GM takes lead in smaller-car race
How well is Detroit meeting the demand for smaller, lighter, more-fuel-stingy vehicles for the 1980s? As the US automobile industry moves into the decade ahead, General Motors is far in the lead in revamping and shrinking its car fleet all across the board. GM, for example, will introduce its front-drive J-car in 1981 as an '82 model, replacing the aging Chevrolet Monza and Pontiac Sunbird, plus a new Camaro, front-wheel-drive Malibu, and a smaller-size pickup truck. Further, there is no question but that GM will continue to lop off the fat.
But how about Ford Motor Company and Chrysler?
Long-beleaguered Chrysler Corporation is losing millions of dollars a day and even the 11th-hour rescue effort by the US Congress may be too late, in the view of some observers of the US auto scene.
Ford Motor Company also is losing money heavily in the US and Canada and could itself be a candidate for federal-government help sometime in the future.Ford's triple-A credit rating as well as its $4-a-year dividend, for example, are in danger, reports Philip K. Fricke, an analyst with L. F. Rothschild, Unterberg, Towbin. Thus, many of the plans for the '80s could go through the wringer before the cars actually get onto the road.
No matter what else happens in the auto industry today, lead time is still a fact of corporate life. And what both Ford Motor Company and Chrysler need is time.
Both companies have had major shakeups in their top-echelon staffs over the last year to 18 months. Yet, if there is good management anywhere right now, the good results -- based on normal lead time alone -- won't happen for a few years at best.
Unlike GM, both Ford and Chrysler decided to button up shop and tighten costs at the time of the Arab oil embargo in 1973 and '74. But not GM.
Richard C. Gerstenberg, then chairman, led the world's biggest vehiclemaker in committing hundreds of millions of dollars, a half billion of it borrowed in the money market, to launch its headlong thrust toward Lilliput. The corporation, with a long reputation for being a big-car company alone -- and that's where the big profits had been -- laid out a plan to downsize its car fleet all across the board.
Thus, GM, with about 70 percent of the market above compact size, picked up a two- to three-year lead on its domestic competition in the battle for fuel-stingy cars. That, together with the dominant position which GM has in the marketplace anyway, puts it in a very strong position as the industry moves into the 1980s.
In broad terms, the US auto industry had been designing monstrous cars for decades, making the "import invasion" of the last 10 to 12 years a sure thing as the cost and availability of energy became of momentous concern to everyone who drives a car.
In modern times "the so-called 'new' cars were just new metal boxes which were designed to draw the buyer into the showroom and nothing more," says a Detroit automan who quit one of the big three manufacturing firms a few years ago for a job with a company that designs new components for suppliers.
"The truth is, the buyer wasn't getting anything new except a different shape to the body, by the large. Built-in obsolescence was the catch phrase at the time, and the consumer took the bait.
Bennett E. Bidwell, Ford vice-president for cars and trucks, candidly admits the company made mistakes. Yet he blames the federal government for a lot of the auto industry's problems because of the high cost of meeting safety, emissions, and front-loaded mileage requirements of the law. He asserts: "The government asked too much and brought the free-enterprise system to its knees."
Still, neither Ford nor Chrysler saw the fundamental changes awheel in the industry and, as a result, are paying for it in whopping losses on the balance sheet.
Ford in good times earns about one-quarter of the percentage of pretax profit on a car as GM, while overseas it is just the reverse. These, however, are not good times, and Ford is losing hundreds of millions of dollars on its car and truck operations in the US and Canada even though it is making money overseas. Chrysler's losses exceeded $1 billion in calendar-year 1979.
Meanwhile, US automakers press their plans for up-to-date, leaner, more fuel-efficient car lines for the early and mid-1980s.
Next fall, as an '81 model -- assuming the company is still in business -- Chrysler expects to launch its compact front-wheel-drive K-body cars to replace the long-troubled, slow-selling Dodge Aspen and Plymouth Volare. The new cars, says Chrysler, will be 27 inches shorter than the cars they replace and at least a thousand pounds lighter in weight. Combined average fuel economy is estimated at 26 miles per gallon, a 7 mpg improvement over the phased-out Aspen and Volare.
The automaker also will launch variations of the basic K-body configuration in both the intermediate and specially-car segments of the marketplace over the following two years. Then, in 1984, it hopes to unveil its own front- wheel-drive X-body car which will update the present LeBaron and Dodge Diplomat.
Further, Chrysler will restyle the Omni and Horizon, the domestic industry's first front-wheel-drive small cars put on the road two years ago, in 1984 as well.
In 1985, when the corporate average fuel economy (CAFE) number hits 27 1/2 mpg, up from 20 in 1980, Chrysler will shrink the St. Regis/Newport/New Yorker as variations on the X-body shell introduced the year before. Finally, the Cordoba/Mirada will be downsized, offshoots of the X-body shell.
"By then," asserts Harold K. Sperlich, vice-president, for engineering and product development, "we should be competitive with GM." Of course, all of this is moot if the company fails to fend off the bankruptcy wolf now at its back door.
All manufacturers are reducing the number of basic body shells in future years. Ford, for example, expects to have no more than three.
Ford Motor Company now has the year-old Mustang and Mercury Capri on the road as well as the compact Fairmont/Zephyr.
But the company has many more new-car programs in the works, all aimed at the fuel- conscious '80s and beyond. The most important near-term project, code-named Erika, will be unveiled a year from now as the Ford Escort, a familiar name tag for a Ford product long built by Ford of Europe in West Germany.
The 1981-model Escort, which may be introduced next spring and would replace the subcompact Pinto and Bobcat, will have front-wheel-drive and an economical four-cylinder engine under the hood. Although it will be bigger than the four-year-old Chevrolet chevette, it will be smaller than GM's popular X-body lineup -- Chevrolet Citation, Buick Skylark, Oldsmobile Omega, and Pontiac Phoenix -- put on the road last April. The Escort will be sold with two and four doors and as a wagon.
Ford, which already has squeezed the standard-size LTD, thunderbird, Lincoln, and specialty Mark VI, now plans to slim down the Granada/Monarch line for '81, building the cars off the Fairmont/Zephyr platform. They will be offered with both standard and turbocharged four-cylinder engines as well as with a 3.3 "six" and a 4.2-liter V-8.
The following spring it will unveil a two- door sportster which, together with the year- old Mustang, will vie the GM's coming sporty models, the so-called J-car.
Two years from now (1982 model) Ford will begin building a smaller car than the Erika in the US, the Fiesta, now being built in Europe. Henry Ford II as chairman had long opposed building the Fiesta in the US, feeling it was just too small for the American car buyer. The trend in gas prices has changed all that.
Further, like Chrysler and GM, Ford will switch almost entirely to front-wheel-drive in the years ahead. The new LTD and Mercury Marquis, planned for 1986, will use front wheel drive and a V-6 engine. A year later the full-size Lincoln and Continental Mark VI will be revamped while, says Automotive News, the trade weekly, the intermediate Ford Thunderbird, Cougar, Versailles, Granada, and Monarch will be resized in 1987 or '88.
Looking ahead, given time and the cash to do the job, GM and Ford will continue to do battle on the road. The outlook for Chrysler is far less certain.