Hatchback Market Wide Open

The last time U.S. vehicle plants produced more hatchbacks and wagons than 4-door sedans and 2-door coupes in the U.S., E.T. was a box-office sensation, Jack and Diane were growing up in the heartland, and cold, icy weather delayed the arrival of the San Francisco 49ers’ motorcade at the Pontiac Silverdome in suburban Detroit for Super Bowl XVI.

The year was 1982, and 40% of new cars produced were small, fuel-efficient hatchbacks and wagons such as the Ford Escort, Chevrolet Chevette, Dodge Omni, Volkswagen Rabbit and Renault Le Car. It also was the same year Toyota Motor Corp. launched a hatchback and sedan called the Camry, in limited numbers.

Over the next two decades, small hatchbacks would fall horribly out of favor with Americans, who were warming to larger sedans and discovering the functionality of SUVs and minivans. Facilitating the market shift were lingering memories of noisy Chevy Vegas, exploding Ford Pintos and broken-down AMC Gremlins.

“The interesting footnote here is that the Kamm-back quasi-hatchback rear end was actually considered a very sporty look in the 1970s,” writes enthusiast blogger Chris Hafner, who had a love-hate relationship with his Gremlin. “That is, until the Gremlin adopted it and ruined it for everybody.”

Today, hatchbacks are hot once again, although auto makers carefully use other monikers such as “sportback,” “3-door coupe,” “4-door coupe” and “5-door liftback.”

The most significant new interpretations of the hatchback concept are coming from Europe. Even though German auto makers have attempted to sell some hatchbacks in the U.S. over the years, few Americans would associate European luxury performance cars with hatchbacks.

And yet, the German brands are staking their most important new products on America’s erstwhile body style.

The Porsche Panamera, BMW 5-Series Gran Turismo and Audi A5 Sportback (available only in Europe) all have rear windows that lift, along with the back of the vehicle, to offer maximum storage space. Coming late next year is the similarly equipped Audi A7 Sportback.

A number of other recently launched vehicles build on the hatchback trend, including the Honda Accord Crosstour, Toyota Venza, Volvo C30 and Volkswagen Jetta SportWagon.

Ward’s extensive vehicle-production database confirms the resurgence. Beginning in 1983, U.S. production of hatchbacks and wagons began plummeting, bottoming out at 5.7% of new cars in 1998.

It then hovered around 7.5% for several years before beginning its ascent to 9.3% in 2005 and about 13% in 2009. Based on scheduled vehicle launches, the upward trend for liftgates should continue.

Import sales in the U.S. are showing the same trend. Ward’s data shows 17% of import cars sold were hatchbacks and wagons in ’08, up from 10.6% in ’05.

Take rate for Ford Fiesta hatchback expected to be heavy.<link rel=

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Much of the credit for bringing back hatches goes to the raft of small cars that were strategically placed to lure consumers tiring of gas-guzzling SUVs.

That import-heavy list includes the Chevrolet Aveo, Dodge Caliber, Honda Fit, Hyundai Accent and Elantra Touring, Kia Rio5 and Soul, Mazda3, Nissan Cube and Versa, Saturn Astra, Suzuki SX4 and Toyota Matrix and Yaris.

Given their renewed popularity, some auto makers have no qualms about using the term hatchback with regard to new product.

“There’s no stigma attached to the hatchback name. It is what it is. I don’t see it as a stigma,” says Jim O’Sullivan, CEO of Mazda North American Operations. “It’s what consumers want. They provide greater utility. About a third of the Mazda3s (we sell) are the hatch.”

Ford Motor Co. might sell an even higher proportion of hatchback versions of the all-new ’12 Focus when it arrives in the U.S. next year in two body styles – a 5-door hatchback and 4-door sedan.

Ford marketers expect the hatch to account for 20%-40% of volume, says Gunnar Herrmann, C-segment vehicle line director.

In the early days of the global Focus program, product planners debated whether to even offer the hatch in North America. The last time a Focus version was available in the U.S. was three years ago.

But Ford recognizes liftgates are gaining popularity “in all regions, even in China,” Herrmann tells Ward’s, citing U.S. research “that 5-doors could be a significant market.”

Likewise, the Fiesta B-car headed for the U.S. late this year will be available in both 4-door and 5-door versions, and Ford expects the 5-door hatchback to be perceived as the premium step up from the sedan.

John Krafcik, CEO of Hyundai Motor America, theorizes Americans got used to 2-box body styles with SUVs and liked having access to space behind the second row.

