What do buyers love? Horsepower.
Not every car-shopper wants a snappy-fast ride, of course. But automakers love high-performance cars for a number of good business reasons. First, developing the cars can be a treat for their engineers, helping them hire, retain, and reward talent. Second, they're typically positioned as top-of-the-line models, priced to deliver plenty of profit. And last but not least, they draw motivated new buyers to dealer showrooms, giving the dealers a chance to form relationships that can lead to more sales over the longer term.
Here are three takes on the idea of an affordable high-performance car. All three have helped boost their brands' images and delivered new customers to their dealers' showrooms.
John Rosevear: What does every automaker want? More young buyers with money who can become lifelong customers. And Ford (NYSE:F) is doing a good job of drawing them into its dealerships with its pair of pocket rockets, the Focus ST and Fiesta ST.
Both models are juiced with higher-performance versions of Ford's turbocharged "EcoBoost" engines, slick-shifting manual transmissions, bigger brakes, and sport-tuned suspensions. They're also loaded with Ford's latest high-tech "Infotainment" features. They're priced a lot higher than the entry-level models they're based on, but they're still affordable. And they're a hoot to drive -- while still being easy to live with year-round.
Ford says buyers of the ST models are younger than average. Millennials buy ST products at over twice the rate of other Fords. These buyers are also better-educated and more affluent than the average car-shopper. And roughly two-thirds of them are replacing vehicles that aren't Fords -- or put another way, the ST models are what drew them to Ford.
For Ford, that all adds up to a big win. Its hot hatchbacks are drawing particularly desirable young new buyers to the brand, giving Ford and its dealers the chance to establish life-long relationships. And given that the profit margins on high-performance variants of mainstream cars are typically quite rich, Ford's making plenty of money at the same time. That's a good deal all around.
Sean Williams: It's far from Fiat Chrysler Automobiles' (NYSE:FCAU) top seller, but a lot can be said for the steady annual sales increase we've witnessed from the Dodge Challenger since its 2008 debut. With sales increases in each year since its debut, the Challenger could potentially top 66,000 units sold within in the U.S. in 2015 when all is said and done.
The 2015 Challenger, which sports a base MSRP of $26,995 along with 305 horsepower, has a number of factors working in its favor, which in turn could help provide another piece to Fiat Chrysler's long-term growth puzzle.
To begin with, warmer weather in 2015 really helped fuel sales of muscle cars. Anyone who's ever driven, or should I say tried to drive, a rear-wheel drive car on an icy or snowy surface understands full well why muscle cars tend to sit on dealer lots during the winter. Exceptionally warm weather across the U.S. worked favorably to boost Challenger sales this year.
But, Fiat Chrysler is relying on more than just the luck of the weather to drive sales. Dodge is giving the consumer more choice than ever at a time when gas prices are rivaling lows that haven't been seen on a regular basis in years. In total, consumers have 10 trim options with the Challenger, ranging from the affordable, yet powerful, SXT, all the way up to the 707-horsepower Hellcat, which is still reasonably priced. With fuel costs not a big concern, it's allowed Dodge to take advantage of the horsepower-hunting nature of the consumer.
Finally, subtle improvements in the interior appear to have paved the way for improved sales. A redesigned cluster screen for the driver allowing for more detailed digital readouts, and a freshening up of the dashboard where Chrysler's UConnect infotainment system is housed, give the car a cleaner and upgraded feel.
I'd expect the Challenger to continue to drive modest, but consistent, growth for Fiat Chrysler moving forward.
Daniel Miller: When discussing affordable, high-horsepower, cars that consumers can't get enough of, there's no way you can leave Ford Motor Company's Mustang off the list -- it would be a travesty.
Depending on your taste, you can get the 2015 Mustang with multiple engine options starting around $24,000 for the base 3.7-liter V6 that puts out 300 horsepower and 270 lb.-ft. of torque. For a few extra Benjamins, you can upgrade to the EcoBoost engine or the 5.0-liter V8, which respectively generate 310 horsepower and 320 lb.-ft. of torque and 435 horsepower and 400 lb.-ft. of torque.
While Mustang loyalists initially scoffed at the Mustang selling with an EcoBoost engine, there's no denying that the option has sold very well. Through October, nearly 40,000 Mustangs sold in the U.S. were powered by an EcoBoost engine, or about 37%.
The new EcoBoost engine option for the Stang has helped power the iconic sports car to sales levels not seen in years. Consider that through November, sales of the Mustang are up more than 55% to 113,607, and the vehicle has a good chance of breaking 120,000 sales by the time the books are closed on 2015 -- that's something the Mustang hasn't achieved since 2007. Further, after the first half of 2015, the Mustang reclaimed its U.S. title for the best-selling sports car, which it hadn't accomplished since 2009.
The icing on the cake, looking at data from J.D. Power, is that the Mustang is now attracting younger consumers more than it has in the past. In California, one of the Mustang's best-selling markets, millennial buyers increased from 30% in 2014 to 47% through September 2015, and the vehicle sits on dealer lots for only 16 days compared to the industry average of about 60 days.
Whether you're a fan of the Mustang or not, you can't argue it isn't a high-horsepower ride consumers can't get enough of.
Daniel Miller owns shares of Ford. John Rosevear owns shares of Ford. Sean Williams has no position in any stocks mentioned. The Motley Fool recommends Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.