yes, this segment may shrink, but for us this is an opportunity because if we put additional value in this segment, the customer can be energized,” Gupta said in an interview.

It’s an uphill battle, however, particularly in the midst of the COVID-19 pandemic, which is hastening the demise of poorly selling vehicles. Automakers can no longer afford to make cars that aren’t selling well or turning a profit, so they will likely continue to pare down their lineups, Autotrader analyst Michelle Krebs said. And SUVs are vastly more profitable than cars.