“And now that those vehicles are falling out of favor, many Americans are looking for that same kind of functionality, and they’re pleasantly surprised,” he says, when they shop a Hyundai Elantra Touring or 5-door Volkswagen Golf. “They say, ‘Man, there’s an awful lot of room back there.’”

Krafcik considers hatchbacks “a very sensible choice. I think American car buyers are becoming more sensible now.”

Hoping to cash in on this newfound thrift, Hyundai is preparing to replace the coupe-like 3-door Accent hatchback with a 4-door sedan, as well as a 5-door model with a liftgate that will be more vertically aligned, Krafcik says.

German Luxury Embracing Hatchbacks

While high-end station wagons and “shooting brakes” occupy a niche in Europe, today’s hatchback market adds a luxury dimension that has never been seen before in the U.S.

True to the lineage, these upscale hatches represent good value. For instance, Panamera pricing starts at $89,800, and the car offers much more comfort and versatility than the 911 coupe, which can cost much more.

In these trying economic times, even the wealthy must be frugal.

Likewise, BMW Gran Turismo pricing starts at $64,725, which is below the 7-Series, although both vehicles share the same wheelbase, engine and many of the same luxury amenities.

Because of the Gran Turismo’s unique “dual-access tailgate” and relatively appealing price, BMW executives say the car is selling very well, having arrived in the U.S. in December.

Loyal BMW customers did not grasp the vehicle when they first saw pictures over a year ago. But invitation-only private parties at dealerships cured any misgivings, says Jack Pitney, vice president-marketing for BMW of North America LLC.

“When people actually had the opportunity to interact with the car and see the functionality of the rear and the first-class seating in the rear and the command seating up front, people really got it,” Pitney says. “The key to selling the Gran Turismo is to bring people in close interaction with the vehicle.”

As expected, Pitney says the car is resonating strongly with women, perhaps due to the unique liftgate that makes groceries easier to remove from the cargo area.

BMW has had mixed success with hatchbacks and wagons. The short-lived 4-cyl. 318i was discontinued in 1999 because of flagging popularity, and the 5-Series wagon left the U.S. market in October.

The 3-Series is available as a wagon, but, again, sales have stalled. “That’s another one where we’re just waiting for the market to to come around,” Pitney says. “Wagons have never really taken off the way we had hoped.”

BMW’s rival Audi says it has achieved moderate success with Avant wagon versions of the A4 and A6 sedans, but company executives clearly are disappointed with the sales of its 5-door A3, which arrived in the U.S. in 2005. The A3 has been marketed as a “Sportback” model, but it looks much like a smaller version of the A4 wagon.

The A3 is a sore subject for Stefan Sielaff, head of design for Audi AG. He is proud of the dramatic, steeply raked decklid for the Sportback concept shown at the 2009 North American International Auto Show, which comes to the U.S. next year as the A7.

The A3 needs similarly bold sheet metal, Sielaff tells Ward’s during this year’s Detroit auto show, and his design staff is working now on the next-generation, due to market within three years.

“We are still under construction from the product point of view and naming point of view. Nothing has been decided,” he says. “But for sure we have to do something with the next-generation A3 for the American market so it is more attractive.”

In 2009, Audi sold only 3,874 A3s, down 19% from 2008, according to Ward’s data. Despite being the brand’s least expensive vehicle in the U.S. (starting at $27,270), the A3 was considerably outsold by every vehicle in the Audi lineup, except the A8 flagship and the high-performance cars.

In fairness, the A3’s sluggish sales may have nothing to do with the body style but more to do with economics: Audi has not offered attractive deals on the A3, and no leases have been available.

Why? Because the auto maker can sell the entire global volume in other markets, without relying on the U.S., spokesman Jeff Kuhlman says. The vehicle is assembled in Ingolstadt, Germany. Sielaff likes the term “sportback” because of how it motivates his staff.

“It allows us to create, for a 4-door car, a very sporty silhouette. We can get a very fast roof rear end. It’s not a classic bootlid,” he says.

“In the ’60s, these were called fastbacks. They were very popular, like the MGB or Triumph Spitfire GT6 – powerful little sports cars. There were roadster versions and shooting-brake hatchback versions. This is more the tradition we are looking back to.”

Sielaff sees sportbacks and hatchbacks fitting well within the German “Bauhaus” philosophy, which encourages designers to break from tradition and emphasize modernist functionality.

