US carmakers betting on fuel efficiency, upgrades
Detroit automakers are hoping to finally persuade American car buyers to buy American. But instead of using patriotic messages to appeal to consumers, they are betting on a handful of higher-quality, more fuel-efficient cars — both old and new.
That General Motors Corp., Chrysler Group LLC, and
As Chrysler repays interest on its $12.5 billion federal loan, though, and GM prepares for what may be one of the largest initial public offerings of stock of all time — possibly as high as $20 billion — US automakers are under increasing pressure to improve their products.
“Americans want to see these brands come back,’’ said Joel Ewanick, GM’s vice president of marketing. “Product is king, and you need to have good product to change people’s perceptions.’’
All three big US automakers have shuttered dealerships across the country, but they have slowly been stealing market share from foreign carmakers. That’s partly because Toyota Motor Corp. had to recall millions of vehicles, but it’s also because the US companies have improved their cars.
Chrysler and GM got government help, too: $85 billion in loans.
Market share for Toyota, Honda Motor Co., and
Chrysler, which is not expected to turn a profit this year, reported a 7 percent increase in August sales, compared with a year earlier, and
Still, only 10.5 million cars were sold in the United States last year — the fewest in 27 years — and 2010 sales through August were up just 8.4 percent from last year.
Rebecca Lindland, an analyst at IHS Automotive, is predicting a modest increase in US car sales to 11.4 million by the end of 2010, but said the Big Three have a huge opportunity.
“There’s a lot of market share up for grabs right now,’’ she said, adding that Detroit automakers recently “were actually able to meet customer expectations in the showroom.’’
US automakers have done this in part by scrapping names that have done poorly — and bringing back old favorites that once were top sellers.
GM’s Buick has revived Regal as a four-cylinder, European-tuned sedan, for instance, and Ford is hoping Taurus, once its best-selling sedan, will generate buzz.
Chrysler is focusing on brands it already has. It is growing again under
These are all top priorities to “rejuvenate our portfolio,’’ said Ralph Gilles, Dodge’s chief executive and senior vice president of design for Chrysler Group.
Chrysler also introduced a new Jeep Grand Cherokee, based on the current Mercedes ML sport utility vehicle, in May.
While the outside looks familiar, the Jeep’s interior has moved upscale, with soft-touch dashboard surfaces and finer-grade leather.
It’s a sweeping change from the hard-edged, dull-looking plastic in most Chrysler products, which the company intends to fix on at least six more models next year, Gilles said.
Next year, Chrysler will also introduce revamped Chrysler 300 and Dodge Charger sedans. In the next few years, it plans to begin importing a fuel-saving eight-speed transmission from Germany.
US automakers also are rolling out new cars to entice buyers.
GM’s Chevrolet brand is launching two models for 2011: Cruze and Volt. The compact $17,000 Cruze, on sale in Europe since last year, promises up to 40 miles per gallon on the highway and offers a six-speed automatic and knee air bags, features typically found on more expensive cars.
GM is so confident of this car’s appeal that it has encouraged some dealers to buy Honda Civics and Toyota Corollas for comparison test drives.
And the electric Volt will be the only plug-in hybrid of its kind when production starts in November. Initial sales will be limited to six states, including Connecticut and New York, but GM says it will sell 40,000 next year. The automaker is hoping a federal tax credit worth up to $7,500 will help to soothe the sting of the $41,000 price tag.
Fuel-economy numbers have not been announced, but GM says the Volt can go 40 miles without gas.
Toyota says it will sell a plug-in Prius in 2012, but its conventional drive train — unlike the Volt’s, which uses a gas engine as an electric generator — will limit the number of miles the car can travel on electricity.
(The plug-in Prius is expected to cost several thousand dollars more than the base price of $22,800.)
Ford is continuing its US push to sell smaller European-market vehicles like the Transit Connect van and the Fiesta subcompact. It’s also bringing out a new Focus hatchback and sedan next year.
George Pipas, a sales analyst for Ford, said these new compacts, which can be outfitted with Wi-Fi and custom Internet applications, will be more critical to Ford’s success than the best-selling F-Series pickups.
“We view the Focus and Fiesta as the linchpins of our sustainable growth,’’ Pipas said.
Material from Reuters is included in this report.