Automotive News - June 2, 2008 - (Page 54)

54 • JUNE 2, 2008 S M A L L C A R S TA M P E D E Auto advertisers adopt mpg mantra Kathy Jackson kjackson@crain.com Changing the message How some automakers are promoting fuel economy in their advertising GM has shifted up to 20% of advertising spending from light trucks to cars and crossovers. Ford’s brand campaign now emphasizes its most fuel-efficient vehicles. Chrysler has based a campaign on $2.99-a-gallon gasoline. Hyundai’s campaign for its new high-performance Genesis sedan has an ad about fuel economy. ad for that. We have a story to tell.” General Motors has shifted 15 to 20 percent of its spending out of light trucks and into cars and crossovers, said Mark LaNeve, GM’s North American marketing chief. “People now know what they’re spending on gas and adding it to their monthly budgets,” LaNeve said, “so we have to address that. For example, we can tell them that the Chevy HHR can do a lot of what bigger sport-utilities do in terms of space, but you can get it for under $20,000 and with good mpg.” Other marketers are talking the same game. Said Ford’s Felice: “Our primary brand campaign involves Focus, Fusion, Edge, Escape and Escape Hybrid. We’re not calling out fuel economy, but those vehicles have it.” Chrysler LLC has built a campaign around its incentive offer: Buy a new Chrysler, Jeep or Dodge vehicle and get a guaranteed gasoline price of Chrysler’s $2.99-a-gallon gasoline campaign responds to consumer concerns about rising fuel prices. LOS ANGELES — The pain at the pump has auto advertisers retooling their messages. Fuel economy is the new refrain. Hard-charging V-8s and big, bold SUVs are out of fashion. “The mpg message is resonating more with consumers,” Mark Felice, general marketing manager for Ford division, said here last week at the Automotive News Marketing Seminar. At Hyundai, executives are enthusiastic about this summer’s launch of the Genesis, the brand’s first reardrive sedan powered by a V-8. But Hyundai’s marketers are toning down talk about the car’s performance. “We’ve made a slight adjustment with Genesis ads to focus on fuel economy,” says Joel Ewanick, vice president of marketing at Hyundai Motor America. “It was a secondary matter at first, but now we’ve created a separate $2.99 a gallon for three years. Deborah Meyer, Chrysler’s chief marketing officer, says the $2.99 promotion will run through July 7 and could be extended. Despite the myriad messages about fuel economy, trucks and powerful V-8s are not being ignored. “Still one of our highest Web site responses is for the (Dodge) Challenger,” Meyer says of the new muscle car. “There still is a lot of desire for dreams, and we need to talk to these people.” Randy Pflughaupt, vice president of marketing at Toyota Division, says the brand is constantly reminding consumers that Toyota is in the pickup business. Said Pflughaupt: “There are less pickup buyers today, but messages are still relevant for people in the market who need those vehicles.” c Mark Rechtin contributed to this report Even on used market, big trucks go begging Arlena Sawyers asawyers@crain.com In mid-May, a customer visited McRee Ford in suburban Houston looking for a fuel-efficient car. He wanted to trade in a 2008 Ford F-250 diesel pickup he had bought for $53,000 just three months earlier. Dealer Mitchell Dale shopped the truck with his wholesale buying sources. The best offer: $35,000. Dale said the customer kept the truck. “The prices dropped so fast,” Dale told Automotive News. “At the auction, with heavy-duty trucks, you used to get all the money. Now you won’t even get a bid. It’s just amazing.” For used vehicles as well as new ones, rapidly rising fuel prices are causing consumers to shun big trucks in favor of smaller cars and crossovers. As sales of gasoline-thirsty used vehicles have slumped, so have their prices. In March and April, used full-sized pickups such as the Ford F series sold for an average retail price of $18,431, down 5.6 percent from the year-ago period, according to J.D. Power and Associates’ Power Information Network. At the same time, demand for used small cars is driving up their prices, Power said. Basic compact cars, such as the Toyota Yaris, sold for an average retail price of $10,039 in March