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THE BIG THREE THINK THEY SMELL BLOOD
There's nothing like brand-new cars to lure car buyers into dealer showrooms. Every year, auto makers bank on snazzy new models, launched with plenty of hoopla, to persuade customers to trade in their aging rides for something fresher. This year is no exception, with Detroit and Japan rolling out spiffy new vehicles that range from Chrysler's Euro-style LH midsize sedans to the sporty open-air Honda del Sol to Ford's beefy Ranger compact pickup.
But this time around, Detroit is going for Japan's jugular. With the sluggish economy making consumers nervous, Motown is trying to tempt the recession-weary with bargains. It's holding price increases for its 1993 lineup to an average of just 1.2% over last year, figures Salomon Brothers Inc. analyst Jack V. Kirnan. And on some models the Big Three are throwing in attention-getting lagniappes: low-cost options packages (box), bargain-basement lease deals, or free roadside service. "The domestics' message for the 1993 model year is going to focus more on value," says Christopher W. Cedergren, an analyst at AutoPacific Group Inc. in Santa Ana, Calif.
Detroit hopes all that will translate into more market share gains vs. Japan. Japanese car companies, hit by lousy profits and political pressures in the U.S., will probably raise prices by just over 3% this fall, Kirnan estimates, after a 4% hike last spring. He expects additional increases in 1993. Buoyed by the growing price advantage, Motown has already raised its share of the car and light-truck market by two points, to 72.4%, so far this year, and it hopes to eke out a bit more in 1993.
ADDED BURDENS. But even attractive prices may not coax potential buyers out of their shells. The analysts' consensus is that sales of light vehicles should creep up to about 13.5 million or so next year, from a projected 13 million this year. Part of the problem may be that for many buyers, even today's best bargains may seem high-priced. Cars are less affordable than ever. New wheels now cost, on average, the equivalent of 25.9 weeks' pay, up from 18.1 weeks 20 years ago (chart). Detroit blames the added burden of more rigorous safety and antipollution regulations.
The new model year poses different challenges for each of the Big Three. Ford, which has been the only company to increase its share in both cars and light trucks this year, will try to maintain momentum. General Motors Corp. is just trying to hold its own while it restructures. And for Chrysler Corp., whose minivans and Jeeps are a roaring success, the trick will be to show that it still knows how to sell cars. Its new LH line of family sedans--the Dodge Intrepid, Eagle Vision, and Chrysler Concorde--hit the showrooms this fall. The cars, which range from a $15,930 base for the Intrepid to $22,000 for a loaded Concorde, are so important to Chrysler that wags say LH stands for "Last Hope."
The new Chryslers are getting rave reviews, but the midsize sedan market is brutal. Honda's Accord and Ford's Taurus are battling for the best-seller spot, an honor the Accord has held for the last three years. Ford, with the Taurus trailing by just over 24,000 cars as of September, is now offering 0.5% financing on two-year leases. With $1,500 down, a lessor can now drive off the lot with a well-equipped 1993 Taurus GL for $249 a month.
Nissan Motor Co., meanwhile, is coming out with a comeback car of its own--the new Altima family sedan, which replaces the slow-selling Stanza. The Altima is small for a midsize, but it's priced to sell: It starts at just $12,999, vs. the Taurus' $15,491 base price.
The Japanese companies are turning up the heat in a number of other areas, too. This year, Toyota Motor Corp. will offer Japan's first big pickup, the T100. And Japan is set to unleash a host of attractive small cars. Toyota is moving its Corolla upscale, making it longer and upping its base price 15.2%, to $11,198. The added money buys extras such as standard driver airbags.
Among even smaller entries, Honda's new del Sol two-seater runabout, which starts at $13,200, has a nifty fiberglass top that stows neatly in the trunk (page 136). And Mitsubishi Motors Corp.'s new Mirage is a roomier, spruced-up version of the economy car, starting at $7,649.
In each case, however, Detroit has a riposte. To boost truck-owner loyalty and fend off Toyota, Ford is offering free 24-hour roadside service to all buystarts at $13,200, has a nifty fiberglass top that stows neatly in the trunk. And Mitsubishi Motors Corp.'s new Mirage is a roomier, spruced-up version of the economy car, starting at $7,649.
In each case, however, Detroit has a riposte. To boost truck-owner loyalty and fend off Toyota, Ford is offering free 24-hour roadside service to all buyers of its F-series full-size truck, the industry's sales leader. Ford is also taking on Toyota in small trucks with its macho, revamped Ranger, which is designed to steal sales from Toyota's trendy, small four-wheel-drive pickup.
The Big Three also have some new small cars of their own--though not all of them match up well against Japan. GM's import-buster Saturn will probably continue to sell well--especially with a zippy new station wagon out for 1993. And Chevy's new GEO Prizm is a strong entry. It's made by a GM-Toyota joint venture and has the same improvements as the Corolla. But Chrysler will have to use freebie features to keep its aging Plymouth Acclaim, Dodge Spirit, and Chrysler Le Baron sedans in the race.
SPORTS SHORTS. Luckily for Detroit, strong reinforcements are on the way. Early next year GM introduces its new Pontiac Firebird and Chevrolet Camaro. Ford will also come out with a high-powered, limited-edition Mustang Cobra, which is supposed to help stave off more market-share erosion until a fully revamped 1994 Mustang arrives.
Cadillac is escalating its assault on Japanese newcomers Lexus and Infiniti, as well as traditional European rivals. GM's luxury division is adding its potent Northstar V-8 engine, a hit in the Allante, introduced in April, to its stylish Seville touring sedan and two Eldorado coupes. In December, Ford will unveil the Lincoln Mark VIII, a sleek coupe with a powerful 32-valve aluminum V-8. Ford's first multivalve V-8, it finally puts the company on par with Japanese engine technology. Not to abandon its traditional, older buyers, Cadillac also is introducing new land yachts, the Fleetwood and Fleetwood Brougham, even longer than their 18 1/2-foot predecessors.
Will all these hot new models sell? There's plenty of pent-up demand, but consumers are still balking. The University of Michigan's consumer confidence surveys find that Americans view the economic outlook as "mediocre at best," says Michigan economist F. Thomas Juster. "The uncertainty of the employment outlook," he says, is keeping potential buyers out of the showrooms. Translation: Hot new models can help, but for Detroit to get a real boost, the economy has to get purring.Kathleen Kerwin in Detroit, with Larry Armstrong in Los Angeles and Thane Peterson in New York