The Top Drops on Convertible Sales

"Feel-good" cars like convertibles fall to the bottom of the priority list during an economic downturn

by Jim Henry

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Nobody needs a convertible. In fact, there are few better illustrations of sheer hedonistic, profligate enjoyment than driving a small car at high speed into the sunset with the top down. It is a supremely selfish, environmentally uncool act. But boy, is it fun.

When the Dow was surging, the dollar was whipping the euro, and gas cost around two bucks a gallon in the U.S., convertibles were selling almost as fast as subprime mortgages. The category—granted, a tiny one—outperformed the rest of the U.S. automotive market in 2004 and 2005 when total U.S. auto sales were still slowly improving. Even in 2006, despite rising gas prices and the beginning of a downturn in U.S. auto sales overall, convertibles managed a slight 0.9% gain in registrations, according to R.L. Polk registration data.

"We joke that a convertible is a midlife crisis car, it's a feel-good emotional car," says Lonnie Miller, director of industry analysis for Polk. "There are all these psychological factors, and if people are uncertain, it falls to the bottom of the priority list when it comes to transportation needs.". That was evident in 2007, when total U.S. light vehicle sales fell for the second year in a row. Sales in 2007 slid 2.5%, to about 16.1 million. Convertible registrations dropped more sharply, by 8.9%, to 257,313.

Weather Factor

So far this year, sales are off even more for several of the biggest-selling convertibles, like the Pontiac Solstice. Solstice sales fell to only 2,971 in the first quarter of 2008, down 22.9% from the year-ago quarter, according to AutoData. Sales for its twin, the Saturn Sky, fell 24.6% to 2,140 in the first quarter. Granted, the first quarter is seasonally poor for convertibles because of the weather, but that shouldn't affect year-ago comparisons. AutoData of Woodcliff Lake, N.J., compiles sales data from the automakers, based on retail deliveries at dealerships.

Polk, based in Southfield, Mich., compiles auto registration data gathered from state motor vehicle departments after you register your vehicle. Registrations should not be confused with sales data, even though over time, the numbers are close. Because its data come from all 50 states, Polk takes longer to compile them than it takes AutoData to gather sales reports from the automakers. For example, Polk's first-quarter figures weren't out in time for this article, while AutoData sales numbers for the first quarter were published on Apr. 1. But Polk registration data offer greater detail than sales figures. For example, Polk breaks down registrations by body style, distinguishing between coupes and convertibles with the same model name. The car companies don't always publicly disclose that much detail.

Even more than the rest of the auto industry, convertibles are a segment where the question, "What have you done for me lately?" is important. That is, sales for a new model usually peak in the first year after a new product is launched, then fall faster and harder than for ordinary sedans.

Besides the slumping economy, falling curb appeal could help account for the drop in sales for the Solstice and Sky, the Toyota (TM) Camry Solara SLE Convertible, the Volkswagen Beetle convertible, and the Mazda Miata. Sales are down so far this year for all those models, none of which is new.

Somebody's Always Rich Enough

"Convertibles are probably one of the most fickle segments in the industry, in terms of sustained demand," Miller says. He estimates that only about one in five owners comes out of a convertible and buys another.

Among luxury brands, some convertibles are selling well, considering how small a niche it is. Sales were up 48.4% in the first quarter for the Volvo C70 Convertible, which starts at $39,985, but that represents first-quarter sales of only 1,500 units. It's easier to achieve a big percentage increase on such a small number. The current C70 was redesigned in 2006 as a 2007 model.

Sales of the Mercedes-Benz SLK Roadster—which was given a facelift in January for the 2009 model year—were up 25.8% in the first quarter, to 984 units. "There are some people who seem unaffected, almost no matter what," Miller says. Unfortunately, there aren't as many of those people around as there have been in recent years.

If you're shopping for a convertible but don't want to spend too much, click here to see 13 convertibles for $30,000 and under.

Jim Henry is a reporter covering the automotive industry and automotive trends in BusinessWeek's New York office.