LONDON - Passenger-car sales rose by over four percent in 1997, but minis, minivans and sports cars did far better than the overall market.
The mini segment rose 25 percent with help from Italian sales incentives. It accounts for almost one in 10 cars sold in Europe.
Minivan sales rose more than 20 percent and sports cars were up almost a third. Sport-utilities began to level off, rising 7.9 percent.
The only volume sector to grow much was the Vectra-led upper-medium class. Sales were up almost 9 percent.
Superminis and lower-medium Golf-class models remained flat. Luxury segments lost ground.
'The shift towards smaller cars isn't only being driven by the Italian incentives,' said Klaus-Juergen Melzner, auto industry analyst at Deutsche Morgan Grenfell in Frankfurt. 'We're also seeing the effects of constraints in the European economies, higher unemployment and low wage rises.'
A trend towards niche models is striking, said Chiara Tirloni, analyst at Credit Suisse First Boston in London.
'Niche models, especially the sports cars, are becoming much more affordable than before,' said Tirloni, 'thanks to production efficiencies.'
The Fiat Panda and Lancia Ypsilon did well in Italy, but it was not enough to catch the Ford Ka, Renault Twingo or Peugeot 106, which leads the segment.
The mix will change this year with the launch of the Volkswagen Lupo. VW's Seat Arosa, launched in April, barely moved into the Top 10.
'The limited impact of the Arosa must be disappointing to the VW group,' said Melzner.
Boosted by Italian incentives, the Fiat Punto was European market leader as well as top supermini. The Ford Ka stole sales from the Ford Fiesta, which lost 125,000 units.
Renault held the decline of the Clio to 7.1 percent in its last full year on the market. The GM Corsa increased its share of the segment.
Volkswagen's slow ramp-up for the new Golf cost 130,000 units and left the door open to rivals.
General Motors took advantage to ease the run-out of its Astra prior to the new model's arrival in March. The old model declined by just 2.3 percent - compared with an 8.1 percent fall for the Ford Escort, which will not be replaced until the fourth quarter.
The Renault Megane rose by one-third over 1996.
'It is an outstanding success due to the Scenic version,' said Melzner.
Growth has been driven almost entirely by the Fiat Marea and Volkswagen Passat. Together, they added 200,000 units and more than offset the drop in the sales of the three French contenders.
GM's Vectra held the top position, just ahead of the Ford Mondeo.
'They've both given quite a good performance,' said Melzner. 'But it's the Passat that's the new star on the horizon.'
Nissan is seeing results from its facelifted Primera. Sales rose 28 percent.
Mitsubishi Carisma sales were up more than 80 percent, but it failed to make the segment's Top 10.
'It's doing well,' said Melzner, 'but Mitsubishi must be disappointed the Volvo version is selling so much better.'
The Audi A4 has been squeezed hard by three cars from other segments, the VW Passat and Audi A3 and A6. But the A4 still leads its Mercedes and BMW rivals.
Volvo's S40/V40 almost doubled its 1996 sales total to take fourth position.
The new Alfa Romeo 156 could also have a big impact, said Tirloni of Credit Suisse First Boston. 'It is already well on target, but a potential problem may be that it is not seen as a premium brand like BMW or Mercedes.'
The Mercedes E-class and BMW 5 series are still well ahead of the Audi A6. But the Audi has overtaken the Volvo S70/V70 and stands to gain more when the Avant wagon version arrives later this year.
Hardest hit in this sector was the GM Omega, though once again it is one of the few volume executive cars to keep pace with premium-label models.
Another exception is the Renault Safrane, which continues to do well following its late-1996 facelift. Volvo's rear-drive 900 series staged a 6.4 percent comeback in its farewell year.
Mercedes' once-dominant S-class will be replaced this fall. The aging Mercedes slipped further behind the BMW 7-series, which itself declined 14 percent.
Both the Audi A8 and the Jaguar XJ series are challenging BMW and Mercedes.
The Jaguar is beginning to benefit from a facelift and new V-8 engines introduced last autumn.
'The A8 is now challenging the S-class,' said Melzner. 'It is probably attributable to the new range of engines, especially the diesel. The 7 series is clearly ahead now, but the S-class is sure to stage a comeback once it is renewed.'
Coupes dominate the top of the segment, despite impressive growth by new roadsters.
Sales of the segment-leading GM Tigra are holding up, through its lead may be challenged by Ford's Puma and new Cougar. The segment may expand further as the higher-priced BMW Z3, Mercedes SLK and CLK overcome production bottlenecks.
The Porsche Boxster, which has also been restricted by production capacity, missed the Top 10.
Debuts of the GM Sintra and Toyota Picnic, and facelifted versions of the Chrysler Voyager and Renault Espace, helped the segment grow.
Espace sales grew by 48 percent over 1996. The Ford Galaxy was down almost 14 percent, while the near-identical Volkswagen Sharan was up 3.9 percent.
Minivans built on the VW/Ford platform hold close to one-third of the segment.
The segment is fashion conscious. The Toyota RAV4, Mitsubishi Pajero and GM Frontera fell back as the Suzuki Vitara increased its lead.
Land Rover's second-place Discovery also weakened and Jeep's Cherokee series is coming under increasing pressure as carmakers like Volvo and Audi launch crossover wagon/sport-utilities to gain a slice of the leisure market.
The two big forces for 1998 are likely to be the Honda CR-V and Land Rover Freelander.
'It looks as if the customers are just bored,' said Tirloni. 'It's new cars that tend to do well in the segment, cars that are perceived as fun.'