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DRIVE TAB Big Three count on renewed interest in cars

By Jim Mateja

Chicago Tribune

CHICAGO -- The numbers tell the story.

Light trucks -- pickups, sport-utility vehicles and minivans -- outsold passenger cars in calendar 2002, 8.5 million to 8.3 million.

Of the top 10 industry nameplates in sales, six were trucks, sport-utes or minivans and four were cars. Three of those cars wore a Japanese nameplate -- Toyota Camry and Honda Accord and Civic, and one a Big Three moniker, the Ford Taurus, which was outsold by the full-size Dodge Ram pickup by 64,000 units.

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Little wonder the industry has focused on trucks and SUVs the last few years, especially since demand for those machines caught the industry off guard and its production mix was 60 percent cars and 40 percent trucks when demand for trucks and SUVs reached 50 percent.

The industry switched from building cars to trucks at some plants and began offering a wider variety of sport-utes and trucks but only modestly updated cars.

Now, the industry insists, a revised lineup of trucks and SUVs is in place or about to be (Ford's full-size F-150 is remade for this fall), and it's time to get back to cars.

"The emphasis back on cars is important," said Jim Hall, vice president of industry analysis for AutoPacific Inc., in Southfield, Mich.

"It's always bad to depend too much on one segment of the business like the domestics have with trucks. When you do, you can't react quickly to even little shifts in market demand and you get in trouble. Trucks are more profitable than cars, but you still must have balance in your lineup," Hall said.

As evidence cars are back in focus, General Motors, Ford and Chrysler have formed operations to develop high-performance cars to lure folks back into the showroom. And limited-edition, low-volume, high-priced machines, such as the Cadillac XLR roadster and Ford GT coupe, will appear as well.

Cars dominated the Detroit Auto Show in January: The 2004 Chevrolet Malibu, the '04 Pontiac GTO, the '05 Dodge Magnum SRT8 and the '05 Ford Mustang among production models and the Dodge Avenger, Mercury Messenger, Lincoln Navicross, Chevy SS and Pontiac G6 among the concepts awaiting production go-ahead.

Initially, the new cars primarily will be midsize models, for two reasons -- Toyota Camry and Honda Accord.

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"We've got to get the midsize market back," said Gary Cowger, president of GM's North American automotive operations.

"They don't have a choice," said Art Spinella, general manager of CNW Marketing/Research, the Bandon, Ore.-based company that concentrates on why consumers buy the vehicles they do.

"The Japanese have done so well in cars, as evidenced by Camry and Accord, that the domestics have to shore up and can't afford to lose any more sales on the car side," Spinella said.

"Sometimes it takes a whack with a 2x4 to get the attention and wake up the domestics. When Taurus collapsed (it was the best-selling car in the industry as recently as 1996, but has since slipped behind the Toyota Camry and Honda Accord), GM, Ford and Chrysler took that to mean it was time to focus on trucks. Now they've gotten smarter. It's dawned on them that 45 percent of the consumers still buy cars and you don't want to give away that market," Spinella said.

The Japanese have taken command of one segment after another: economy cars (Honda), luxury cars (Lexus) and midsize cars (Toyota and Honda).

"We never left the car end of the market. Passenger cars account for about half the market so you can't overlook them," said Toyota spokesman Mike Michaels. "We kept our eyes on cars all along, which is why we have the best-selling car in the market (Camry).

"Now some are getting more aggressive and more motivated to sell cars. That will serve to renew interest and awareness in cars for all of us. The only question for the future is what cars will be -- sedans or crossovers," Michaels said.

With the Toyota Tundra and the arrival this fall of the Nissan Titan, a run is being made on full-size trucks, too, which along with full-size sedans has been the stronghold of the domestics for decades.

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"There's a higher acceptance of U.S.-built trucks and sport-utility vehicles than there is U.S.-built cars among those who buy Japanese cars, lots of people with an Accord parked next to a Chevy Suburban in their garage," Cowger said.

"We have to get consumers out of Japanese cars, and we have to have cars to get them back," he said, noting that in the last few years, 65 percent of GM's investment in new product has been in trucks. Now 65 percent is being devoted to cars.

For years GM and Ford dominated the midsize-car segment. GM had the most offerings; Ford had the best-selling model, Taurus, until its reign ended in 1996. Camry and Accord have since taken turns as the best-selling car in the industry.

That explains the counterattack by GM and Ford while Chrysler hinted at its planned replacements for the Dodge Stratus and Chrysler Sebring sedans with the Dodge Avenger concept.

GM is first up. The next-generation Pontiac Grand Prix comes out this spring as a 2004 model. The next-generation Chevy Malibu joins the Monte Carlo SS and Impala SS models this fall. The return of the GTO is scheduled for November/December, and the next generation of the Buick Regal is due for 2005.

"How do we get 'em back from Camry and Accord? With cars like our new Malibu," said Kurt Ritter, general manager of Chevrolet.

"We'll have two versions, regular sedan and a stretched-wheelbase Malibu Maxx hatchback four months later, as well as a (gas/electric) hybrid (in 2007), and hopefully a high-performance SS, too," Ritter said.

"We'll also do little things to attract consumers away from the Japanese, such as offering power adjustable pedals, remote start and rear seats that can be moved forward or backward to provide more leg or more cargo room (on the '04 Malibu Maxx) to make us a credible alternative to Asian imports," Ritter said.

Ford and Chrysler plan little things as well. The Dodge Avenger, for example, features all-wheel-drive, which neither Camry nor Accord offer, and Ford has come up with a Freestyle concept that converts to a pickup at the touch of a button.

Winning sales back from the Japanese seems the motivation behind several cars coming from the domestics.

"Who have we been losing sales to? We haven't been capturing people in their 30s and 40s when they decide to move up. They've stayed with the brand and moved up from compact Civics to midsize Accords rather than move from Civics into midsize Taurus," said Chris Theodore, vice president of advance product development for Ford.

That's why, Theodore said, "we've taken care of trucks and the '04 calendar year is going to be the year of the car at Ford," the time frame for bringing out the next-generation Mustang, Ford Five Hundred and Freestyle.

Once the midsize car segment is taken care of, watch for the domestics to protect full-size sedans.

"People don't aspire to big sedans today because the industry builds boring ones," noted J Mays, vice president of design for Ford. "It's not that people walked away from big sedans, it's that the industry walked away. If we go back, customers will go back."

There may be another reason you'll see more focus on midsize and full-size cars in the near future -- hints that the government may encourage the sales of more large sedans, which it considers safer than small cars and safer and more fuel-efficient than large sport-utility vehicles, by easing corporate average fuel economy regulations.

"Large passenger cars and minivans are the safest way to move around large numbers of people, and yet we've CAFE'ed large cars out of existence," said Jeffrey Runge, head of the National Highway Traffic Safety Administration, in a recent speech in Detroit. CAFE stands for Corporate Average Fuel Economy.

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