Detroit tools up for long-haul sales race with Japan
Traverse City, Mich.
At this time of year, US auto companies are normally getting ready to launch a new model year. The air in Detroit is filled with managers' boasts about new model performance and optimistic sales forecasts.Skip to next paragraph
Subscribe Today to the Monitor
Domestic auto companies will certainly sound the marketing drum for 1983 models this fall. But auto executives are preoccupied with shaping the industry's future so it can cope with the challenge from Japan during the rest of the decade.
The industry's crystal ball has been badly clouded in the past. But managers say a sharply different industry will emerge by 1990. Management methods will change to include greater use of Japanese-style inventory control, closer and longer-term links with suppliers, greater use of worker ideas, and expanded application of new quality-control methods.
The cars produced with these new methods will come in fewer sizes but will be more tailored to individual preferences through greater use of electronics. Some will be powered by alternative fuels like propane and methanol. And the often disagreeable process of buying a car will be aided by the use of home computers.
Auto managers see the challenge ahead in unvarnished terms. ''We are plagued by uncertainty over economic growth . . . we have a long way to go in reducing costs to the levels enjoyed by our Japanese rivals,'' admits David Collier, a vice-president at the General Motors Corporation. ''We face an enormous challenge in getting the younger generation to buy American.''
Unlike some investment analysts, many auto executives still believe the US industry can become fully competitive with Japan even on subcompact models. But the timetable managers now use for pulling alongside the competition is years, not months.
''My assessment is we can catch (Japan) in this decade,'' says Ford vice-president James Bakken.
The following is the view of the auto industry's future which emerged last week at a three-day meeting of several hundred auto company and supplier executives; the conference was sponsored by the University of Michigan and the Michigan State Chamber of Commerce: Demand for cars:
Automakers expect to slug it out in a market that will not set any volume records for a while. For 1982, industry sales will be about 8.0 million, down from last year's 8.5 million pace and well below the 11.3 million cars sold in 1978, according to Maryann Keller, a vice-president at Paine Webber Mitchell Hutchins Inc. Sales in 1983 will probably be 9.0 to 9.3 million units, she says.
Because of the effects of recession, unemployment, and high interest rates, ''US vehicle sales probably won't establish any new records before 1986,'' says Mr. Collier at GM. But Mrs. Keller argues that ''by the end of the decade I would hope (sales) would be at the level of 12 million a year.'' Consumer reaction to US cars:
Even if car sales recover sharply, Detroit may not be the beneficiary. ''Younger people lack a strong preference for domestic nameplates,'' Mr. Collier admits.
In fact, in the second quarter of 1982, 38 percent of all new car buyers under age 25 bought Japanese models. And one-third of the buyers in the 25-to-34 age group bought a Japanese car. That group accounts for almost one-fourth of the total new car market.
Winning back these young drivers will not be easy, since they, like older Americans, are unhappy with the domestic industry, says Milton I. Brand, president of Brand, Gruber & Co., a Detroit-based market research firm. Buyers ''don't believe in the companies that make cars,'' Mr. Brand says. They feel dealers often give the impression that ''they don't want to sell me a car.''
Home computers are likley to play a role in smoothing the auto buying process. It is likely, for example, that a customer could call up information on potential cars by using a home terminal. Already Buick Motor Division is testing a computerized order assistance system with some dealers.
''I don't know why ordering a car should be harder than ordering a pizza,'' says Buick's chief engineer, Edward Mertz. New car technology:
The cars Detroit hopes will lure buyers back into showrooms will not be radically different from today's models but will include noticeable refinements. Perhaps the most noticeable will be the increased use of electronics to personalize cars. Auto engineers hope this personalization will offset a smaller selection of body sizes.
For example, electronics will be widely used in the passenger compartment. Buick is considering a card key system, with which a driver inserts a card in the ignition. Then the car's seat, steering wheel, sound system, rear view mirrors, and other items would automatically adjust to the individual driver. Electronic dashboards could be programmed to display information required by each driver, engineers add. Meanwhile, the Nissan Motor Company is already selling a car in Japan that responds to verbal commands uttered by its owner. Competition from Japan: