Why Hatchbacks Are Back

By David Kiley, AOL Autos

The 2010 Volkswagen GTI (VW).

(AOL Autos)

If Europeans had their way, America would have national healthcare, espresso on demand, legal smoking in the workplace, and the same rational love of hatchback cars and sport wagons that they have.

How is all that going? Despite healthcare reform, Americans are no closer to a single-payer healthcare system than they were a year ago. I suppose Starbucks becoming this generation’s McDonalds takes care of the espresso, and at least the Italians running Chrysler are smoking with abandon in their headquarters building, despite Michigan’s smoke-free workplace law. And it could be that the U.S.’s love-hate relationship with hatchbacks is warming after years of associating the five-door design with high-school equivalency degrees and those who sniff the screw-cap on their wine coolers.

For years in the U.S., highly rated hatchbacks have sold like escargot at Waffle House. To Volkswagen’s perennial dismay, the Golf, the top selling model in Europe, rarely tops 35,000 sales in the U.S., while the Jetta remains its top selling model. When Ford issued a restyled Focus for the 2008 model year, it dropped the five-door, three-door and wagon versions of the car altogether, as they combined for only about 15% of the volume. And let’s not even discuss the short-lived Chevrolet Malibu Maxx, technically classified as a “notch-back,” a car so reluctant to be called a hatchback that designers went to great lengths to make it look like a sedan despite the wide-mouthed bass rear opening. Chevy boasted that a person could fit a kayak in the car with the front-passenger seat folded down, but few seemed to try, or care.

But as Ford unleashes its all-new Fiesta on the U.S., hatchbacks are running at 60% of the sales and production mix. And when the new Focus launches in early 2011, the same allocation is expected. What gives?

“The market is changing, and so have the designs,” says Ed Welburn, chief designer at General Motors. GM is launching a new Chevy Aveo five-door, as well as the new Chevy Spark, which is a hatch-only subcompact. “I think people are viewing them more as small utility crossovers than hatchbacks.”

“Crossover,” of course, is marketing-speak for a hatchback station wagon.

Ford Fiesta exterior designer Kevin George said the original plan for the Fiesta launch in the U.S. was to bring only the sedan version to the U.S. “The insight was that many hatches represented entry-level cars for a lot of people, and did not have the features people associated with an ‘aspirational’ car,” says George. “[Ford global marketing chief] Jim Farley decided we would give it all the features and technology we had to offer, and people would respond … and they have.”

The disconnect for auto executives who often work on both sides of the Atlantic is how popular hatches and sporty wagons are in Europe. Wagon versions of the BMW 5 Series, Mercedes E Class, Audi A4, and Ford Mondeo all sell in big numbers overseas. On the other hand, the Dodge Magnum sport wagon sold in the U.S. from 2005-2008 was short-lived.

The frustration comes from the fact that auto companies are trying to design vehicles for world consumption these days. Back in 2006 when Nissan was getting ready to launch the Nissan Versa, a car the company already sold overseas, U.S. executives told Japanese management they didn’t really want the car. They felt they could cover the entry-level category with the Sentra. CEO Carlos Ghosn ordered U.S. managers to take the car, and that 60 of the production mix would be hatches. U.S, executives moaned louder, demanding 70% be sedans, despite the awkwardness of the Versa sedan’s design. Ghosn proved correct and the Versa has been a solid contributor to Nissan sales.

Honda introduced the Fit, which only comes as a five-door, in 2007. It too, has been a solid success, selling between 85,000-100,000 a year, with transaction prices trending around $17,000.

“Hatchbacks got a bad name in the mid and late 1970s and into the 80s,” says New York-based design consultant Robert Cafaro. “It was exemplified by the Pinto, the Dodge Omni, the original Ford Fiesta, AMC Gremlin and the Volkswagen Rabbit.” Says Cafaro, “These cars were not well-made and they came on the scene as a response to higher gas prices, so they were associated with sacrifice, not aspiration.” Hatchbacks, Cafaro adds, became associated with being the car your college kid packed with stuff in late August to head back to school — and that image stuck for a long time.

It was ironic then that in 1994, Ford launched a tiny hatchback called “Aspire.”

What auto executives and product planners can’t explain is why the Focus five-doors didn’t sell in the U.S., but the Honda Fits do. Ed Kim of auto industry consulting firm AutoPacific says it seems to boil down to a combination of the design and the image of the brand. “To some degree, SUV’s and crossovers have legitimized the hatchback, but to most people they still identify hatchbacks with one of too things, cheap, or — and this isn’t necessarily bad — ‘young'” says Kim. “Vehicles like Volkswagen GTI or Audi A3, and even Mazda3 to some extent aren’t downmarket at all. They are perceived as sporty, high performance, and youthful. Those are the so-called “hot hatches.”

Indeed, the enthusiasts who doll up their small cars with performance accessories love small hatchbacks, especially when they have go-fast engines in them.

Some would say that Americans never really scorned hatchbacks, just small ones without much in the way of performance. After all, every minivan, compact SUV and crossover is technically a hatchback. It is undeniably a useful tool to have whether one is a city mouse or a country mouse. In a country that has turned perfectly good one and two garages into storage sheds because of all the crap we keep on hand — despite such handy riddance mechanisms like garage sales, Craigslist and eBay — its understandable that we like utility vehicles of any kind on hand for hauling it all place to place.

Part of the reason automakers are planning for more and building more small hatches is the expectation that gas prices will climb above $3.50 a gallon by mid-decade and stay above that level — or perhaps climb higher for a “new normal” in gas prices.

“People will demand better gas mileage, but they won’t want to give up utility,” says Peter Savard, a New York-based trend analyst.

Hatchbacks are still a bit of a hard sell in the luxury category. BMW, Audi and Mercedes all sell touring wagon versions of their cars in Europe in healthy numbers. But in the U.S. they’ve been but a blip, with the Audi A3 and Volvo C30 selling in small numbers. But there is no arguing with the success of the MINI Cooper, which is selling about 50,000 a year. It has influenced every automaker on how it thinks about both premium small cars and hatchback.

Hatchbacks seem to have lost their stigma. Now, they are part of the overall “utility” class of vehicles that is here to stay. But as sales trends indicate, their popularity seems to depend on the price of gas and how good the designs are. So, memo to automakers: More like the MINI and Fit, fewer Aspires and Gremlins.

Now, if we could just get the single-payer healthcare.

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