Taurus Goes For The TitleGreg Bowens
It was a slap in the face to Detroit. In 1989, Ford Motor Co.'s subcompact Escort was toppled as the best-selling car in America by the midsize Honda Accord. Since then, to the embarrassment of domestic carmakers, Accord ads have bragged about the car's top spot. But no more. Ford is back.
Its Taurus, the 6-year-old midsize model, is leading the resurgence. Since being restyled last fall, the Taurus has been steadily closing the sales gap with the Accord. During the first four months of 1992, Taurus sales rose 10%, while Accord sales dropped off 8% (chart). Indeed, Taurus sales were so strong that Ford's total market share rose a full point during the period, and the company turned a $338 million first-quarter profit--its first quarter in the black since the summer of 1990.
The two cars are now running neck and neck, with Honda ahead one month and Ford ahead the next. Tailgating them both is the Toyota Camry, which has logged a 22% increase in sales this year. "There is going to be an explosion here real soon, and it's going to be interesting to watch," says George C. Peterson, president of market researchers AutoPacific Group Inc. in Santa Ana, Calif.
Of course, more is at stake than simple bragging rights. Midsize family sedans such as the Accord, Camry, Taurus, and the Chevrolet Lumina make up 34% of the total car market. Better yet, they generally return an average 16% to 18% profit margin. On smaller cars such as the Escort, manufacturers generally lose money. And a steady supply of aging baby-boomers means demand for midsize cars will stay strong. Midsize sales are expected to rise 20% over the next five years.
SHORT SHRIFT. Nearly all of the auto companies are doing their best to grab a piece of the action. Nissan Motor Co. is getting its Altima ready for a summer debut. And Chrysler Corp. this fall will launch its midsize LH sedans--the Dodge Intrepid, Eagle Vision, and Chrysler Concorde. But the newcomers face a tough challenge in dislodging the three leaders, which hold a combined 76% of the segment. Indeed, Ford's sales are so strong that it casually dismisses its onetime fierce rival, Chevrolet. The Lumina, "is a dead dog," crows Richard N. Beattie, Ford Div. marketing plans manager. Chevy isn't giving up, though: It plans to come out with a revamped version of the model soon.
The darling of baby boomers, the Accord grew over the decades from a compact to a midsize sedan as its customers aged. But consumers can be fickle. The Accord is showing its age, and Toyota's new Camry is cutting into its customer base. Indeed, on the West Coast, where Japanese-made Accords are sold, sales plummeted 50% in March and an additional 26% in April. "I think we're giving Accord some fits," says George Borst, Toyota's vice-president of strategic and product planning. Adds analyst Maryann N. Keller of Furman Selz Inc.: "Camry is essentially stealing customers from Accord and making Ford look good in the process."
Meanwhile, the Taurus and Camry have launched a marketing blitz against Accord. Like its Ford rival, the Camry was restyled last fall. The Accord hasn't been remodeled since 1990 and won't be until 1994. And both the Ford and the Toyota offer a V-6 engine, bigger than the Accord's four-cylinder power plant. Ford also is pushing its safety edge: It's the only midsize car offering both a driver's air bag as standard equipment and, for an extra $400, an optional passenger-side air bag. With 80% of Taurus buyers ordering dual bags, Ford says it can't keep up with demand.
SECRET WEAPON. Honda doesn't seem to be panicking. "I guess there is a little bit of a concern for us, but nobody is jumping off the roof--yet," says Gerald R. Bankston, Honda Motor Co.'s vice-president for marketing and distribution. The anxiety level might grow if Honda can't work down its inventory. Dealer stocks of Accords are hovering around 80 days' supply. That's a lot of cars waiting to be sold, especially considering that this time last year, Honda had only 50 days' worth of Accords.
Privately, even some Honda officials concede that Taurus will win top-seller honors this year. Best of all, Ford says it has kept Taurus' sales booming while reducing its dependence on sales to rental-car fleets. Toyota and Honda avoid pumping their numbers up with rental sales, on which companies usually take a loss. But if Taurus and Accord approach yearend nearly even, rental sales could be a secret weapon: Ford could push enough vehicles into the fleets to ensure a victory.
Ford can't turn on the cruise-control yet, though. Chrysler execs say they are "hungry and eager" for the chance to take on the competition with their new LH models. "What you are seeing is a resurgence of the American car in that market," says Steven Torok, general manager and head of marketing for the LH team. The three sedans feature a daring design, standard dual air bags, and a standard V-6 engine. Chrysler will have fewer than 100,000 to sell this year, however, so the trio won't challenge the leaders. In 1993, though, Taurus marketers may have to keep one eye on the rearview mirror as they race against all comers.