and April, up 7.3 percent from the same months of 2007. Dale said he knows dealers who no longer accept big SUVs and pickups as trade-ins. Although Dale still takes large trucks in trade, he said he can’t Tipping point: The big shift to small cars offer customers the allowances he once did. “It has to be within reason, knowing what the market is,” Dale said. Some automakers are offering special sales incentives to move certified large used trucks. For example, through July, Toyota Division is offering 2.9 percent financing nationally on certified Tundra pickups and Sequoia SUVs. The certified program’s finance rates usually vary by region. “The full-sized truck and SUV market is a challenge segment now,” said Norm Olson, sales operations manager of Toyota Certified Used Vehicles. “Our dealers and our customers need this kind of support.” Some skeptics suggest the used-vehicle market may be overreacting to changes in fuel prices. Tom Kontos, executive vice president of customer strategies and analytics for the vehicle auction company ADESA Inc., said current bargain prices for used trucks could compensate for higher prices at the pump. Said Kontos: “Consumers should be made aware that if they were ever in the market for a used SUV or pickup, now may be the best time to buy one — even with higher gas prices.” c Ford’s Fiesta U.S. line will have a four-door sedan and a hatchback when sales begin in 2010. Ford won’t say whether the hatchback will be the three-door model pictured or a five-door. The stylish models are targeted at consumers demanding high fuel economy. More small cars to arrive in 2009-10 Rick Kranz rkranz@crain.com Thinking small New or redesigned small vehicles planned or likely for the U.S. 2009 Dodge or Chrysler hatchback (Nissan Versa-based) Honda hybrid hatchback Kia Soul Kia Spectra Mazda3 redesign Mazda Kabura Nissan Cube Pontiac G3 Scion tC redesign 2010 Chevrolet Beat Ford Fiesta Honda CR-Z hybrid Mini crossover Saab 9-1 Suzuki Swift Toyota Prius redesign Based on announcements by automakers or conversations with industry sources Worth less One Texas customer saw the value of his new Ford pickup plummet in 3 months. PRICE 2008 Ford F-250 Super Duty diesel bought new in February . . . . . . .$53,000 Best wholesale offer for same vehicle in mid-May . . . . .$35,000 With the high cost of gasoline on the minds of consumers, the timing is right for the wide range of small, fuelefficient cars arriving in 2009 and 2010. The Kia Soul, Ford Fiesta, Pontiac G3, Mazda Kabura, Nissan Cube and others are expected to give consumers more high-mpg choices. Timing is everything, said Tina Jantzi, senior manager of North American forecasting at J.D. Power Automotive Forecasting in suburban Detroit. “Given the state of the economy and gas prices, really any of the smaller-vehicle timelines could be pulled ahead,” she said. The Detroit 3’s 2009 and 2010 product plans reveal only a few new small vehicles. Officially announced vehicles include the Ford Fiesta sedan and hatchback, arriving in 2010, and a rebadged Nissan Versa sedan that Chrysler LLC will sell as a Dodge or Chrysler in 2009. General Motors is expected to roll out the 2009 Pontiac G3 (see story, Page 6), basically a Chevrolet Aveo with a separately styled front-end design. Also likely for 2010 is the Chevrolet Beat three-door hatchback. Iffy at best are one or two Chrysler LLC models from China’s Chery Automobile Co. Chrysler has said it will sell current-generation Chery vehicles in developing markets, but those vehicles do not meet U.S. standards. capacity for Civics. Meanwhile, the next-generation Fit is expected to arrive in the United States this fall. Spokeswoman Yasuko Matsuura said Honda does not plan to move up the car’s launch date. Despite waiting lists for the Prius hybrid, Toyota has not announced major increases in production capacity. Spokesman Paul Nolasco declined to comment on whether the company will increase production of the Prius, Yaris or Corolla. Short-term fixes Because of the long lead time to develop new vehicles, automakers will adopt short-term solutions to boost the fuel economy of current vehicles. GM and Ford will introduce smallerdisplacement four-cylinder engines that will be turbocharged. A slight improvement in fuel economy