Editorial: Tough Times for Motown
Those days are gone, and some industry observers say it's getting worse. General Motors, Ford and Chrysler have virtually nothing to offer this fall in terms of new automobiles for the 2002 model year, says Jerry Flint. Writing recently in Forbes, he says except for the limited-volume Thunderbird, this is the thinnest new car season he's seen in a half-century of reporting.
The foreign marques, conversely, are launching new vehicles across the entire market. Toyota will have a brand-new Camry this fall, and Flint expects it to be the best-selling car in the United States. Lexus will unveil a new luxury model as well as a new five-door near-luxury performance car. Nissan plans to launch 22 new models over the next 3 years, 10 of them in the United States. In the family sedan market, Flint predicts that Nissan's all-new Altima will garner major sales gains and become a category killer!
To this mix, add a new sport utility vehicle and a new coupe, both from Honda, a new small car from Mitsubishi, a new family sedan from Hyundai and a new minivan from Kia. And then there are the Germans. Mercedes is aiming a new low-end coupe squarely at women car buyers, and both BMW and Audi will have significant new offerings.
On the "domestic" front, Ford subsidiaries Jaguar and Land Rover will be unveiling important new models. Both Chevy and Lincoln are poised to move boldly into the sport utility truck market and, given Lincoln's proven expertise in building luxury vehicles, one can expect it to grab a significant share of this new market.
However, the sport utility trucks will only be a small fraction of the total automotive market. So, although these will be high-profit margin vehicles, their contribution to revenues will also be small. Even those profits may quickly vanish in a market threatened by growing import competition and rising fuel prices. And whether suppliers--squeezed between the economy and price cut demands--can continue delivering technological innovation is also questionable.
Big incentives to clear out dealers' lots aren't the answer. Detroit has to get its product development--and manufacturing innovation--back on track, or its market share will keep dropping and Motown may turn into Ghost Town.