Unless you've been living under a rock, you're probably well aware that auto sales within the U.S. hit their highest levels in 2013 since prior to the recession. If you broaden your horizons even further, though, you'll discover that global automotive sales actually tallied a record number of vehicles sold last year.
According to IHS Automotive, global vehicle sales in 2013 jumped 4.2% to 82.84 million, marking the first time that global auto sales have topped the 80-million mark. The U.S. with its 15.6 million vehicles sold and China, the world's largest auto market, with essentially 22 million vehicles sold, provided the bulk of the boost. This combination of a resurgence in mature markets such as the U.S. and Europe, coupled with rapidly growing markets such as China and India, sheds hope that auto sales may crest 100 million units worldwide before the end of the decade.
If there is a downside to a year of record sales for automakers, it's that growing product lines from a number of manufacturers is making it more difficult for specific models to stand out. This means automakers are needing to beef up their research and development spending in order to not only make their cars visually attractive and unique, but also to improve factors such as fuel-efficiency without sending prices through the roof.
As you might expect, some brands have done markedly better than others at balancing their price-to-value proposition. That's why today I want to take a closer look at the three best-selling cars around the globe in 2013, so we can get a better idea of why these models are succeeding and determine whether or not they can keep their prestigious "best-selling" moniker moving forward.
For the second year in a row the Focus has graced the top of the global sales list according to registration data compiled by Polk, a division of IHS Automotive. Based on their data, Ford (NYSE:F) sold 1,097,618 Focus models around the globe in 2013, representing an 8.1% increase over the previous year. What makes its sales growth even more impressive is that Focus sales actually fell by more than 11,000 in the U.S. to 234,570 last year.
So what's fueling the boom in Focus sales? China has been a big proponent, with Focus sales surging 50% in the country to 403,219 units. The Focus has also been a big reason why Ford was able to top 100,000 units in March of this year, its first month ever above the 100,000 unit sale mark, and is likely going to put Ford on pace to top 1 million units in China by year's end.
What's to like about the Focus? Primarily it's the value proposition that appeals to consumers. It's not overly pricey, allowing middle class consumers around the globe to become buyers. It's also not particularly bulky, meaning it makes sense for consumers in large overseas cities to drive a Focus. And, of course, the Focus delivers favorable gas mileage which overseas consumers can rally around.
Despite claiming the top spot for the second year in a row, though, the Focus will still have to fight tooth and nail to keep its global sales total above 1 million. Increasing competition from compact and subcompact SUVs could attract consumers looking for slightly more interior transport space to opt for the SUV instead. The Jeep Renegade is one model that comes to mind as a potentially formidable competitor that could lure Chinese consumers away from the Focus.
Gas prices are also worth monitoring. Rising gas prices often push consumers toward compact cars like the Focus. With gas prices relatively stable year-over-year Focus sales in the U.S. have stalled a bit as noted by Foolish auto specialist John Rosevear.
Make no mistake, I still expect the Focus to be a huge growth driver for Ford, but the competitive picture is clearly building.
Everything is based on perspective, and if you ask Toyota (NYSE:TM), which did its own analysis of Polk's registration data, it'll tell you that the Corolla was the best-selling car of 2013, with 1,098,524 million units registered and 1.22 million units sold overall, a 5% year-over-year increase.
Regardless of whether the Focus or Corolla takes the top honor doesn't matter. Over a lifetime no car has sold better than the Corolla, which has amassed 40.72 million units sold through Feb. 2014 since it was introduced in 1966. That factor alone is one of the primary driving forces behind Corolla sales. Having a rich history of sales that dates back 48 years would signify to the consumer that the brand has staying power and that the Corolla is a reliable vehicle.
Similar to Ford's Focus, the Toyota Corolla gets the job done by appealing to middle-class consumers with relatively few frills on the inside of the vehicle. The Corolla was designed as a comfortable way to get from Point A to B with better than average fuel economy and a reasonable price point. Nearly 41 million vehicles later I'd say that message is still resonating with consumers.
But, does the Corolla have what it takes to retain its top-two spot in the best-selling car list?
It's tough to say, although it's evident that Corolla will remain the mainstay of Toyota's lineup for years to come. Toyota recently introduced a redesigned model in the U.S. and overseas meant to target a consumer that's looking for a sleeker design and more differentiation. While it does hit some level of differentiation, the design, which Foolish auto contributor Dan Miller called "aggressive" last year, may still fall short of the Focus.
If Toyota's Corolla is going to surpass Ford's Focus in global sales, it's going to need to rekindle growth in the U.S. For now, the jury is still out on whether or not that will happen, although it looks to be on pace for another year of more than 300,000 units sold in the U.S.
Surprise! Did you see Volkswagen's (NASDAQOTH:VWAGY) Jetta coming in as the third best-selling car in the world? I admit, it even took me a bit by surprise, especially considering Volkswagen's lackluster sales trends within the U.S., the world's second-largest auto market, in 2013.
Despite logging the sixth-highest sales total among compact cars in the U.S., Jetta sales shrank 4% last year to just shy of 164,000. It also marked the second consecutive year that Jetta sales have retraced following a sales surge in 2011. As you may have surmised, the bulk of VW Group's growth has come from China where a burgeoning middle class is demanding luxuries they've never had previously, such as owning a car.
The question is, can the Jetta rise to the occasion and potentially take on the Corolla or Focus for the top spot, or will it cede its top-three ranking to the Hyundai Elantra or some other formidable foe. The answer to that question is going to really depend on whether or not the redesigned 2015 Jetta resonates with global consumers.
As Foolish contributor ICRA Online pointed out a few weeks back, Volkswagen has a four-pronged approach to improving Jetta sales in the U.S. and abroad. Some of these components are basics that have driven sales of Corolla and Focus higher, including making the car sleeker and more stylish, as well as more fuel-efficient for largely cost-conscious overseas consumers. However, the 2015 Jetta will also include blind-spot detection and points to a growing demand from consumers for low-cost, but high-tech gadgets within the car which make the driving experience safer and more enjoyable. The as of yet unrevealed final price of the redesigned Jetta will also play a key role in whether or not Volkswagen can lure consumers away from these two aforementioned foes.
While Volkswagen looks to have a winner overseas, like Corolla, its ability to further grow its sales will face its true test in the U.S. -- and for now the jury is still out on that answer.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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