News Column

The Big Auto Opportunity

Dec. 12, 2011

Broos Campbell, Staff Writer

Hispanics love their trucks. Trucks are rugged, versatile, useful and dependable. So Hispanic auto purchases are dominated by pickups, right?

Well, no. In its 2011 Polk Insights report, automotive marketing firm R.L. Polk named compacts as the leading Hispanic purchase segment, at 20.35 percent. No. 2 was standard midsize cars, at 15.5 percent. Large pickups came in third, at 8.85 percent.

This depends on what part of the country you're in and who's doing the talking, of course. Hispanics in oil country want trucks, and don't flinch when gas hits $4 a gallon, as Ralph Gray points out in his story on Page 18, while car buyers in Denver and South Florida favor Ford Fiestas and Toyota Priuses. The top domestic brand in the Hispanic market is Chevrolet, according to Polk.

"Chevy has had an exceptional YTD 2011, seeing an increase of 37 percent in sales to Hispanics," says General Motors spokeswoman Nina Price. She attributes the rise in sales to increased relevance of Hispanic consumers, "and the very successful launch of the Chevy Cruze" in the competitive compact car segment. The Cruze is Chevy's No. 2 nameplate among Hispanics.

Strategic Visions, a San Diego company that studies how consumers make buying decisions, says in its 2011 New Vehicle Experience Survey that the top three things Hispanic consumers look for in a vehicle are image, manufacturer reputation, and exterior styling. Cost, monthly payments, interest rates and credit terms all rate low on the list.

"Something that is really important for a Hispanic consumer is that a car makes a statement," says Alvaro Cabal, multicultural communications manager for Ford. "Something that says, 'This is my car.'"

Also big on the list is technology such as MyFord Touch with SYNC. "(It) allows you to link any type of smartphone to your car and allows Hispanics to be connected with their families," he says. And don't forget a personalized sound system. "We love that," he says. "I can download everything in my car, and I can say, 'Play Shakira.' And I can say it in Spanish: '°Toca Shakira!'"

The Market Share
Asian automakers are tops with Hispanic consumers, according to Marc Bland, head of diversity and inclusion at Polk. "The group that has the largest Hispanic share right now is Toyota" with 17.26 percent. However, he says, "The brand to watch would be Chevrolet." Chevy's share increased by 1.04 percent between January and August 2011, while Toyota's dropped by 3.11 percent.

But Japan isn't panicking just yet. "We see no major outflow to other brands, especially domestics," says Joe Tetherow, national manager of product communications, Toyota Motor Sales USA. "Toyota has been the No. 1 brand among Hispanics since 2004."

Although the Hispanic auto market share is down from a high of 10.6 percent of the market in 2006, according to Polk, the Hispanic market is recovering from the Great Recession faster than the U.S. market as a whole.

After hitting bottom between 2008 and 2009, "the industry bounced back and grew another 15.4 percent" between 2010 and 2011, Mr. Bland says. "The ethnic group outpaced the industry by 3 percent at 18.1, rounded. That ethnic group was led by Hispanics, which had a market-leading 22.7 percent growth year over year."

The Hispanic market share grew from 8.61 percent in 2010 to 9.16 percent in 2011, he says.

Where Are the Trucks?
Big pickups are perennial big sellers among Hispanics. "The Silverado nameplate continues to dominate among the Chevrolet nameplates sold to Hispanics, with 23 percent of total sales," says Ms. Price. Silverado owners are "known for keeping their trucks and passing them down generation to generation," she adds.

"The Ram 1500 and Ram 2500 are among the best performing Chrysler nameplates among Hispanic consumers," says Chrysler spokeswoman Eileen Wunderlich. The Ram 1500 alone accounts for 13.4 percent of Chrysler's Hispanic market share, according to Polk.

To further capture the Hispanic market, Ram rolled out a multimedia bilingual ad campaign at the State Fair of Texas in October. "Texas is 'the heart of the Hispanic market,'" says Fred Diaz, president and CEO of Ram Truck Brand and Chrysler de Mexico, Chrysler Group LLC.

Representatives from Ford were at the fair to promote their trucks, too. "The F-150 is still No. 1 in sales over pretty much any brand and any style," Mr. Cabal says. "It's a workhorse for the week and a sedan for the weekend."

A Growing Market
By far the fastest-growing brand among young Hispanics, however, is Buick. From 2010 to 2011, the brand had a year-over-year volume increase of 73.9 percent among brands with at least 0.25 percent of the 18- to 34-year-old Hispanic market share, says Mr. Bland, followed by Chrysler at 58 percent and Kia at 50 percent. Top model for Buick in the age group? The Enclave SUV.

When asked what effect Hispanic consumers have on the auto market, carmakers agree that Hispanics are in the driver's seat. "Hispanics command a huge influence on the auto industry," says Mr. Tetherow. "With a total U.S. population of more than 50 million, Hispanics account for 9 percent of all U.S. buying poweró$1.1 trillion."

After the recession, "Hispanic consumers came back to buy cars and trucks faster and more aggressively than the general market," Mr. Cabal says. "Automotive companies are looking at the Hispanic market, and they see a big opportunity."

Mr. Bland says: "If the industry overall grew at the same pace as the Hispanic consumption of vehicles, that would result in an incremental 358,000 units." At a "very conservative" $25,000 per vehicle, "that would have generated another $8.95 billion. It's a philosophical thing, but I put it out there to get people to understand how important the ethnic markets are."

Source: (c) 2011. All rights reserved.

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