A recent post on Autoblog understandably laments Kia’s decision to price the Rio hatchback higher than the Rio sedan. The concern is that such pricing will decrease the likelihood that customers will purchase the hatchback version, and increase the likelihood that our automotive landscape will continue to be marred by the car equivalent of weeds. Although this concern may make intuitive sense, Kia’s and other automakers’ pricing schemes may actually increase the esteem of hatchbacks in customers’ eyes and ultimately increase hatchback sales.
Automotive enthusiasts (and much of the rest of the world) tend to like hatchbacks. They are versatile, arguably better looking than sedans, and primed for sportiness. In contrast, it has been said many times that Americans do not like hatchbacks. Given the above arguments, Americans’ supposed aversion to hatchbacks makes little sense. Whenever behavior seems illogical, psychology can usually explain it. This case is no exception.
Even the most basic car-buying decision is influenced by emotions. For many decades, Baby Boomers have dominated the automobile consumer segment. Many Boomers came of age in an era of large sedans that evoke wonderful memories (ironically, memories made all the more distant by Boomers’ decisions to seemingly ruin the very things that made those cars possible). In addition, hatchbacks began to infiltrate showrooms in earnest during the 1970s oil crisis. Hatchbacks were largely offered for economy and not for versatility, looks, or sportiness. Thus, they do not have any real nostalgia associated with them for most of the car-buying population, and they may be perceived as cheap alternatives to sedans.
Negative emotions 1 Hatchbacks 0
Fast forward to today. While it is likely that hatchbacks are still perceived as being relatively low rungs on the automotive ladder, the reality is not so simple. First, ultra-luxury cars such as the Porsche Panamera and Aston-Martin Rapide (one of the most gorgeous cars to ever grace the roadways) are hatchbacks. Yes, really. Furthermore, the new Ferrari FF and proposed Bentley shooting brake are also hatchback/wagon variants. Second, Mini Coopers, Audi A3s, and even VW GTIs are on the premium side of the double-yellow line, albeit at much lower price points than the previously mentioned cars. Third, an increasing number of new vehicle launches (Ford Fiesta and Focus, Chevy Sonic, Hyundai Veloster) and industry stalwarts (VW GTI and Mazda Mazdaspeed 3) are hatchback-heavy or only offered in hatchback form. While some of them are aimed at people on a budget, none are being offered as lesser variants of their sedan siblings. In fact, it’s quite the opposite. The result is that a new generation (literally) is growing up with and aspiring to own, dare I say it, hatchbacks!
The score may be beginning to even out.
So what role does pricing play in this psychological equation? Pricing is important to our perception of a product’s place in the market. For example, suppose you walk into Home Depot with intentions of purchasing a power tool, something about which you hypothetically know nothing. You see a bunch of drills laid out in front of you, all of which look similar. However, some are priced in the $50 range, others in the $150 range, and yet others in the $400 range. All else being equal, which range of drills do you perceive as “better”? Exactly. That is why hatchbacks may actually benefit from higher prices relative to their dowdy siblings.
Have no fear hatchback fans. Before long, you may be lamenting that you see too many of them on road as opposed to not enough. We’ll save the psychological lure of exclusivity for another time though.