Detroit's 'new' idea: Cars Americans want
As U.S. automakers make a renewed push with new car models, even some executives say it'll be tough to win back customers lost to Toyota and Honda.
DETROIT (CNNMoney.com) -- Detroit automakers are rediscovering cars.
The question is whether it's too little and too late.
Even though light trucks - including SUV's, pickups and minivans - now make up a majority of U.S. sales, sales of compact and midsize sedans are still important. Non-luxury midsize sedans, which generally fetch between $20,000 and $25,000, accounted for more than one-in-five vehicles here last year.
And while sales of those models slipped slightly in 2007, they held up better than those segments where Detroit has put much of its attention for the past decade - SUV's and large pickups.
Even some Detroit auto executives are admitting that the Big Three made a big mistake betting so heavily on light trucks at the expense of car models.
"If your goal is to grow your business, you have to get serious about the small car market," said George Pipas, sales analyst for Ford Motor (F, Fortune 500). "The steady decline in the Big 3 share can be traced directly to the lack of interest in the small car market."
As recently as 2000, 53 percent of U.S. car model sales went to the traditional Big Three.
In 2001, a majority of Americans looking for car models turned to import brands for the first time, and they haven't gone back.
By last year, the three U.S. automakers had only 36 percent of the U.S. car model market, and many of those sales were less profitable fleet sales to rental car companies rather than retail sales to American consumers.
Toyota Motor's (TM) Camry is by far the best selling car model, with U.S. sales of 473,108 in 2007, followed by Honda Motor's (HMC) Accord, with 392,231. Next up on the sales list are the Corolla and the Civic, also from Toyota and Honda, respectively.
The Chevy Impala, with sales of 311,128, is the best-selling car model from a U.S. automaker, and its sales are heavily dependent on the rental car industry. No other sedan out of Detroit has even two-thirds the Impala's sales volume.
Still, at the North American International Auto Show in Detroit this week, General Motors (GM, Fortune 500) and Ford Motor are giving renewed attention to car models, while Chrysler tries to build on car model sales gains it posted last year.
GM captured the "Car of the Year" award at the show for the second year in a row, this time with Chevrolet Malibu, which is being compared favorably with the Camry and Accord by auto critics.
Malibus, which started selling in November, are flying out of dealers' showrooms as fast as they arrive, and Chevrolet will put considerable marketing push behind the Malibu in the coming months, including Super Bowl ads.
Ed Peper, GM's general manager for Chevrolet, said it's been a long time since GM made a car model the focus of its Super Bowl advertising dollars, or even a key priority. But he believes the company now has a product that can win back sedan buyers.
He admitted that it will be a challenge, though. "There are a lot of import consumers who have not experienced a domestic car in quite some time. So it's very very difficult," he said. "But we're the No. 1 selling brand in America, and when we get behind something at Chevrolet, we can get to a lot of people and make things happen."
But GM's sales last year for the Saturn Aura, which won the car of the year title in same segment, were at best disappointing, coming in at just under 60,000 vehicles sold in 2007. GM won't give any sales targets for the new Malibu, and most experts think it's a long way from challenging the Camry or Accord this year or any time in the near term.
"It looks pretty darn good and more expensive than it is," said Michelle Krebs, a senior editor at Edmunds.com, and one of the jurors who voted for the Malibu as North American Car of the Year. "But they don't have the numbers available for manufacturing to rival the Camry numbers yet."
Chrysler LLC actually saw a healthy 6 percent jump in the sales of car models in 2007, at the same time its truck sales fell almost as much. But its car models were able to post that gain off a relatively low base, and sales of car models would have plunged without the new introduction of the Chrysler Sebring and Dodge Avenger sedan, which have not met with anywhere near the same critical acclaim or marketing commitment as the Malibu. Both Sebring and Avenger are seeing large sales into the rental car market.
"The Sebring and the Avenger are subpar in terms of design and interior quality," said Krebs. She said even if Chrysler revamps those vehicles, something the company is reported to be working on, it will be difficult to overcome the poor initial impression.
Ford's offering in midsize sedans is the Fusion, which saw a modest 5 percent sales gain in 2007, its full-year on the market. But it's still seen relatively modest sales.
Pipas said he's hopeful that the small concept car that Ford unveiled Sunday, the Verve, will help Ford start to turn things around among car buyers. It is due to start showing up in U.S. showrooms in 2010 after rollouts in Europe and Asia. But he admits that it'll be tough to win back Toyota and Honda customers given the quality of their offerings.
"It is our biggest challenge is to communicate in a way that will give us a chance," said Pipas. "If you as a consumer are a satisfied long-time Toyota and Honda car buyer, you have to ask yourself what's the compelling reason to switch."