Sun Sets on Global Convertible Car Market Growth as Niche Players Continue with New Models, IHS Says

Premium brands have led convertibles global market share since 2014; consumer preferences influence regional sales

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Tuesday, September 8, 2015 10:00 am EDT

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LONDON

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IHS
"North America has always led the global convertible market, but hit a near-record low in 2014 with just 164,000 units sold in the region. While consumers returned to the automotive market, the gain has been in more practical segments, and purchases of convertibles and roadsters have lagged the general automotive market resurgence"

LONDON--(BUSINESS WIRE)--The global convertible car market has peaked, according to new analysis by IHS Automotive, the leading global source of critical information and insight to the automotive industry and part of IHS,Inc. (NYSE: IHS). Based on its latest forecast and analysis, IHS reports the outlook for the global convertible car market will not return to record levels of 831,000 convertible sales experienced in 2004 during the next decade despite a raft of new model launches.

Additionally, the IHS analysis concludes that after several years of leadership, mass-market brands offering convertible options relinquished their standing to premium brands offering new drop-top models. On a global scale, premium brands have a 55.5 percent market share compared to 33.1 percent for mass-market brands.

China growth, cultural influences influence convertible market

China’s exponential growth of the auto industry in the past decade has influenced the stagnation of the global convertible vehicle market in the past decade, though not intentionally. While there is no real culture of Chinese consumers opting for convertible passenger cars, the volumes of traditional vehicles sold in China has outpaced the overall market influencing the overall market share dynamic between traditional options and convertible body styles.

According to IHS sales analysis and forecast sales volumes, China represents just a small percentage of the combined global convertible market with just under 24,000 units sold at its peak in 2012. IHS Automotive forecasts expect this to continue until 2025 with just 1.2 percent growth in convertible sales in the next decade in China.

“The cultural influence is not the only factor in the adoption of convertibles in China as high pollution levels in major cities also pose a challenge. In addition, the concentration of the middle-class buyers with the financial means to afford convertibles are in these congested cities,” said Tim Urquhart, principal analyst at IHS Automotive.

European market sees decline in past decade, though future remains hopeful

The European market is one of the key remaining flourishing markets for convertibles, though it also has undergone significant sales contraction in recent years. In Europe, the convertible market fell by almost 58 percent between 2004 and 2014, and now represents just one percent of the market. From a regional perspective, Germany and the United Kingdom dominate the market in terms of convertible sales with 74 percent of the combined regional market. This is largely because of the large number of German convertible models that are sold into the domestic market and the affection that UK car buyers have for two-seater roadsters.

“There are signs that the market in Europe will recover slightly as a result of certain key new model launches with vehicles like the BMW 2-Series convertible and the fifth-generation Mazda MX5 set to bolster the market, along with soft-top variants of the Land Rover Evoque and Mercedes-Benz C-Class which are also due in 2016,” Urquhart said.

American dream continues as North America leads global market

“North America has always led the global convertible market, but hit a near-record low in 2014 with just 164,000 units sold in the region. While consumers returned to the automotive market, the gain has been in more practical segments, and purchases of convertibles and roadsters have lagged the general automotive market resurgence,” Urquhart said. “However, the North American market is expected to progress on a stable platform over the next few years, led by the launch of the latest iteration of the Ford Mustang in 2016.”

The 2016 forecast is still significantly less than the market's peak of 344,000 units recorded in 2006, according to IHS Automotive. In 2006, however, the market itself saw a pre-Great Recession record not yet matched, which cascaded down to nearly every body type. In addition to the Mustang, the convertible variant of the new Chevrolet Camaro, the Mazda MX-5, the BMW 2-Series and the Buick Cascada (the U.S. market variant of the Opel of the same name) are also forecast to help with the slight recovery of drop-top sales in the region with 208,000 total units forecast for 2016.

Premium brands expected to lead for the long term

The convertible car market reached a peak in the mid-2000s when many manufacturers in Europe wanted to seize the opportunity by launching convertible variants of mainstream models, such as Ford Focus CC, Renault Megane, Opel Tigra, Mitsubishi CZC and Nissan Micra C+C. At the peak in 2004, the mass-market brands held 51.5 percent of the global soft-top market with premium brands occupying just 40.2 percent.

“We’ve seen some successes for mass-market brands getting into the convertible business in Europe, but there have been more misses. The financial crash of 2007/2008 was a huge factor. Also, as consumers’ preferences stymied convertibles as a commerciallyviable proposition for many OEMs, many players needed to withdraw from the shrinking market,” Urquhart said.

By 2014, premium brands once again took over. Last year, premium brands represented a much larger share of a much smaller market with 55.5 percent share compared to the mass-market brand's share of 33.1 percent. Overall, convertibles represented less than 1 percent of global market in 2014.

“As we move forward,” Urquhart said, “we expect to see the premium brands continue to grow within the convertible market while mass-market OEMs that were not as successful with convertibles in previous years instead concentrate their resources toward popular and, in some cases, more practical, SUVs and crossovers.”

About IHS Automotive (www.ihs.com/automotive)

IHS Automotive, part of IHS Inc. (NYSE: IHS), offers clients the most comprehensive content and deepest expertise and insight on the automotive industry available anywhere in the world today. With the integration of Polk in 2013, IHS Automotive provides expertise and predictive insight across the entire automotive value chain from product inception—across design and production—to the sales and marketing efforts used to maximize potential in the marketplace. No other source provides a more complete picture of the global automotive industry. IHS is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs about 8,800 people in 32 countries around the world.

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