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Jumping on the Hatchback Wagon

The newest breed is sleek, sporty and drives the youth market wild.

Mercedes-Benz likes to refer to its new C230 as a “coupe.” Suzuki slapped an “SX” (sport crossover) label on its trendy new Aerio. Both Toyota and General Motors’ Pontiac have adopted the term “crossover utility vehicle” to describe the versatility and sporty features of their respective station wagonlike models, the Matrix and the Vibe. But all the overindulgent verbiage is just a clever way of disguising what these cars, and the scores of others like it, truly are: the new breed of hatchbacks.

While American hatchbacks, such as the Chevrolet Vega and Ford Pinto, were all the rage in the 1970s and early 1980s, consumers eventually lost interest in such autos, dismissing them for larger sport utility vehicles. But the recent shift by price-conscious motorists to fuel-efficient vehicles with maximum flexibility has brought about the revival of the hatchback. According to California-based market research firm J.D. Power & Associates, hatchback sales this year will grow to 630,000, up from 384,000 in 2000. In addition, the firm estimates that hatchbacks will make up 4 percent of the U.S. automobile market, up from 2.2 percent two years ago.

“Hatchback’s are neat, because they’re really capturing the entire scope of the market. Initially, the target market for the Matrix was set between 17- and 35-year-olds, but since it was introduced, we’ve been selling to 17- and 70-year-olds,” says Dennis Tengan, general manager of Toyota City. “It’s a little station wagon in design, so it satisfies the older market in that way, and the youth love it because it’s so sporty.”

The youth also love it because it’s so economical. The Toyota Matrix starts at $15,155, while the Pontiac Vibe (which comes with a few extra bells and whistles as standard equipment) will run you $16,900. Even Mercedes-Benz, the posh and swanky German brand known to cater to the upscale market, is trying to tear into the youth market with its first ever U.S. model hatchback, the Mercedes C230. The C230 “coupe,” as Mercedes prefers, is also the first car the company has ever offered for under $25,000 in the United States. Like everyone else, Mercedes is making a bid to lure the younger buyers, with the goal being future brand loyalty.

“At these prices, young professionals in their 20s and 30s can now afford to step into a Mercedes. And once you drive a Mercedes-Benz, it’s going to be very hard for you to drive anything else,” says Aaron T. Swain, sales associate for Honolulu-based Mercedes-Benz. “So if we get you when you’re young, the chances of us keeping you for a lifetime is even better.”

Mercedes kicked off a multimedia advertising blitz in Hawaii and is hoping to sell between five to 10 C230s per month. Tengan says Toyota City, too, recently launched several promotions for the Matrix – all geared toward the elusive youth market. “We did a marketing venture with Chevron, where they’ll give away one Matrix a day. Then we had an ongoing promotion with the nightclub World Café,” he says. National broadcast commercials are doing their bit to stir up the hatchback frenzy, as well.

But the market is quickly crowding – J. D. Powers estimates that the number of hatchback models available will increase to 23 this year, from 15 models two years ago – so whether these highly functional vehicles can lure enough buyers to absorb the supply remains to be seen. “It depends,” says Rex Parker, vice president and senior consultant for automotive marketing and product consulting firm AutoPacific Inc. “Is America’s youth in the mood to buy these multifunction vehicles? The jury is very much still out.”

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Hawaii Business,June