As the warmth of summer arrives across North America, automakers are deploying that favorite seasonal sales tactic - going topless. Whether you call them cabrios, drop-tops, ragtops or roadsters, vehicles that offer some form of retractable roof boost showroom traffic. They also provide a halo for the rest of the product range. But as they sprout like tulips in car dealer lots, soft-top convertibles and those with articulating hard tops are experiencing a different sales scenario than the steady growth they enjoyed for most of the 1990s.
Blame the sour U.S. economy and, perhaps, the car-buying public's changing view of safety, security and what's cool in new vehicles. Whatever the cause, sales of retractable-top vehicles through mid-spring have plummeted up to 40 percent across a segment that has enjoyed annual sales of over 300,000 units in recent years. However, sagging sales isn't stopping automakers from packing their North American lineups with convertibles built locally, as well as models imported from Europe and Asia. Led by ragtop versions of the BMW-built Mini Cooper and Nissan's 350Z, this market's offerings will grow to more than 30 models - the widest array of convertibles in post-WWII U.S. history.
In Europe, convertibles enjoy far greater popularity and an even wider range of models from a greater selection of automakers. European production will lead that of North America by more than 100,000 units this year, as the accompanying chart reveals. CSM forecasts that within five years, European production of retractable-top vehicles will be more than double North America's output.
The recent sales slide in the U.S. has affected all players - from high-image models including the Valmet-built Porsche Boxster to the four-seat Chrysler Sebring. Discounts and cash-givebacks are now as prevalent in this segment as in every other - General Motors even began offering 0 percent financing on its iconic Chevrolet Corvette roadster which, until recently, had escaped the dreaded rebate game. There appears to be far more product in the pipeline than the market seems to want, requiring costly incentives to "move the metal."
All of this points to a challenging business environment for convertible top system suppliers. Two U.S.-based veterans, ASC and Collins & Aikman, along with Canada's Magna Decoma, are defending the home turf against a growing influx of German specialists. ASC's business, which currently includes the Toyota Camry Solara program and Mitsubishi's Eclipse Spyder, is getting a boost with two 2004 GM programs, the high-profile Chevrolet SSR convertible sport truck and, at much higher volumes, the ragtop version of the Pontiac Grand Am replacement.
Collins & Aikman is the incumbent on North America's highest volume convertible programs - the Sebring and Ford's evergreen Mustang. C&A also enjoys two enviable image projects, the Dodge Viper and the current Corvette. But the company loses the upcoming C6 Corvette to Car Top Systems (CTS), which illustrates how the competitive heat is being turned up in North American drop-top systems supply. As the German top specialists move in, they're leveraging historic relationships with Mercedes, BMW, VW, while targeting GM, Ford and the Japanese.
CTS, which joins Karmann, Edscha and PRS in the drop-top supply base, is a relative newcomer. Bringing expertise from Mercedes' SL and SLK programs, CTS won GM's highest image roadster program, the '04 Cadillac XLR. By all accounts, the company jumped through many hoops to impress GM with its overall determination, product development expertise, assembly precision and modular capability. CTS made sure it got key support from its sub-tier vendors such as SaarGummi, which developed critical sealing technology for the XLR's sophisticated power retractable hardtop.
ASC, C&A and Decoma should expect more of the same from their German rivals in the future. Greater competition will be good for the North American convertible segment. The strategic question is, will America's passion for letting the sunshine in remain strong enough to sustain such a wide field of convertible-top suppliers?
Lindsay Brooke
Senior Manager of Market Assessment
CSM Worldwide, Inc.
LindsayBrooke@csmauto.com
