Ford, Kia add new body styles to spice up sector

Automakers such as Ford, Hyundai, Kia and Seat are experimenting with new compact-car body styles in a bid to slow the steady sales decline in Europe's second-largest segment.

Only the small car segment is more popular than the compact sector with car buyers in Europe, but the seemingly unstoppable rise of SUVs will continue to hit the segment, analyst firm LMC Automotive predicts.

Compact sales are forecast to fall from 3 million last year to 2.9 million this year and drop to 2.5 million by 2023, according to LMC.

Automakers hope to counter this by expanding the traditional offerings to include more fresh body styles such as fastbacks, shooting brakes and even a variant that borrows traits from crossovers.

Key launch

The biggest launch in the segment this year will be this month's debut of Ford's new-generation Focus. The current car finished 2017 as Europe's No. 4-selling compact behind the Volkswagen Golf, Skoda Octavia and Opel/Vauxhall Astra.

Included in the new Focus' lineup for the first time will be a variant styled as a crossover and called Active. This model will join the upscale Vignale version of the Focus and sporty ST variant that will be sold alongside more affordable versions.

"It goes upmarket in exactly the same way as the new Fiesta [small car] has done," Ford's head of global markets, Jim Farley, told investors in the U.S. last year. However, Farley also said Ford expects to sell fewer Focus models, possibly by restricting sales to lower profit channels such as daily rentals.

More choice

Hyundai-Kia is also expanding body styles. The new Kia Ceed, which debuted at the Geneva auto show in March, will initially be sold as a hatchback and station wagon, but will be joined by a sporty shooting brake variant that is set to be unveiled at the Paris auto show in the autumn.

Kia will also add a crossover that sits between the Sportage compact SUV and the Ceed hatchback. Kia expects to boost the Ceed's European sales to 100,000 in 2019, up from 70,036 last year, Artur Martins, Kia Europe head of marketing, told Automotive News Europe. That would be good enough to lift the Ceed into 10th place in the segment, up from 12th last year.

Kia's plans mirror those of its sister company, Hyundai, which last year launched a fastback version of its i30 compact hatchback.

Both brands deleted three-door models from their revised compact lineups, a trend that is being followed throughout the industry. Last year, just 3 percent of compact hatchback sales were three-door models, JATO's figures show.

'Something in between'

Seat is another brand thinking of expanding its compact lineup to include a crossover. The VW Group subsidiary has pushed the current Leon into the segment's top 10 with sales of 146,988 last year. The automaker wants to expand the range with the launch of the new car next year.

"We talk about hatch and we talk about SUV. Why not make something in between?” Seat r&d boss Matthias Rabe said on the sidelines of the Mobile World Congress in Barcelona earlier this year.

Seat already offers a crossover-styled version of the Leon wagon badged the X-perience, but Rabe said the new model could go further. "What I would do is a little more consequential, more extreme," he said.

The new Leon would also increase its technology levels to include a new infotainment system that updates itself over the air, Rabe said.

"It will have more functions on the screens, fewer buttons and much more voice control," he added. Rabe claimed that participants in customer clinics for the new screen rated it above that of the Tesla Model X. The car would also have a plug-in hybrid version, he said.

Dominant player

The new infotainment system should also find its way into the new-generation VW Golf, which is expected in the summer of 2019. The Golf maintained its dominance of the compact sales chart in 2017, outselling its nearest rival by almost a 2-to-1 margin.

However, VW's launch cadence, the T-Cross small SUV is expected later this year while the I.D. full-electric hatchback is due next year, will hinder sales of the new Golf, predicts LMC Automotive analyst David Oakley. "Sales of the next Golf are not expected to surge as much as for the new Audi A3 and Seat Leon," he said.

The I.D. hatchback is arguably the most important launch in a segment that is already turning to electrified vehicles.

"Hybrid and electric cars are becoming a lifesaver for this segment," JATO global analyst Felipe Munoz said. Last year, diesel sales in the sector slipped 14 percent, pushing the powertrain's share in the segment to 43 percent from 48 percent in 2016.

Electrified gains

Meanwhile sales of electrified vehicles rose 12 percent last year to take a 7 percent share, with Toyota's hybrid Auris accounting for 67 percent of those electrified sales.

Sales of full-electric cars such as the e-Golf and Nissan Leaf rose 35 percent to take a 23 percent share.

Toyota unveiled its third-generation Auris at the Geneva show with news that it would drop all diesel variants. Instead, the new car comes with two versions of Toyota's gasoline-electric drivetrain. Toyota heralded the new car as a breakthrough model.

"The current model lacked a certain aspirational image in terms of design or performance. Now we can offer a striking design and the two hybrids give us performance," Toyota Europe sales boss Matt Harrison said.

However, Toyota doesn't expect much improvement on the Auris' 114,415 sales in Europe last year, which put the car in ninth place in the sector. "We expect to grow segment share, but volume growth might be modest if the segment continues to be under pressure," Harrison said.

One of the biggest success stories in the segment last year was Fiat’s Tipo, which moved into eighth place with sales of 127,075. The budget model took top spot in the segment in Italy with sales of almost 56,000 but proved a hit elsewhere too.

Said JATO's Munoz: "The only remaining space for growth in the segment is coming from below with cheaper models."

You can reach Nick Gibbs at ngibbs@crain.com.