Auto Industry

Big 3 counting on cars to win back market

Meanwhile, import auto makers set sights on bastion of Americana -- the pickup

By GREG KEENAN
Monday, January 5, 2004 - Page B1

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DETROIT -- As the Big Three auto makers kicked off the year of the passenger car yesterday, their offshore-based rivals unveiled plans to step up their assault on the truck market -- the last bastion of profitability for the Chrysler group, Ford Motor Co. and General Motors Corp.

Chrysler, Ford and GM hope the cars they began showing off yesterday at the North American International Auto Show in Detroit will win them back buyers in the United States and Canada who have abandoned their sedans and coupes in favour of Toyota Camrys, Honda Accords and Nissan Altimas and Maximas.

The Big Three have watched their share dwindle -- to less than 45 per cent of the North American passenger car market amid steady gains by Honda Motor Co. Ltd., Nissan Motor Co. Ltd., Toyota Motor Corp. and auto makers from South Korea and Europe.

"Somehow, collectively, they made a decision to stem the tide of loss of market share in passenger cars," Joe Phillippi, a veteran industry analyst who now heads Auto Trends Consulting Inc. in Short Hills, N.J., said of the Big Three.

For the Chrysler division of DaimlerChrysler AG, two new cars assembled at a plant in Brampton, Ont., are the keys to a comeback in passenger cars and crucial to its 2004 strategy of launching nine new vehicles to win back market share and restore profitability.

The two cars are the Dodge Magnum station wagon and the 300C sedan. Chrysler had made a bet of more than $1-billion (U.S.) that switching its flagship cars to rear-wheel-drive will lure back North American drivers.

"Obviously, the large cars are the most important of all cars and, therefore, they are very important to us as we want to become stronger on the car side again," Dieter Zetsche, president of the Chrysler group said yesterday.

For GM, the key, new car is its Chevrolet Cobalt compact, which is aimed at winning back share in a segment now dominated by Honda, Toyota and South Korean companies, especially in Canada, where compact cars represent the biggest segment of the market.

The Cobalt, which comes in a sedan and coupe version as well as the HHR station wagon that resembles Chrysler's PT Cruiser, replaces the Chevy Cavalier and Pontiac Sunfire in GM's compact lineup.

Another key car for GM is the Cadillac STS. Cadillac has been a recovery story for GM in recent years, with the CTS sedan winning back market share.

The world's largest auto maker is hoping for more of the same from the XLR crossover utility vehicle and the STS, which will be Cadillac's flagship car.

At Ford, the Five Hundred sedan, Mustang sports car and Freestyle crossover utility vehicle are the key new products this year.

"This is the strongest lineup of new products that we've ever had," Ford chairman Bill Ford told reporters yesterday. "Ford is back."

The Japan-based companies aren't sitting still, but they're spending the 2004 and 2005 model years focusing on pickup trucks, sport utility vehicles and minivans.

The Japanese firms hope to eat into the Big Three's domination of those markets the way they have captured the biggest share of the car market.

"The Asians have used their strength in passenger cars to fund their entry into trucks," said Michael Robinet, vice-president of consulting firm CSM Worldwide Inc. in Northville, Mich.

Honda took a big jump yesterday by introducing what amounts to the first truck it has built, a sport utility vehicle that combines the attributes of an SUV with a pickup truck bed. It will be built at Honda's plant in Alliston, Ont., alongside the Odyssey minivan and SUVs for Honda and the company's luxury Acura brand.

This is not yet a major challenge by Honda to the Big Three's pre-eminence in pickups in North America, but there is a threat from Nissan's Titan, which is put together at a plant in Mississippi along with a minivan and two SUVs from the revitalized auto maker.

Of all the new vehicles from offshore-based companies, perhaps the most important is the next Toyota pickup. The Japan-based auto maker is building an assembly plant in Texas -- the largest pickup market in North America -- that will dramatically increase its output of pickup trucks.

Toyota is launching a pickup with a hybrid gasoline and electric engine, hoping to score the same success in that market as it has with a redesign of its Prius sedan.

"The competition in full-sized pickups has reached a fevered pace," Mr. Robinet said.

In Canada, cars represent 54.6 per cent of the market while trucks, including SUVs, make up 55.4 per cent. In the United States, trucks lead with 53.7 per cent, with cars having 46.3 per cent.

The vehicles being unveiled in this show at the three-day media preview that began yesterday represent the biggest chunk of a massive number of new or redesigned vehicles being launched by auto makers in North America this year.

Consulting firm J.D. Power and Associates puts the number of new or redesigned vehicles at 61, up from 48 in 2003 and just 17 in 2001.

Mr. Phillippi said the flood of new products reminds him of the 1950s, when the Big Three had the North American market virtually to themselves, but would still compete fiercely, with GM changing body styles almost annually.

He expects the flood of new products to continue over the next several years because of the current level of competition and the rush by auto makers to shorten the development time for new or redesigned vehicles to 18 months from two, three, four years or longer in the 1990s.

"Designers and stylists keep coming up with novel ideas and unless [auto makers] respond very quickly, they're going to get caught out," he said.








Top 10 New Cars
1.  Honda Accord
2.  Acura TL
3.  Volkswagen Jetta
4.  Mercedes-Benz C-Class
5.  Audi A4
6.  Honda Civic
7.  Toyota Camry
8.  Nissan Maxima
9.  Toyota Corolla
10.  Nissan Altima

Note: Based on the number of visitors
Top 10 Used Cars
1.  Volkswagen Jetta
2.  Honda Civic
3.  BMW 3 Series
4.  Honda Accord
5.  Audi A4
6.  Toyota Corolla
7.  Volkswagen Golf
8.  BMW 5 Series
9.  Porsche 911
10.  Pontiac Sunfire

Note: Based on the number of visitors

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