In real estate, it’s location, location, location.
In the auto industry, it’s trucks, trucks, trucks.
To sell ’em, you gotta build ’em, and a General Motors executive says the automaker hasn’t been building as many as it would like, which means it hasn’t been selling as many as it would like.
“Two years ago 65 to 68 percent of our production was cars and the rest trucks and that hurt us in the marketplace because customers waited months for a Suburban, Yukon or Tahoe. We were slow to move to increase truck production,” said Richard Wagoner, president of General Motors’ North American Operations.
The consumer swing into trucks–pickups, sport-utilities and mini-vans–and out of cars is the reason GM will drop the full-size rear-wheel-drive Chevrolet Caprice, Buick Roadmaster and Cadillac Fleetwood at the end of the 1996 model run to convert the plant to trucks.
“We’re now at 60 percent car/40 percent truck production when the industry is at about 55 percent cars/45 percent trucks,” he said in noting that GM still can’t produce all the trucks it wants to meet demand.
“Trucks are an attractive business and change your profitability profile,” he said. “Chrysler is at 65 percent truck production and that accounts for its profit margin.”
“We feel demand will peak at a 55/45 percent car to truck ratio and when our Arlington (Texas) plant completes its conversion (from full-size, rear-wheel-drive cars to full-size trucks and sport-utility vehicles), we’ll be at 57 percent car/43 percent truck production and that will help.”
The recent Chicago Auto Show provided ample evidence that change is brewing in the SUV market as the large crowds surrounded new, low-priced subcompact offerings such as the Toyota RAV4 while only a handful of visitors checked out the large luxury SUVs such as the Mercury Mountaineer, Mercedes-Benz AAV, Lexus LX 450 and Acura SLX.
“We’ve all been hustling to add more features to SUVs, but our research shows that it’s not smaller SUVs that people want as it is less-expensive SUVs. The key isn’t size, it’s price,” Wagoner said.
Wagoner said he wouldn’t be surprised to see decontented SUVs in the market soon, vehicles with a few gadgets removed to retain the size while reducing the price.
Speaking of size, GM is making lots of dealers nervous with its game plan to reduce the number of stores.
“There’s a lot of anxiety among our dealers but the vast majority aren’t going to be impacted,” Wagoner said.
“We went from 14,000 dealers in 1970 to 8,500 today, and we will be going to 7,000 in the near future. It was far more dramatic going from 14,000 to 8,500 than it will be in going from 8,500 to 7,000,” he said.
“We did this to ourselves,” he said. “Years ago if we weren’t selling enough cars, we simply added another dealership to sell cars from. Today it’s not so much an issue of closing stores as it is relocating the ones we have. The areas of population growth where we put our stores 10 years ago aren’t the areas of population growth today.”
Concept crossing: What’s this, the Lexus FLV? Lexus snuck a concept car into the Chicago Auto Show to gauge consumer reaction to a cross between a station wagon and a sport-utility vehicle, though Toyota insists FLV is a cross between a sedan and sport-utility vehicle.
Whatever, Lexus says the design is “one answer to the question of what types of vehicles car buyers will want when their life-stage need for mini-vans and other multipurpose vehicles is finished.”
Dimensions are very similar to that of the Lexus ES300 sedan (built off the Camry) with a 107-inch wheelbase and 188-inch length. The front-wheel-drive FLV sits higher than an ES300 but lower than a Previa mini-van. It is powered by a 3-liter, V-6, holds five passengers and features folding rear seats for extra cargo.
Sporting Benz: Mercedes is coming out with Sport versions of its C280 and E420 sedans and 320/500/600 SL roadsters. The sport package will add $780 to the C280, which now starts at $35,250; $3,900 to the E420, which starts at $49,900; and $4,900 to the SL roadsters that start at $78,300 for the 320, $89,900 for the 500 and $122,000 for the 600 SL.
The Sport packages include faster ratio steering, firmer shocks, larger stabilizer bars and larger wheels to provide more performance-oriented ride and handling.
The Sport models also will feature exterior changes, such as body-colored moldings on the C280 Sport to side skirts under the door sills and more deeply recessed air dams on the SL and E420 models.
Mercedes is bringing out Sport packages to attract younger buyers, said Wally Anderson, Chicago regional vice president.
“We’ve lost buyers to BMW and the Japanese because we’re more conservative,” he said. “The Japanese have bland styling and put-you-to-sleep suspensions. With the Sport packages, we’ll appeal to those who want an exciting driving experience.”
Mercedes’s record year in the U.S. was 1986, when it sold 99,000 cars here. Sales began to slip for a variety of reasons: the federal luxury tax, stiff competition from an emerging Japanese luxury-car market and Mercedes’ insistence that the Japanese could have the less than $40,000 luxury-car market, and it would focus on the more than $40,000 market.
Starting with its C-Class replacement for the 190 sedan in 1993, Mercedes focused on the $30,000 to $50,000 market, and sales took off.
“Early in the ’90s, the Japanese showed us the rear lights in many segments and markets. Today, we observe them very carefully in the rearview mirror,” said Jurgen Hubbert, a member of Mercedes-Benz AG’s ruling board.
3 for 3 pace: The Chevy Camaro Z28 has been chosen as pace car for the Brickyard 400 in August. The pace car will give race fans a peek at the special 30th anniversary edition 1997 model Camaro, which will not be in showrooms until the fall, with a 5.7-liter, 285-horsepower, V-8 teamed with a 4-speed automatic. This is the third year for the race and the third year Chevy has had the pace vehicle. In 1994 it was a Monte Carlo and in 1995 a full-size C/K pickup.
QX4 coming soon: Infiniti has chosen QX4 as the name for its 1997 luxury sport-utility that will go on sale this fall.
The QX4 will be a version of the Nissan Pathfinder. Base price reportedly will be less than $40,000 for Infiniti’s first four-wheel-drive sport-ute.
