Reliable, fuel-efficient cars are passé

At the Detroit auto show, automakers are pitching style, flash and sports cars

by Chris Sorensen

The race is on

Brent Foster

Sirens wailed and guitar strings screeched as the 2013 Dodge Dart rolled onto a stage at this year’s Detroit auto show. Hundreds were there to see the first new vehicle spawned by the marriage of Chrysler Group LLC and Fiat Group Automobiles S.p.A. in 2009. They weren’t disappointed. The sporty small car, built using Fiat’s Alpha Romeo Giulietta platform, represents yet another attempt by Chrysler to reach into its rich past for an all-new vehicle—in this case, for the name of a popular sedan from the 1960s and 1970s—while shedding its reputation for building only powerful muscle cars and hulking pickup trucks.

The Dart is meant to compete head-to-head with the brisk-selling Chevrolet Cruze, sleek Ford Focus and popular Honda Civic by adding some attitude to the segment. Prospective buyers will have their choice from a long list of optional features, including LED accent lighting, an 8.4-inch touch screen and no less than seven different steering wheel choices. “The traditional ‘why buys?’ in the segment are price, fuel economy and reliability,” says Dodge president Reid Bigland, who chatted with onlookers following the unveiling. “But today those are no longer differentiators. They’re just simply the minimum barriers to entry. We wanted to do more.”

Chrysler wasn’t the only automaker flaunting a little extra flash at the annual industry gathering. Toyota Motor Corp. unveiled a Scion-badged rear-wheel-drive car called the FR-S, built in partnership with Subaru, marking the first time in years it will have a sports car in its lineup. General Motors Co., meanwhile, displayed a sportier version of its subcompact Chevrolet Sonic and two Chevy concept cars that attempted to combine the look of raw power with a frugal budget (with mixed results). For those who can afford the real thing, a long-nosed Lexus sports coupe concept was also on display, as was a low-slung Acura NSX “super car” concept.

After three years of touting fuel economy and geeky electric powertrains, the industry is now clearly trying to provide consumers with vehicles they can get excited about, too. In part, the shift underscores the success of the automakers’ turnaround strategies amidst a rebounding U.S. car and light truck market, forecast to climb six per cent to 13.6 million vehicles this year.

But it also reflects a growing need for individual automakers to stand out from the crowd now that everyone is offering well-equipped, small- and medium-sized cars in their lineups. “The way manufacturers are going to distinguish themselves is through things like styling and technology—selling the sizzle as much as the steak,” says David Sargent, the vice-president of automotive research at consulting firm J.D. Power and Associates. “They need to give consumers a compelling reason to buy their vehicle. If you’re seen as having a boring, reliable car, you’re going to struggle.”

Inside Detroit’s Cobo Center, automakers had an extra 25,000 sq. feet of space this year to showcase their meticulously polished wares. Nearly a third of the cavernous, carpeted convention hall was staked out by the former “Big Three” Detroit automakers, GM, Ford and Chrysler—each of which was coming off an upbeat 2011 performance. GM enjoyed a 13 per cent increase in U.S. sales last year, while Chrysler sales were up 26 per cent. Ford Motor Co., the only U.S. automaker that didn’t take a bailout, managed an 11 per cent increase. It was also the first time all three Detroit automakers managed to increase their respective U.S. market shares since 1988—a feat made possible, in part, by last year’s devastating earthquake in Japan, which created supply chain nightmares for rivals Toyota and Honda. Even with the threat of the European debt crisis spilling over into the U.S., Michelle Krebs, a senior analyst at automotive website Edmunds.com, says there’s reason to believe American consumers will continue to make the trek to dealerships in 2012. “There’s a lot of pent-up demand,” she says. “The vehicles on the road right now are the oldest they’ve ever been, about 11 years old on average.” (The Canadian market, up two per cent last year to 1.59 million vehicles, is expected to remain relatively flat.)

With the wind finally back in their sails, auto executives are spending heavily on concept vehicles (notably lacking from auto shows in past years) in an attempt to whip up further excitement. In addition to Lexus and Acura, concept versions of the Honda Accord and Nissan Pathfinder were also on display. There was an e-Bugster two-seat convertible concept from Volkswagen and a Lincoln MKZ concept that signalled Ford’s attempt to make its stodgy luxury brand more appealing to younger buyers.

Youth is also top of mind at Chevrolet, which unveiled two compact-sized concept cars aimed at capturing the imagination of some of the 80 million North American consumers born after 1980—a demographic far more interested in companies like Google than they are in GM. After working closely with a division of MTV and thousands of young people, Chevy designers came up with the small but muscular sub-US$20,000 Code 130R and race-inspired Tru 140S. Early impressions on car blogs weren’t kind, however. One writer on Jalopnik compared the Code 130R to a short-lived GM compact from the early 1980s: “Congratulations America, this is your new Chevy Citation,” and called the Tru 140S “an egg with three doors.” GM North American president Mark Reuss was undeterred. “We know we have a market,” he said. “But do we have a business where we can make money on one of these? That’s the next step.”

Another area where carmakers tried to differentiate themselves—and appeal to a younger audience—was technology. Some touted applications that use your iPhone to start your vehicle remotely or locate it in a jammed parking lot. There are hands-free systems that encourage drivers to remain plugged into social networking services like Facebook and Twitter while they’re behind the wheel. “It’s this idea of being able to use technology while you’re driving and have the car become a much more integrated part of your life,” Sargent says, adding that it’s not yet clear whether governments are going to consider such services a safety feature (since they keep drivers from picking up their smartphones) or a hazard in their own right.

Ford, meanwhile, had a more traditional customer in mind for its new Fusion mid-sized sedan. The car now comes with a gaping, Aston Martin-style grille, an attempt to inject more sex appeal into a typically staid segment. It will be made available with a regular gasoline engine, a hybrid and plug-in hybrid versions so customers can “decide what’s best for them,” said CEO Alan Mulally.

But with sales of electric vehicles accounting for two per cent of the market, carmakers will be leaning heavily on their small-car line-ups to meet consumer demands for fuel efficiency. The question is, can they make money on small vehicles with thin margins, particularly when the temptation to grab market share by lowering prices is ever present?

Sergio Marchionne, the CEO of Chrysler, says the Dodge Dart won’t be very profitable at US$15,995 for the base model, less than rival cars like the Chevrolet Cruze. “I would be lying to you if I told you I was making money with a car that’s that capable at that price,” he said at a press conference. So why do it? “You start shopping there, but by the time you finish, you pay more,” he said, referring to the wide array of different grille, interior and trim choices.

The cars and their on-board features may be new, but some of the business strategies—pricing barely above costs and relying on dealer upselling for profits—seem eerily familiar. Certain habits die harder than others in the Motor City.




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Reliable, fuel-efficient cars are passé

  1. how can you have a whole article about new cars without even a single photo of said automobile(s)? what sort of publishing is this? lazy!!!

  2. It seems to me you have missed the newest marketing ploy… we are selling these cars so cheap we don’t make a profit. Bull@#$%!

    In the 1970s GM was rolling out cars like the camaro and firebird for something along the lines of $1500 each and selling them for a 400% to 500% markup.

    Then they moved production out of the USA to increase profits and reduce expenses. The last 40 years have seen cheap electronics take over the function of more expensive mechanical parts, improvement in assembly line technology, reduced labour costs, tax breaks and the amalgamation of technologies between manufacturers reducing research costs.

    And they are trying to sell the line that they can’t make a profit on a $15000.00 car. I don’t believe it.

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