News Column

Measuring the Car Market

November 2003, HISPANIC BUSINESS Magazine

Paul A. Eisenstein

The future of the Ford Motor Co. could depend on the wallets of Hispanic car buyers. Struggling to reverse losses amounting to billions of dollars, the automaker is ramping up one of the most important product launches in its history, an all-new version of the full-size F-150 pickup. While the overall F-150 ad campaign will be the largest in the company's history, it will take special aim at ethnic groups that might have been ignored in the past. "A pretty substantial portion" of the budget will be aimed specifically at the Hispanic market, says Nathaniel Mason, multicultural marketing manager at the flagship Ford Division.

In an industry where manufacturers fight for each tenth of a share point, the latest Census data on the Hispanic population haven't gone unnoticed. Whether they make their pitch in English or Spanish, companies like Ford, Nissan, Toyota, and General Motors (GM) are making plans to win over Hispanic buyers, whose numbers are expected to grow three times faster than the overall U.S. new car market, according to J.D. Power & Associates.

But big budgets alone aren't the solution. The first challenge is to define and understand the Hispanic market. And that hasn't proven easy.

U.S. residents are expected to buy about 16.5 million new cars and trucks this year. Research by J.D. Power suggests that Hispanics make up 8 percent of that total. The market research firm Intellous put the price tag for Hispanic new vehicle purchases in 2001 at $16.86 billion (see table, "Automotive Expenditures by Hispanics").

"One of the biggest issues I struggle with is the lack of and inconsistency in the data," complains Jon Cropper, senior manager of Diversity and Youth Communications for the Japanese import Nissan. In many cases, "you can't ask people what their ethnic background is," he says, so a lot of the research relies on identifying Hispanic surnames an imprecise technique.


AUTOMOTIVE EXPENDITURES BY HISPANICS
Year New purchases Used purchases Repairs Total
1997 $9.26 $15.38 $4.63 $29.28
1998 $12.44 $16.50 $4.47 $33.42
1999 $18.51 $18.98 $4.65 $42.14
2000 $15.18 $21.32 $4.72 $41.22
2001 $16.86 $19.47 $5.53 $41.87

Notes: Dollar figures in billions. Figures do not include gasoline, motor oil, parking, tolls, or auto rentals. Numbers may not sum to total because of rounding.

Source: Intellous 2003 Consumer Expenditure Intelligence Report.



Art Spinella, a researcher with CNW Marketing, believes the Hispanic new car market share is actually 13.6 percent. If he's right, it's a significant number, since Hispanics constitute 13.5 percent of the total U.S. population, according to the latest Census estimate.

One trend the analysts routinely agree on is that the figures will keep climbing. By Intellous estimates, new vehicle expenditures by Hispanics climbed 82 percent between 1997 and 2001, and total automotive spending exceeds $41 billion. During the coming decade, "the overall new car market is expected to grow an average of 1 percent annually," predicts Dave Bean, manager of product research at J.D. Power. "Hispanic purchases are expected to grow 3 percent annually."

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