Drop-top season is here again. And once again, auto dealers are stocking their lots with attractive open-air roadsters and dreamy convertibles, preparing for the season's peak over the next three months. Despite the yearly dealer ritual, convertibles make up a tiny sliver of the total U.S. auto market. Analysts estimate that sales fluctuate annually between 2% and 5% of the more than 17 million vehicles sold in the U.S. That's a mere 300,000 to 800,000 cars.
Lonnie Miller, director of industry analysis at RL Polk a Southfield (Mich.)-based marketing firm that specializes in collecting auto-industry statistics, notes that the market for convertibles is perpetually volatile. "This is the most fickle segment in the industry, the most discretionary," he says.
But that hasn't always been the case. Convertibles once represented the majority of body styles, roofs only becoming ubiquitous as engine power increased and safety issues became a factor. However, as the U.S. government began to pressure Detroit to improve its rollover ratings, by the mid-1970s the convertible had all but disappeared from the American road.
The renaissance of the cabriolet began in the mid-1990s, when carmakers saw the enormous success of Mazda's Miata two-seater and began producing similar vehicles. By 1996, the roadster market was exploding just as baby boomers began reaching their peak earnings potential. Manufacturers began pumping out new models across a wide range of price points and drastically improving technological standards on larger convertibles.
Today, the sporty convertible -- though still not a significant seller on most lots -- represents a feather in an auto brand's cap, judged by many executives as all-important. Sporty convertibles, they contend, signify manufacturers' top performance capabilities and also act as a draw for showrooms.
This year, General Motors (GM), for instance, is banking on two new convertibles to refresh public opinion of Saturn and Pontiac, the stratospherically named Sky and Solstice roadsters (see BW Online, 1/17/05, "Will These Rockets Rescue GM's Saturn?"). Of that strategy, Miller says, "The intent is to renew the stylistic feel of the organization, all the while building customer loyalty, remaining within the GM portfolio. It's a very calculated risk."
In demographic terms, market data show that with average U.S. households owning about 2.2 cars, most convertibles are now being purchased as third vehicles. It's a trend that analysts say is on an upward trajectory, if only slightly. People are asking themselves whether they should replace vehicle number two or add a third. "Many say, 'Let's have fun with it,' and buy a third car," Miller says.
Last year, the best-selling convertible in the U.S., according to R.L. Polk, was Ford's (F) Mustang, and it's a strong contender to repeat that performance for 2006. Total registrations for the Mustang convertible last year were 44,065, an increase of more than 11,000 from 2004.
The Chrysler Sebring accounted for 35,360 in new registrations last year, followed by the Toyota (TM) Camry Solara at 21,544. The Volkswagen New Beetle was in fourth place, with 19,078, while the Chrysler PT Cruiser came in at No.5, with 18,232 registrations. North American convertible sales usually hover around 300,000 vehicles. That number dipped to around 295,000 in 2003, and last year, convertible sales rose to 324,000. Mustang convertible sales in 2005 were short of the 2001 Mustang total of 50,256.
THE ID FACTOR
The range of options is indeed broader than ever. BusinessWeek Online took a comparative look at convertibles and summer cars on the American market today. Models vary in price from just under $20,000 to well over $500,000. The segment's sweet spot -- where most of the sales are -- lies between $30,000 and $90,000, trending in the direction of luxury vehicles.
Technologically, things have changed drastically since the days when choosing a drop top meant compromising on safety and an inevitable confrontation with leaks. Most modern convertibles offer rollover-sensing mechanisms that pop up a roll bar in case of an emergency. Door-mounted side-impact air bags also abound, particularly as the majority of convertibles are upmarket, where such features come standard. Small rear windows that create blind spots continue to be a problem. Fortunately, nearly all rear windows are now glass, not cheap plastic.
Maintenance and operating costs don't differ significantly from coupes and sedans. And fuel efficiency is about on par with similar-sized vehicles. But Miller suggests that doesn't matter much. "Picking a convertible," he says, "is rarely a reasoned choice. It's a segment that appeals to the id. In most cases, fuel efficiency actually couldn't make less of a difference. It's impulse."