After years of being outgunned by Japanese rivals, the American auto industry has made small cars a central part of its strategy, seeking to capitalise on a fundamental shift in the preferences of consumers in an era of fast-rising gas prices.
By refocusing on small cars and de-emphasising the gas-guzzlers that had long sustained the industry, General Motors (GM) and Ford in particular are preserving jobs and positioning themselves to prosper. Their efforts are already paying off in the marketplace. Ford’s tiny Fiesta is the best-selling subcompact in the United States this year, and GM’s Chevrolet Cruze outsold every other compact car in America last month except the segment-leading Honda Civic.
Nearly one in four vehicles sold in the United States in April was a compact or subcompact car, compared with one in eight a decade ago. Of the small cars sold in April, about 27 per cent were American models, compared with 20 per cent a year earlier. Data on sales in May will be released on Wednesday.
“There is a less-is-more mentality,” said Jeremy Anwyl, chief executive of the auto research site Edmunds.com. “The market demand and receptivity for these vehicles just didn’t exist four or five years ago.”
The transformation in Detroit was sparked by the worst financial crisis in generations, but was also assisted by an unusual set of circumstances.
The United Auto Workers (UAW) made steep concessions on wages and benefits. The Obama administration used the opportunity of the bankruptcies of GM and Chrysler to prod them on fuel efficiency. Japanese car makers like Toyota and Honda became complacent about their frontrunner status. And the psychology of the American car buyer underwent a stunning change.
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“The most important thing we had to do was restore our reputation as a fuel-economy company,” said James D Farley Jr, Ford’s head of global sales and marketing. “Without that, we couldn’t get a wide group of people to even consider these new products.”
After decades of turning out embarrassingly uncompetitive small cars like the Chevy Vega and Ford Pinto that rarely contributed to their bottom lines, GM and Ford have devoted their vast global resources to producing new models that are both fuel-conscious and laden with technology and attractive features. Chrysler, the smallest of the Detroit car companies, has been slower to make the changes, but with the help of its Italian partner Fiat it is headed in the same direction, with a new compact model expected next year.
The emphasis on smaller vehicles has proven to be a necessity for the recovering auto companies. Rising fuel prices have prompted a steady migration away from bigger vehicles since the spring of 2008, when gas hit $3.50 a gallon. Industry analysts and company executives say the shift is likely a permanent one, as consumers flock to small cars packed with features like heated leather seats, Internet access and voice-activated entertainment systems.
With every new small car sold, the acceptance of American brands is reinforced as auto makers erase the bad memories of their cheap and unappealing “econo-boxes” of the past.
“This car has changed my impression of Detroit, big time,” said Christopher L Garcia-Rivera of Northborough, Massachusettes, who averages nearly 40 miles to the gallon in the Ford Fiesta he bought for $14,900 in April.
The signs of change are apparent everywhere in the industry’s home state of Michigan, where Ford has converted a former SUV plant to build small cars that will be available in hybrid and electric versions, and GM is preparing to make the first subcompact model it has ever produced in the United States.
Ford got a head start on its small-car push when it hired an outsider, Alan R Mulally from Boeing, to reorganise its operations five years ago. GM, however, had to go through bankruptcy in 2009 before it could shed its big-truck mentality.
“We focused our resources where the market was before,” said Mark L Reuss, president of GM North America.
©2011 The New York
Times News Service