U.S. manufacturers have had a tough time competing in the subcompact car market. For the most part, major U.S. firms have struggled to build these cars with more expensive labor and production costs than their competitors. Some U.S. companies have tried to reduce costs by moving manufacturing to lower cost regions such as Mexico. But this year, Chevrolet plans to level the playing field in the subcompact car market with a new strategy.
When the Chevrolet Sonic hits the market in a few weeks, many analysts expect the vehicle to be priced at $14,000 or below. The new wage structure at General Motors, the increased use of outside vendors and a retooled plant are allowing the manufacturer to lower the vehicle costs and generate a profit. The company is expecting the car to sell well because consumers are actively seeking inexpensive quality vehicles that are also gas-efficient. At 40 miles per gallon on the highway, the Sonic should hit a market sweet spot.
Analysts also expect Chevrolet to encourage consumers to lease these vehicles, another strategy designed to improve profits for both the manufacturer and dealer. Historically, leasing has been a focus when selling larger vehicles. But the economy is forcing consumers to consider less expensive vehicles. As a result, the small car leasing trend is expected to grow.
Swapalease.com's EVP of Operations, Scot Hall says "High MPG vehicles coupled with low lease payments add up to significant consumer savings, and at the same time, those leases are a great way to lure new car shoppers back to the showroom more quickly than standard long-term financing." Look for more marketers to advertise attractive leasing terms as a way to boost sales of more affordable vehicles.[Source: Small Cars, Big Profits: Setting the Trend for Leasing. Swapalease.com. 2 Aug. 2011. Web. 11 Aug. 2011]