Detroit says the worst may be over in auto sag
The Detroit automakers say they believe "the worst is over." Auto sales, after slumping badly all year, are beginning to come back. "The market seems to have bottomed out and seems to be starting back up," says Louis Lataiff, general marketing manager for the Ford Motor Division of Ford Motor Company.
Robert D. Burger, vice-president for marketing at General Motors, agrees: "I've been talking to a lot of dealers and I believe showroom traffic is better than it has been for the past 90 days. You have to believe we must start seeing better numbers."
Jerry Pyle, vice-president of US automotive sales for Chrysler Corporation, adds that "July business is better than June business. We think we're inching back to respectability."
Despite the optimism of the executives, however, the latest 10-day sales figures, representing the mid-July time period, do not give much of an indication that the consumer is back, checkbook in hand. For the period, the automakers reported, car sales fell 24 percent from the same period last year. The full month's sales figures will be reported early next week.
"I have to think the mid-July drop is a blip in the numbers," says Mr. Burger of GM. "I think the 30-day numbers will bear me out."
For the year, most of the automakers are expecting to sell 9 million to 9.5 million cars, up from the May-June annual pace of 7.2 million.
Still other numbers, notably the quarter's losses, are equally depressing to Detroit. General Motors reported a record $412 million loss; American Motors, $ 85 million; and Ford, $468 million. Chrysler is expected to report a large loss later this week. And automakers aren't expecting any miracles for the third quarter. It's not until the 1981 cars are rolled onto the showroom floors in September that car companies expect any return to "normal" markets.
Still, Mr. Lataiff of Ford says the Dearborn company has noticed that "luxury and full-size cars are now selling better," reflecting the earlier dearth of big cars moving in the market. He also notes that "the inventory of used cars is declining and used cars prices are firming up. The same is true for trucks, which often tend to lead cars out of sales slumps."
Mr. Pyle of Chrysler says that "the cost of money is down and there is a wide availability of finance money around." In fact, he reports that banks that earlier in the year were shunning Chrysler dealers who borrow to finance their inventories are once again starting to offer loans to the dealers.
However, it is this fall that the automakers hope to se a surge in sales. Ford, for example, is launching its "world car" in early or mid-October. This car, which utilizes technology from Ford's overseas facilities, will have front-wheel drive and a brand-new engine and suspension system.
Chrysler will be pushing ahead with its K- car. "We will be bringing to market 1 million cars with a front-wheel drive," says Mr. Pyle, "representing 80 percent of the cars we will sell." The K-cars are aimed at GM's highly successful X-cars, such as the Chevrolet Citation. With expected fuel efficiencies of 25 miles per gallon in city driving and 40 miles on the highway, the car will equal GM's mileage ratings. It will also be priced in the same $5, 000-to-$8,500 range. (The $8,500 car would come equipped with various special options.)
Although General Motors has no plans to introduce any new models this fall, it will begin producing its J-cars in the spring. The J- car is designed to fit in between the Chevette, the subcompact, and the X-car. In the meantime, GM is has produced 582,700 of the X- cars this year at three of its plants, which are working overtime to produce the cars.
Almost all the US manufacturers will be shooting for the share of market gained by the Japanese, who now are selling between 22 and 25 percent of all the cars sold in the United States. Partly because they have imports of their own, however, both GM and Ford say they will not focus on a "made in America" theme. Mr. Lataiff of ford says its research has also found that "Americans are not necessarily turned on by the thought of buying a US-made car. They just want the most value for their money."
Chrysler's marketing has to take a different tack. The company has to prove to consumers that it will survive. "Every time we're in the headlines," Mr. Pyle says, "traffic drops off in the showrooms." So the automaker is intent on stressing its survivability.
The company has also decided to keep its policy of returning a customer's money if he doesn't like the car after 30 days. So far only 1 percent of chrysler's customers have returned cars, and one-third of those bought another Chrysler car -- usually a larger one.
At American Motors, president W. Paul Tippett Jr. says the company's strategy will be to introduce a new model every six months. This fall it will offer a smaller version of the Eagle, its four-wheel-drive car, and the Renault 18i, a front-wheel-drive car with fuel injection. American Motors says it will finance its new products with a new capital plan to be introduced in November.