Share this story
Close X
Switch to Desktop Site

US automakers use California as test track to beat imports

Carol Motts, a saleswoman, is sitting alone in the showroom of James Chevrolet here. Nearby are a number of splashy Camaros, cars the General Motors Corporation believes ought to sell well in this state.

The biggest problem, Ms. Motts says, gesturing to the empty showroom, is getting ''people in here to drive the cars.'' Once someone has shifted allegiance to a foreign carmaker, she says, ''It's difficult to get the sales back.''

About these ads

This is the challenge for the auto industry in California. Today, half of all the new cars sold in the state are imports. The domestic auto industry has been in retreat here for the past four years. Now the industry is trying to switch to the offensive.

For Detroit, California is an important testing ground of its national strategy for beating the imports.

The state represents 10 percent of the total new car market. With very little in the way of a mass-transit system, Californians spend a lot of time in their cars, plying the freeways. Thus, a General Motors executive says, the attraction of the Japanese gasoline-efficient automobiles has been strong. Last year, Ms. Motts laments, the gas-stingy Hondas were the most popular cars in the state.

In addition, Robert D. Shaw, director of California marketing for the Chrysler Corporation, notes that Californians consider their automobiles ''an extension of their personal life style. The Californian is very image conscious.'' Sporty-looking cars, such as the Datsun 280ZX, which appeal to an outdoors-oriented consumer, sell well in the state.

One observer says that if the automakers succeed in the tough job of recapturing their former share of market here, ''it could signal a significant turn for the industry.'' In the opening round to win the battle of the freeways, the auto companies have taken these actions:

* GM plans to open up what it calls ''an advanced-concept center,'' in Thousand Oaks. With the center, GM says, ''we will be better at sensing California trends and developing vehicles to meet the needs of the West Coast population.'' In addition, the Buick division of GM is an official ''sponsor'' of the 1984 Olympics, which will be held in Los Angeles. This exposure, says Robert Lund, vice-president for sales and marketing, will be beneficial on the West Coast as well as nationally.

* In February, Chrysler opened the Shelby Performance Center in Santa Fe Springs. The center, which will be run by Carroll Shelby, designer of the Shelby Ford, will initially try to make the Dodge Charger more sporty and appealing to Californians. And Chrysler has opened up a regional marketing operation in Fullerton with the intention of gearing its marketing and advertising toward Californians. Chrysler will spend $10 million on advertising in the state this year. And if people are committed to buying an imported car, Chrysler is developing a program by which buyers of its imports will get either a Canon AE1 camera kit or a Mattel Aquarius home computer system.

About these ads

* This year Ford Motor Company is using computers to try to help it sell cars. In a direct-mail campaign, it will use a computer to help identify people who are in the market to buy a car. Then, in its individual pitch, it will offer to let them drive one of its models free for three days. ''Our primary goal,'' says Philip E. Benton, vice-president for sales operations at Ford, ''is to get people physically into our cars. We feel that the changes are so dramatic , they have to experience the difference.'' Ford is also introducing a new car, the Mercury Topaz, or Ford Tempo, which cost over $1 billion to develop. To help it entice people to climb behind the steering wheel, Ford is in the process of identifying civic leaders, members of the press, educators, and others who might help it get people to the showrooms.

Some auto industry analysts believe Detroit is finally making some right moves. Joseph S. Phillippi, a vice-president and auto analyst at Dean Witter Reynolds Inc., says GM's idea of setting up the design studio on the West Coast should help the company.

Arthur G. Davis, an auto analyst with Prescott, Ball & Turben, says spotting California trends could be important, ''since they generally are two or three years ahead of the rest of the nation in terms of style.'' He adds, ''The auto company who hits the right markets out there with the right product can pick up their image, which can have an impact on their whole product line.''

Warren Christell, vice-president for marketing with Toyota Motors, believes a more localized approach - much like Toyota uses - could help Detroit as well.

But David Healy, an auto analyst with Drexel Burnham Lambert, says he doesn't believe the new design center will make any difference. ''I doubt GM will design one set of cars for California and another set for the US,'' he comments, adding , it looks like ''pure public relations.''

In fact, Mr. Healy believes the Detroit automakers still haven't developed the products or strategies to make a dent in the California market. ''Aside from a drift back to larger cars because of dropping gas prices, I don't see any improvement.''

To Mr. Davis, however, the jury is still out on whether or not Detroit will be successful in California. ''I think the California market is very attuned to performance, value, and quality. The Japanese have filled the criteria with quality, and value. Now the race is on for performance.''

One long-range solution for GM may come if it is successful at clinching its joint-venture agreement with Toyota. Mr. Phillippi says, ''At least they are trying to learn.'' A previous GM-Isuzu joint venture to build Luv trucks in Japan gave GM the knowledge to set up its own United States assembly line producing the successful S-10 and S-15 small pickup trucks.

And should Detroit start to make a dent in the imports' share of market, there is one weapon the Big Three fear: price. Mr. Benton of Ford figures the Japanese now have a $1,200- to 1,500-per-car price advantage. Mr. Christell of Toyota retorts: ''I don't know if there is any real credibility in those figures. I don't know what they are.''

The automakers are under no illusions: Winning back share of market is going to be tough. Mr. Shaw of Chrysler notes, ''Our research shows that once an individual buys an imported car, he does not have any loyalty to that brand, but he does have loyalty to imports.''

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.