(Bloomberg) -- This week in Geneva, the world’s blue-blooded European carmakers showed off their newest creations in a parade of carbon-fiber reptiles that command six-figure sums.
The annual menagerie included a huge Mercedes truck that will cost $500,000, the most powerful Ferrari ever made, and a tangerine McLaren that tops 212 miles per hour. But here and there across the floor, an even stranger beast appeared—one many thought to be extinct: the station wagon.
The Porsche stand, a mecca for sports-car fiends, was crammed with its new hatchback Panamera Sport Turismo, which ships to dealers in the fall. Volvo trotted out its sleek V90, looking as sexy as many a two-seater on display. And Mercedes showed off its AMG E63 S wagon, a dad-bod shell stuffed with Usain Bolt legs. Here’s the Instagram pitch from Mercedes communications chief, Rob Moran.
Instagram: Instagram post by Rob Moran
Yes, the sober station wagon, one of the smallest, quirkiest niches of the global auto market, is poised for a remarkable renaissance. To anyone whose been on U.S. roads lately, this may be surprising news. Last year, some 55 percent of vehicles sold in the U.S. were either pickup trucks or SUVs, according to IHS Markit.
Indeed, the wagon has been on a long, slow skid to obscurity since Chevy Chase hooned his Family Truckster across the country in 1983’s Vacation. These machines weren’t very sexy to begin with. When the SUV came along with the same cargo space in a tougher, taller package, even the Griswolds made the switch.
Lately, the skid has accelerated. Over the past five years, as the U.S. auto market surged, domestic wagon sales fell by 16 percent, to just 77,200 in 2016. Ford Motor Co. sells that many pickups in a decent month.
So why the sudden glut of new rigs with seats in the way, way back? It turns out that the wagon data is a bit deceiving. Much of it can be attributed to a dearth of product, since the number of station wagons available to U.S. buyers dropped from 17 to just seven over the past five years.
Acura scrapped its wagon, as did Cadillac, and Saab finally ground to a full stop. Meanwhile, Audi and BMW decided to keep their high-end wagons in Europe, as U.S. orders dwindled to the point where it didn’t make sense to load a ship.
“There’s a fundamental demand level that doesn’t fluctuate much,” said IHS Automotive Senior Analyst Stephanie Brinley. “It’s enough for the players who are left to see some healthy take.”
Here’s the other thing that wasn’t missed in the C-suites of Stuttgart: The small crew of drivers who still keen for a wagon are the best customers in the car business. They are more educated, more affluent, and perhaps most important, more loyal than other buyers. In a consultant’s quadrant of customers charting effort vs. profit, these are the folks in the box at the top right: the keepers.
“It’s a great customer for us,” said Dana Headrick, product manager at Mercedes-Benz USA. “I almost liken them to the millionaire-next-door type of person.”
Volkswagen’s new SportWagen and Alltrack are proving particularly popular with cyclists and kayakers, according to Hendrik Muth, head of product planning at Volkswagen of America. Their roof racks are easier to access than those on an SUV, with plenty of space in back for gear.
“The buyer is slightly more male and more sports-oriented,” Muth said, dispelling the station wagon-soccer mom cliché of a few decades back.
Bryce Beerman, who owns a New England company that stages trade shows for woodworkers, recently handed the keys back on a 2013 Audi Allroad after a three-year lease. “I don’t typically get excited about these things, and I was excited to get that car,” he said. “I’m a wagon guy, and it was the best-looking one out there.”
Now he’s waiting to test-drive the Volvo V-90.
The cargo space will be clutch for his family’s two dogs and the gear the family hauls back and forth to a 25-foot fishing boat north of Boston. A truck, he realizes, would probably make more sense. But Beerman, 38, hates trucks. “They’re not cheap, and they’re not economical,” he said. “Plus, I grew up being able to drive a sports car now and again, so I’ve always been partial to these designs.”
Volvo has so much confidence in potential buyers such as Beerman that it isn’t even bothering to stock its new wagons at U.S. dealerships. Customers who want one will place an order and then wait a few weeks while the machine is hammered together and shipped from Torslanda, Sweden.
Such inelastic demand is manifest in pricing. Though they are usually skittish about losing customers to rivals, when it comes to wagons, auto executives have the swagger of Texas pickup dealers. Sure there aren’t that many customers, but there aren’t that many wagons anymore, either, at least not in the U.S.
Consider the Mercedes E-class wagon. In North America, window stickers on the bare-bones version start at $62,300, almost 20 percent more than the starter E-class sedan. Part of the spread is because the base model wagon comes more fully stocked with such goodies as four-wheel drive. But the cars are essentially the same, which is another reason why wagons are getting the green light from product planners.
A station wagon is a marvel of financial engineering, as much as mechanical. With higher prices and virtually zero added cost, its unit economics are usually better than those of conventional cars. “From B-pillar forward, it’s basically the same as a sedan,” said Brinley at IHS. “Compared to developing a whole new model, it’s not that hard to make a wagon.” IHS forecasts a little bit of growth in the station wagon segment as new models come out and Chinese drivers discover hatchback life.
“We don’t chase volume,” Porsche Chairman Oliver Blume told the crowd in Geneva this week. “We simply build great cars that people desire.”
It helps that today’s station wagons are incredible. Long gone are the days when these machines approximated rolling condominiums, with faux wood siding and sofa-like seating for the entire family. Driving dynamics are one place where wagons still beat out their taller siblings. And with the utility box checked off by SUVs, the segment is getting sportier.
The Mercedes E400 slaloms through LaGuardia Airport traffic effortlessly, its two-turbos and nine transmission speeds ushering it among lanes with a calm urgency that defies its size. Zen-like is the term that comes to mind. Our man Woodrow, slumped against the hatch, never even woke up. Had we gotten into an accident, the car’s sensors would have cued “pink noise” to protect his velvety ears.
Volkswagen’s Golf Alltrack has a whippier feel, encouraged by a flat-bottomed steering wheel with little in the way of resistance. Corkscrewing onto Manhattan’s FDR Drive, the pup’s head popped up as the smaller engine queued its whiny turbo-charge. At less than half the price of the Benz, stateliness is not standard. But the handling— particularly all-wheel drive—did not disappoint.
Surely, the new wagons coming from Mercedes and Porsche will put both of these models to shame, once they show up on the road. Oddly, the only thing that might make the exotic station wagon extinct in the U.S. is a trade war. Subaru aside, almost every version on the market today is assembled in Europe and shipped across the ocean. Of course, that will change if Cadillac gets back in the wagon game.
To contact the author of this story: Kyle Stock in New York at firstname.lastname@example.org.
To contact the editor responsible for this story: David Rovella at email@example.com.
©2017 Bloomberg L.P.