also can be gained by changing a vehicle’s axle ratio. A lower numerical value in a small vehicle can increase fuel economy by about 1 mpg, says Jim Hall, director of industry analysis at 2953 Analytics in suburban Detroit. At least one automaker is heading in that direction, says Hall. With a lower axle ratio, an engine revs lower when powering a vehicle. But the tradeoff for the lower fuel consumption is slower acceleration. Says Hall: “The problem with axle ratios is, if you make the car too slow for the segment, you usually don’t find out until the car is out.” c Hans Greimel contributed to this report Cube is coming Nissan Motor Co. is adding the Cube small car. Nissan has no immediate plans to speed up its launch, scheduled for the first quarter, spokesman Simon Sproule said in Tokyo. Honda is juggling light-truck production in North America to make room for more small cars (see story, Page 3). Next year, the automaker plans to move Ridgeline pickup production from Canada to Alabama so it can build more Civics in Canada. Honda is also opening a factory in Indiana this year to further increase its

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Automotive News - June 2, 2008 Gas prices fuel industry's new era Chrysler faces tricky dealer mergers Honda may crank out more Civics in N.A. Mercedes will move into Chrysler Pacifica studio Ford to offer hatchback version of Fiesta Prestige Automotive sells stores but keeps Black Enterprise top spot Dealership marketers take to text messaging Senate to hear personal pleas on roof crush rule Magazine: Chrysler, Fiat are talking Former Fla. dealer gets jail for bilking bank That guy Alfred had possibilities Ford will make next Mustang look smaller Pontiac subcompact may come to U.S. GM: Battery glitch cuts hybrid sales Porsche exec: CAFE 'will not change our nature' Japanese rivals race for lithium batteries Jatco boosts CVT capacity in Mexico for N.A. vehicles Mercury deserves a better chance Rising gas prices have changed the U.S. market Marketing and sales: Context and content Mexico's Nemak grows beyond North America Buyers didn't quit GM; GM quit on its buyers Brand perceptions change slowly Bloggers are journalists, too Nice HQ, Nissan, but where's Nobe? Chrysler's Chernoby: Growing up gearhead Picture this Mitsubishi hopes new gearbox widens Evo's appeal Openlane gets funds Obituaries Survey: Going green can get your auto ad noticed Inrix: Router can reduce traffic delays Mazda6 gets own platform for U.S. ... sort of Mazda6 set to take on mid-sized sedan heavyweights Troubled or not, the United States still beckons What's next? More transplant models headed this way Exports help as Mitsubishi sorts things out Irma Elder: 'This is one of the toughest times we have had' Fitzgerald: Dealers, consumers need alliance Can Bertone design a comeback? Family-owned business struggles for survival Some design houses fall on tough times Hughes: Not a subscriber? No problem American Axle lines up new non-U.S. business GM think tank works to boost service business Toyota offers gas card as tire incentive VW turns to common software to develop products Continental's Calif. office targets Asian carmakers ZF sees chassis, axle opportunities in N.A. Flex: A new Ford image ... or just over the top? Ford targeted Flex interior quiet, ride Ex-dealership managers say firings were over religion Dealers Genesis in Toledo: It's a long story Back woes sideline Nardelli GM: 19,000 take buyouts Panama to head Nissan Mexicana Wilhite jumps to Jumpstart Dauch sons move up, out Kozyra leaves Continental Ford to lay off salaried staff More small cars to arrive in 2009-10 Even on used market, big trucks go begging Auto advertisers adopt mpg mantra Industry to motorists: We're here to help Diesel prices hit suppliers' Mexico sites Can Camry catch F series? Leno's words of wisdom for automakers Nissan's carbon credits ease global warming guilt Automotive CEOs' pay pales next to peers' Year of the Small Car can't come too soon Foreign suppliers adding capacity in Southeast From cows to kimchi: Making Alabama sweet home for Koreans After light-truck push, cars are king again Mexican suppliers expect sales record in '08

Automotive News - June 2, 2008

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