After the 2000 Focus and 2001 Escape were recalled several times for safety and quality gaffes, Ford delayed the introduction of the 2002 Explorer and similar Mercury Mountaineer by two months to prevent similar problems. They are now scheduled to arrive at dealers in March, and Ford President Jac Nasser says he is comfortable with the timetable.
“We set very ambitious launch targets for ourselves and from time to time we’ll miss those targets,” Nasser said while in town for the Chicago Auto Show and to hand over a $6 million donation for a nature center on the South Side near Ford’s Torrence Avenue assembly plant.
“This is such an important launch for us, we decided to take a very cautious, very conservative approach. If it’s plus or minus 45 days, I can’t get too excited about that.”
Production of the 2002 Explorer and Mountaineer began in November at a Louisville plant and in January at a second plant in St. Louis, but at a much slower pace than usual to ensure quality.
Wiggle room: Nasser said that because Ford cut operating costs in the good times, it can be profitable this year if industry sales fall by 1 million or more units below 2000’s record pace of 17.4 million cars and light trucks.
“When they make predictions of 16 million to 16.5 million, everyone in the industry says that with a long face,” Nasser said. “If we come in around that, we’ll take it, and we’ll do quite well at those levels.
“We’re in a pretty good position. We have a strong balance sheet, and we did a lot of wood-chopping two or three years ago, when it was considered unfashionable,” he said, but added, “That’s not to say we won’t have to do more.”
If you build it: So what’s been the consumer reaction to GM’s latest round of concept cars on the auto-show circuit, first debuting in Detroit last month and in Chicago this month?
Which are in line for possible production?
“Everyone loves the Buick Bengal open-air roadster,” said Ron Zarrella, president of GM’s North American Operations. “The Cadillac Vizon, well, everyone knows we have a luxury activity vehicle coming from Cadillac [2003] and the production version of the Vizon looks better than the concept. There’s no debate over [producing] the Chevy Borrego, the only question is being able to price it to keep it an entry-level car under $20,000, while the Pontiac REV is a true performance vehicle with a 245-horsepower V-6 with composite lower body panels so it can be taken off-road.
“But the surprise has been how well the GMC Terracross has been received, an SUV with different proportions. There’s still debate within the company over Terracross, but consumer reaction has been profound,” he said.
All-wheel-drive way: It’s noteworthy that so many concept cars feature all-wheel-drive, a feature GM has reserved for sport-utility vehicles.
“Four-wheel or all-wheel-drive is going to be more widespread in the near future, and you’ll see a lot more of it in luxury cars soon,” Zarrella said.
Watch not a warning: So how will consumers react to General Motors being put on credit watch by Standard & Poor’s the credit rating agency?
“If there was a change in our credit rating, it would affect us, but we were put on credit watch which won’t affect our borrowing rates, so I don’t think there will be any affect,” said GM’s Zarrella.
History lesson: says it won’t let success go to its head “and will be careful not to go upscale with our vehicles,” said Greg Weber, vice president of sales and marketing.
Hyundai made a name for itself in 1986, when it introduced the mini Excel for $4,995 as an alternative to a used car. Consumers bought Excels in droves. However, Hyundai went from penthouse to outhouse in only a couple of years because quality plagued the little car.
In the last few years it has made a strong comeback, and is considering opening a U.S. assembly plant with its partner Kia of South Korea.
At the auto show, Hyundai unveiled the HCD6, a dramatically styled two-seat roadster that looks like it is meant to compete with $25,000-plus rivals.
Hmm. Brings back memories of a 1970 model Datsun Z car that started at $3,500 becoming a $40,000 exotic in the ’90s after the name changed to Nissan, and a 1979 model Mazda RX7 starting at $6,995, but then giving way to a 1995 RX7 at $38,000.
Those automakers, like Hyundai, got a foot in the U.S. market by selling economy, then quickly moved up to more expensive models to attract more profits. But the Z and the RX priced themselves out of the U.S. market.
“I remember what happened to Mazda,” Weber recalled. “They started promoting their 929 luxury sedan and RX7 sports coupe once they became successful selling economy cars in the U.S. The rank and file got confused over what Mazda was all about. We can’t forget who we are, a force in the small, affordable car arena. We brought out a $12,000 to $15,000 midsize XG300 sedan for 2001, but we don’t plan to go much higher than that. We aren’t the bare-bones Excel company anymore, but last year we outsold both Mitsubishi and Mazda in the U.S., and so we aren’t the close-outs company anymore either.”
Lexus bound: Who says the Japanese don’t have a sense of humor? Tag Taguchi, president of Toyota North America, told the media at a Chicago Auto Show briefing: “I joined Toyota in 1966 at its offices in Newark [N.J.] as a gofer making $2 a day, and now I drive a Lexus.”
However, Taguchi didn’t say whether that’s an entry-level or top-of-the-line Lexus.
Show and tell: One auto executive admits he has learned what parents have known for centuries: “Figuring out what young people want is tricky,” said Dave Illingworth, Toyota’s senior vice president for planning and development. “They’re very trendy, so they change their minds a lot, and they don’t have a lot of money.”
Young buyers want more room and flexibility than a subcompact car provides, he said. Designing cars for any age group isn’t just a matter of asking them what they want.
“They usually don’t know what they want until they see it,” Illingworth said. “You have to do a lot of leading when you ask what they want.”
Thinking young: The Corolla’s appeal has edged older in recent years, but the next Corolla (due for 2003 model year) will change that, said Jim Press, Toyota’s chief operating officer in the U.S.
“Young buyers want a vehicle that is high in image and high in functionality, and previously, those types of vehicles were not affordable,” said Don Esmond, general manager of Toyota division.
To appeal to Gen Y, “you have to be more aggressive with styling, but it’s a challenge to come up with what the public doesn’t know it wants yet.”
In the beginning: Genesis is an internal name but may become a sub-brand of Toyota aimed at young people, and there may be an announcement this year.
Echo, Celica and MR-2 Spyder are the first three products created by the Genesis team, and all are less expensive than the models they replace and are attracting younger buyers. Matrix is the next new model aimed at youth. Half of Echo buyers are new to Toyota.
“We don’t want a third [dealer] channel, but with 17 models, we are looking at how you most efficiently market those vehicles, how you sub-brand to this particular market,” Esmond said.
How youth-oriented vehicles are displayed at dealerships and whether Genesis products will be in a separate area are being studied.
