What's Hot in Autos? Everything

It's evident in the reincarnation of Volkswagen's steel-blue Beetle, the plush new Lexus sports utility vehicle, and the Audi Allroad Quattro wagon.

In an effort to give consumers exactly what they want, auto manufacturers are changing the way they design and build their products. Niche marketing is on the rise. Carmakers are moving further away from the one-size fits-all approach. This week at the International North American Auto Show, some 74 new vehicles made their debut.

"The market is fragmenting," says Richard Perry-Jones, Ford's product development director, during the premier of the new Mercury Cougar sports coupe. "People are looking for something that more precisely delivers what they need."

Experts say the era of the mass-produced, high-volume car is drawing to a close. Yes, the Toyota Camry sedan bucked the trend by winning the 1997 title as the bestselling passenger car in America, with 397,156 vehicles sold. (It edged out both the Honda Accord and the reigning five-year champ, Ford Taurus.)

But automakers are redefining success as fewer sales across a broader selection of vehicles. The Cougar, for example, will sell just 50,000 a year. In its heyday, back in the 1960s, VW moved as many as 400,000 Beetles a year. But the German carmaker expects to sell just 50,000 new Beetles in America, another 50,000 abroad. The sticker price, when the car is put on sale this Spring, is expected to be $15,000.

This approach changes the basic economics and design of carmaking. Corporatewide, Ford has slashed nearly $3 billion in costs this year. Volkswagen is equally aggressive in holding down costs. The New Beetle shares many components, and the same basic chassis, as the VW Golf.

SUV appetite

Meanwhile, auto manufacturers continue to feed America's appetite for sport-utility vehicles and light trucks. That segment accounted for roughly 43 percent of the total US motor vehicle market last year, up from 25 percent in the early 1980s. And new models are rolling off the drawing boards and assembly lines. Korean carmaker Hyundai, for example, announced plans to introduce both a new minivan and a sport-utility vehicle. Honda will add a new, Canadian-made minivan later this year.

"But the big trend this year is the crossover vehicle," noted General Motors chairman John "Jack" Smith.

Trucks have trade-offs not everyone likes. Even with leather seats, CD sound systems, and other luxury touches, they still ride rougher than conventional passenger cars. And they deliver far less fuel economy.

So automakers are combining the ruggedness and versatility of sport-utility vehicles with the comfort, convenience, and fuel economy of conventional sedans and station wagons.

Subaru's Legacy Outback was the first of this new breed. Subaru started with a mundane Legacy wagon, then added a more rugged exterior and an extra couple inches of ground clearance.

With Australian actor Paul Hogan as pitchman, the Outback has succeeded "far beyond what we expected," admitted Subaru of America president George Muller. The "sport-utility wagon" was expected to account for just 8 percent of total Legacy sales. It hit 60 percent, and helped Subaru reverse a decade-long sales slump.

The strategy is being imitated by a wide range of manufacturers. The new Lexus RX-300, for example, looks like a sport-ute but shares the same platform as the automaker's ES-300 sedan. The Audi Allroad Quattro wagon has a body shape that falls somewhere in-between station wagon and sport utility. Audi officials hint they may put the prototype Allroad into production in the near future.

Stable sticker prices

But more variety doesn't necessarily mean higher prices. The US auto industry is in a period of unusual stability. Sales are expected to run about 15.3 million in 1998, which would be the fifth year in a row with volume of more than 15 million units. That's good news for auto workers and strategic planners, who like to keep their plants running at a steady pace. But all these new cars are vying for market share. And manufacturers must struggle to win the hearts and pocketbooks of consumers.

That means there'll be few price hikes in the coming year, says Chrysler Corp. Chairman Robert Eaton. And buying incentives are likely to increase on all but the newest and hottest models. Meanwhile, automakers like Toyota say they're looking for ways to improve service to keep customers happy - and loyal.

Easy on the environment.

Of course, auto shows are just that, showcases for the cars of today and the not-so-distant future. And many of the cars on display here at Detroit's Cobo Center showed that auto executives are thinking about the environment.

Take the Dodge Intrepid ESX2. It is one of several so-called "green" cars unveiled here. This plastic-body "hybrid" is fitted with an internal combustion engine and an electric motor. The combination provides up to 70 miles per gallon and reduces smog emissions. But Mr. Eaton says it would cost $15,000 more than a conventional Intrepid sedan to build - a price he believes consumers aren't ready to pay.

In any case, Detroit automakers are likely to be pushed along the environmentally friendly road by Japanese car builders. At the Tokyo Motor Show in October, six Japanese low-emission vehicles were on display.

But with rising public concern about global warming, Detroit isn't waiting for these "next generation" vehicles.

Ford announced this week that by installing bigger catalytic converters on all of its 1999 sport utility vehicles, it would cut smog emissions in half. Similarly, Chrysler announced it would reduce emissions on its Jeep Wranglers, Cherokees, and Grand Cherokees by 1999.