Americans edge back toward big cars - as Detroit gasps
Is the full-size US automobile about to upset Detroit's workbench?Skip to next paragraph
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''There is no question that the move toward big cars is real,'' asserts Arvid Jouppi, a stock-market analyst with Rooney, Pace Inc., based in Detroit. ''What it does is prove that the American 'love affair' with the large American car is still very much alive. It's a dangerous development for Detroit.''
Responding to consumers' quest for fuel economy, US manufacturers in recent years have invested heavily in smaller car models. But a number of factors - among them falling gasoline prices over the last few months - seem to be luring buyers back to their big-car habits.
''We have a run on big cars right now and it's hard to explain why,'' declares Bob Richards, sales manager for Mac Moran Chevrolet, a large-volume dealership in Norwood, Mass., a Boston suburb.
''If the manufacturers can make the full-size car just a little more fuel-efficient - just a whisker - I think that people will go right back to it, '' he adds. ''Motorists still like a comfortable car.''
In any case, the importance of fuel economy to new car buyers fell sharply in the 18 months between April 1980 and last October, reports J.D. Power & Associates of Los Angeles, a company that specializes in automotive consumer research.
Consumers now demand dependability and trouble-free operation more than fuel economy, a major switch in position, the research firm says. In rating the most important feature when buying a new car, 33 percent of the survey respondents listed fuel economy in April 1980, but the figure fell to 15 percent by October 1981.
''The automotive consumer is much more demanding now in wanting a vehicle that doesn't break down frequently or experience mechanical problems, and this is what they mean by dependability,'' declares John M. Hemphill of J.D. Power & Associates. For many buyers, clearly, this means a bigger car.
To show the extent of the ''car size'' problem facing Detroit, the supply of subcompact cars in dealership hands as of Jan. 31, according to Ward's Auto Reports, ran from a 267-day supply for the Chevrolet Cavalier to 127 for the Ford Mustang and 120 for the Chrysler-built Dodge Omni.
The compacts were a lot better off, although American Motors dealers had a 146-day supply of Concords and Pontiac dealers had a Phoenix stock of 112 days. The others were all under 100 days.
In contrast, among the full-size cars, the supply was: Chevrolet Caprice 86 days, Pontiac 60 days; Oldsmobile 88, 54 days; Oldsmobile 98, 64 days; Buick LeSabre 72 days, Buick Electra 95 days, Buick Riviera 103 days, Oldsmobile Toronado 82 days, Ford LTD 74 days, and Mercury Marquis 63 days.
With gasoline prices either firm or falling (under $1 a gallon in at least one station in Texas), US car owners have one less thing to worry about - at least for now. Thus, more of them are taking a look at the modern version of the big car.
Admittedly, the big American car used to get miserable mileage on the road. But no more. Instead of 10 to 12 m.p.g, most of them are now in the 20s, and sharply higher with a diesel engine under the hood.
Detroit may have encouraged a return to big cars, anyway, by tilting its sharp price increases over the last few years to the small-car end of the market. After all, the new front-drive technology was expensive and, the reasoning went, the people who buy the small cars should pay for it. Also, carmakers wanted to get as much money back on their investment as they could by maximizing the return on the high-technology small cars.
If Detroit has overreacted to the small-car demand, it could face some agonizing decisions over the next few months. US carmakers were caught off guard three years ago by an unexpected buyer shift to the small car. In reaction, the domestic automakers pulled out all the stops and stepped up a massive switch to less bulk, and thus weight, in the cars they build.
The automotive division of Chase Econometrics predicts that by 1983, the domestic car companies will be turning out at least a million more small cars a year than they can sell.
As a result, the consumer could benefit to Detroit's dismay. Fierce competition may unleash no-holds-barred price wars which could keep the auto-industry economy on a hot griddle. Chrysler especially could be hurt if this happens, and particularly if it lasts for a long time. Chrysler has got out of the big-car business entirely in trying to stay alive.
Ironically, this discomfiting shift in consumer preference coincides with some encouraging news about carmakers' financial situation. According to the latest figures, US auto industry losses last year were almost $3 billion less than in 1980. Hard-pressed Chrysler showed a $66.9 million loss in the last quarter of '81, compared to a $200 million loss in the same quarter of 1980.