US Automakers Gain As Japanese Raise Prices
THE Big Three United States automakers see an opportunity to win back the hearts, minds, and pocketbooks of consumers once given up for lost to Japanese cars.
For example, when the Ford Motor Company's new 1993 models go on sale this month, they will carry an average 0.3-percent price increase, rather than the 2.9-percent hike Ford had originally announced. Ford is cutting prices on some models, such as the Thunderbird and Cougar.
The move is a costly but calculated gamble. Ford hopes to catch consumers suffering from sticker shock when they check out the cost of Japanese cars.
"We're going to remain very aggressive in the marketplace," explains Robert Rewey, Ford's vice president of sales operations.
As for the Japanese competition, Mazda Motor Company is raising prices by an average 2.9 percent, and several models including the new MX-6 are posting double-digit increases. Toyota Motor Company is also boosting prices, especially on its new Corolla. A decade ago, the average Corolla cost $586 less than a comparable Ford Escort. For 1993, however, the $10,899 Escort LX costs $2,594 less.
According to federal statistics, the typical Japanese import now carries a price tag of $19,411, versus $16,666 for the average domestic vehicle.
Toyota officials point out that the 1993 Corolla is longer, wider, and roomier than the old model, and offers a variety of new standard features, such as a driver's-side airbag. In fact, most new Japanese cars are bigger and more luxurious than the models they replace.
"There's a line you can cross over where you lose the value-for-the-dollar reputation," concedes George Borst, director of strategic planning for Toyota Motor Sales USA. "We can't afford to lead the industry in pricing again."
Price isn't the only problem posing a "real risk" for Japanese carmakers, says David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan. `Try American'
When President Bush returned from his trip to Japan last January, he brought back little in the way of trade concessions. But the embarrassing confrontation encouraged a grass-roots "Buy American" movement.
"I don't know if I'd call it `Buy American' or `Try American,' " says Joel Pitcoff, an auto analyst with Ford.
Import owners are still skeptical. Nonetheless, more and more of them are at least willing to take a look inside domestic showrooms. What they're finding often comes as a surprise.
Big Three products seem to be more on target in terms of the styling and features consumers want. Just as important, they are clearly improving in quality.
Take General Motors Corporation's new Saturn division. The oft-quoted market research firm, J. D. Power and Associates, has named Saturn its "Best Domestic Carline in Customer Satisfaction." Saturn ranked third among all brands, just behind two luxury imports, Lexus and Infiniti.
That came as a surprise to Jim and Carol Anne Fausone. The suburban Detroit couple has owned a succession of Hondas over the last 15 years. But last month, the Fausones traded in an Accord on a new Saturn SL2 sedan. "You rarely switch any kind of a product if it performs consistently and does what you want it to do, which the Hondas did," says Mr. Fausone, a lawyer. But the Saturn, he says, "matches up." And it cost a lot less.
Saturn isn't alone. Cadillac is selling every Seville it can build. Ford can't keep up with the demand for its Explorer sport-utility vehicle. The Chrysler Corporation plant in Detroit is also running flat out to meet demand for its minivans and the new Grand Cherokee Jeep.
For the first eight months of the year, the Japanese captured a combined 24 percent share of the domestic car and truck market, down from 25.6 percent during the same period in 1991.
Industry analysts expect Chrysler will also have a hit this fall when it introduces its new L/H line of midsized sedans. Chrysler's foreign cars
However, those new sedans underscore one of the fallacies of the Buy American movement. The L/H series is being built at a Chrysler plant in Bramalea, Ontario, Canada. Half of Chrysler's minivans also come from Canada, and some of its other products are built in Mexico.
Honda, on the other hand, builds most of its Accord sedans at its 10-year-old plant in Marysville, Ohio. When Toyota finishes its second plant in Georgetown, Ky., next year, it will actually be building more passenger cars in the US than Chrysler.