“If you do it in a very distinguished and discrete way, like with the A5 Sportback and the A7 show car, which is another sportback, we will technically establish them as kind of family members in our portfolio,” Sielaff says.

One obstacle facing the kind of steeply raked hatchbacks Sielaff wants is aerodynamics. It took three design iterations to achieve the proper aerodynamics for the A5 Sportback, and he says similar challenges are being addressed now as the A7 program nears production.

Hatchbacks also have presented sound-management problems because they can allow noise from the rear of the vehicle to penetrate the passenger compartment.

Sielaff admits the second-row of an A4 Avant or A6 Avant is not as quiet as their sedan counterparts. But he says Audi uses special triple seals in doors, within the body and in the liftgate to mitigate those noises.

In the Gran Turismo, BMW added a variable partition that locks in place to better separate the cargo hold from the cabin. It helps make the car incredibly quiet inside.

In addition to improving sound management, the variable partition keeps trunk odors from reaching the cabin. “If you were to carry a pizza in the back, or something that would have an odor, it won’t permeate through the rear into the passenger compartment,” Pitney says.

Although BMW is proud of the Gran Turismo for having both a fully functioning trunk and liftgate, Audi’s Sielaff is not convinced.

His concern centers on the small back light, the large C-pillar and the additional weight of all the hardware necessary to raise the entire liftgate. “The double mechanism is very heavy,” he says of the Gran Turismo.

Pitney admits BMW engineers “always make things more difficult than they need to be,” but he stands firmly behind the car as an ideal blend of luxury, style and utility.

Asian Hatchback Legacy Alive

Asian auto makers have a rich hatchback legacy, and Subaru of America Inc. President and Chief Operating Officer Tom Doll says he is glad to see them rebounding.

“Some of the hatchbacks that are coming out right now are styled very nicely. And people like the utility, quite frankly. It really is that simple,” he says.

And it helps that young buyers today do not remember the dark days of hatchbacks that were unreliable or noisy.

“I think there’s an element to that,” says Jack Hollis, vice president-Scion (Toyota Motor Sales U.S.A. Inc.).

“Designs with hatchbacks can be different than your normal sedan. Having a trunk is pretty much standard. You can reshape them a little bit. But with hatchbacks, you can do more dynamic changes to rears of vehicles, so there’s a styling element that I think is very attractive.”

A key selling point for Scion is something Hollis calls “surprise utility. It’s almost surprising when you see it. You open up the xB, the back, or the xD and you think, ‘Wow, I can do a lot with this.’ I think the consumer sees value in this.”

Young people use their cars for much more than basic transportation. “They’re storing and putting more stuff into their car,” he says. “The hatchback makes it easy to get at it.”

The Kia Soul is an unabashed inexpensive small car with a quirky sense of style and a vertically aligned tailgate that harkens back to the hatchbacks of old. The car is selling well, and Michael Sprague, Kia Motors America marketing vice president, attributes its success to value and a unique charm for Gen Y buyers.

“They are a generation that wants functionality in the things they do,” Sprague says. “If you look at their communication devices and what they can do on them, they want things that are going to help their life. And they want it for a very good price point.”

American Suzuki Motor Corp.’s Gene Brown agrees.

“The whole economy is a little more thrift-oriented,” says Brown, vice president-marketing and public relations at American Suzuki. “And part of being thrifty is ensuring you’re getting utility and pleasure for your money. Hatchbacks do that pretty well.”

Suzuki introduced its SX4 5-door in 2007 only as a hatchback, primarily to allow for integration of all-wheel drive (unavailable in SX4 sedan). A sportier version of the SX4 arrives this year as the Sportback.

Some new vehicles coming to market could be mistaken for a hatchback. The new coupe-like Jaguar XJ, for instance, looks an awful lot like the Audi Sportback concept at the rear, but it has a trunk.

Same with the Volkswagen New Coupe Concept, which basically is a 2-door version of the Jetta, due later this year, with a trunk rather than a hatch.

It seems appropriate that three months ago a German giant in the field of automobile aerodynamics, Wunibald I.E. Kamm, was inducted into the Automotive Hall of Fame in Dearborn, MI.

His pioneering research led to the “Kamm-back” or “Kamm-tail,” characterized by a long, tapering roof and an abrupt, cut-off tail. The design is seen on the Toyota Prius, Honda Insight and, yes, the Gremlin, all hatchbacks.

Kamm died in 2006, about the same time hatchbacks were springing to life.

– With Eric Mayne, Byron Pope and Christie Schweinsberg

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