Automakers expand their high-power niche

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The performance car niche is filling up fast. While unit sales of performance cars remain small-an estimated 3%-4% of U.S. vehicle sales, according to J.D. Power & Associates-these souped-up models are guiding buyers into more prosaic brand lines.

Mercedes-Benz USA now sells AMG performance versions of all its models but one. That compares to a single AMG model in 1995. BMW of North America, which markets its regular line of cars as "the Ultimate driving machine," adds the 10-cylinder M5 performance sports car this fall and the M6 in 2005. Mazda North American Operations is beefing up its year-old MazdaSpeed lineup. Chrysler Group expanded its Hemi engine from a few Dodge vehicles to Chrysler brand's new top-of-the-line 300 C sedan.

Even General Motors Corp.'s homey Saturn brand started selling its new Red Line supercharged-engine series this year in its Vue sport-utility vehicle and Ion small car. Pontiac has brought back its GTO coupe and Cadillac launched the V version of the CTS. Ford Motor Co. is revamping its performance strategy by eliminating the SVT Focus small car this model year and moving SVT upscale to other models and sibling nameplates. Subaru of America, best known for its sensible all-wheel-drive wagons, gains visibility via its 200-horsepower WRX.

The marketers' performance models are generally sold in low volumes, can bring decent profit margins and add "extra cachet" to a car brand's overall image, says John Bulcroft, president of consultancy Advisory Group. J.D. Power reports six performance makes had unit sales of about 473,000 in 2003, or 3% of the U.S. light-vehicle market, and those statistics did not include Subaru WRX, Ford SVT or Hemi-packed Dodges or Chryslers.

"Americans have a propensity for size and power" in the vehicles they drive, says Evan Hirsch, VP at Booz Allen Hamilton. SUVs fulfill the size quotient, and with the market now flooded with SUVs, automakers have started paying more attention to performance cars, the underserved segment, he says.

seeking the cooler crowd

"A performance car jazzes up the brand and makes it attractive to a cooler crowd," Mr. Hirsch says.

MazdaSpeed Miata model, which arrived this spring, lifted sales of the regular Miata, says Eric Johnston, marketing director for the brand. MazdaSpeed models are marketed mostly through public relations, with advertising relegated to auto enthusiast titles. The performance cars are sold short-term, only for three to four months, and not by all Mazda dealers. The first version, MazdaSpeed Protege, arrived last year, attracting the youngest, mostly male, buyer ever for the brand at an average age of 26. The vehicle was a tuner car one could buy already outfitted versus the tuner trend of buying used cars and beefing them up.

Mazda has been trying to sell performance in all its products with its "Zoom Zoom" tag from independent agency Doner, Southfield, Mich. "In the last eight months, our showroom really reflects our brand positioning," says Mr. Johnston, adding that brand incentives are down and sales are up. He's shifted ad strategy from making the cars the stars to showing people driving the cars. TV spots for Mazda6 models carry the tag, "For some people it's all about the drive." Mazda's Tribute SUV is touted in ads as having "the soul of a sports car."

At Mercedes-Benz, AMG owners average 52 years of age, are male and have multiple vehicles in their garage, says Rob Allan, AMG manager. The AMG package offers sports seats, massive brakes and vehicle stability. In general, AMG models are not advertised, although a solo TV spot from Omnicom Group's Merkley & Partners, New York, ran last year aimed at "bringing a performance halo to Mercedes-Benz," Mr. Allan says.

Performance cars, from two seaters to sleek sedans, appeal to a broad range of buyers, including females, says Mark-Hans Richer, marketing director of Pontiac. "People want a more visceral experience. They want something that makes them feel something."