Detroit Auto Makers

The Big Three Improve Cars
But Then Find It Hard
To Get Buyers to Notice

September 14, 2007; Page B1

(See Corrections & Amplifications item below.)

Just about every month, CNW Market Research meets with a group of would-be car buyers and plays a trick on them.

Sometimes the company, which specializes in auto sales trends, takes a Toyota Camry, removes any identifying logos, and tells them it’s a new model from one of the U.S.-based auto makers. Or it takes a domestic car and tells them it’s a Toyota or another import make.

Either way, the result is the same. “If they think it’s an American car, the perception of the vehicle falls dramatically,” said Art Spinella, vice president of the Bandon, Ore.-based firm. “Detroit really gets a bum rap in the U.S.”

Those negative impressions are now souring efforts by Ford Motor Co., General Motors Corp. and Chrysler LLC to halt their long slide in U.S. market share. And for these Detroit auto makers, persuading import buyers to even consider a U.S. car is becoming the new battleground.

The issue of public perception is coming into sharper focus now because experts say the Big Three, after years of concentrating on trucks and all but ignoring cars, have markedly improved the quality and look of their sedans and compacts. So in recent months, Detroit auto makers have been increasingly willing to experiment with aggressive marketing tactics to trumpet those changes.

In the most recent example, Ford was behind a ruse involving about 80 people around the country in the past several weeks. In New York, Miami, Los Angeles and Dallas, its advertising agency, JWT, had workers pretend to be from a fake market-research firm, track down owners of cars made by Toyota Motor Corp., Honda Motor Co. and other competitors, and ask them to drive new Ford models for a supposedly impartial weeklong test.

In taped interviews, almost all gushed about the Fords they drove. JWT is using the comments in Ford’s new “Swap Your Ride” ad campaign.

At the Dallas test, 20 or so fake market researchers — actually JWT staffers — set up operations at a convention center and donned green polo shirts with “In-Home Test Drive Experience” embroidered in gold. Outside a small brick building they set up camera teams to interview drivers returning their Ford test vehicles. Inside, the account team sat in front of four flat-screen monitors, watching live interviews and listening for the choicest comments.

A few came from Derek Campos, a 24-year-old student. The owner of a 2002 Nissan Sentra said he liked the Focus’s flashy look, and appreciated the Synch entertainment system that allowed him to use his cell phone and Apple iPod while driving. (Synch uses Microsoft Corp. technology, and is making its debut in the Focus.) Smiling into the camera, he said, “I’m probably going to get a new car soon, and I’ll definitely look at the Focus.”

Reached yesterday, Mr. Campos was surprised to learn In-Home Test Drive Experience isn’t a real company and was linked to Ford. “I had no idea,” he said. He added it doesn’t change his high opinion of the Focus, but that it would be better for the company to be “more straight-forward.”

Big Three executives acknowledge it will take more than clever advertising to win over significant numbers of “import intenders” — the industry’s term for people who buy foreign brands without even looking at Detroit’s models. Ford, GM, and Chrysler’s combined share of U.S. light vehicle sales so far this year is 51.3%, down from 54.2% at the same point in 2006, and down from 60% just four years ago.

Inferior cars that Detroit churned out in the past are still hurting the industry’s image. In addition, Detroit auto makers still tend to push sales using big discounts, a tactic that undermines both brand image and the resale value that customers get when they trade in or sell their old car.

“Building a better car and assuming people will buy it doesn’t work,” GM Chairman and Chief Executive Officer Rick Wagoner told reporters at this week’s Frankfurt Auto Show. GM, he said, “can do a better job” marketing its vehicles.

Many in Detroit are convinced they can convert import buyers if they can just get them into their vehicles for a test drive. For the past couple of years Ford, GM and Chrysler have organized test-drive events around the country, where hundreds are invited take a spin in their vehicles around a parking lot. Those events, however, are expensive and only reach a limited number of consumers. More importantly, they tend to draw people who are already willing to consider domestic vehicles, not the import intenders.

“We’re not on a lot of people’s collective radar screens for vehicles beyond trucks and SUVs,” said Barry Engle, vice president of marketing for the Ford division.

In the auto industry, “consideration” is a term that describes the degree to which car buyers look at a model or brand when they shop. If a car gets little consideration, that means few customers go into dealerships and look into buying the vehicle.

Ford Chief Executive Alan Mulally has expressed frustration with Ford’s recent tendency to abandon well-known vehicle names and familiar advertising campaigns — effectively squandering years of effort to build customer awareness. Mr. Mulally said he’s lobbying his subordinates to bring back a classic Ford advertising line that speaks directly to the issue of consideration: “Have you driven a Ford lately?”

While the Big Three still dominate in trucks, import loyalists make up more than half of the people who buy cars — 54% according to research by J.D. Power & Associates, a market research firm well known for its auto-quality studies. Just under a quarter shop only for domestic cars and 22% consider both imports and domestics, said J.D. Power researcher Chris Denove.

The main reason import intenders stay away from domestic cars, Mr. Denove said, is that “today’s consumer doesn’t yet believe the Big Three have improved quality to the point where they are on par with the Japanese manufacturers.”

That drives Ford, GM and Chrysler executives crazy. Independent quality studies show they’ve narrowed the gap with Toyota. Just a few weeks ago, J.D. Power’s long-term dependability study reported that GM’s Buick brand had tied Toyota’s Lexus, which had stood alone on top for the past 12 years.

A Toyota spokesman acknowledged the quality of Detroit’s vehicles is closer to Toyota’s, but added that Toyota continues to improve its quality as well. “Our problems per vehicle is still going down. It’s continuous improvement,” the spokesman said. “And that’s all good for the consumer.”

New sedans from Detroit auto makers like the Fusion and GM’s Saturn Aura have won rave reviews in the automotive press, often beating out the Honda Accord and Camry in head-to-head comparisons. New Detroit crossover wagons such as the GMC Acadia and Ford Edge have gained traction in a segment previously dominated by Japanese models.

The trouble is, most of these models are bought by people who are already driving domestic vehicles, and only a tiny fraction are sold to people trading in Toyotas and Hondas, according to data from J.D. Power. Of the cars customers traded in for new Chevys this year, 60% were GM vehicles, the firm’s trade-in research shows. The figure for Toyota is just 38%.

GM, for its part, has been trying to use the well-received Aura to steal customers from its main foreign rivals. This summer, in a bid to shake up the market, GM put a Camry and an Accord in each of its Saturn dealerships around the country and encouraged car buyers to test-drive the vehicles side-by-side.

The move had little impact on Aura sales, and GM has now ended the effort. It has also scrapped a plan to have Chevy dealers keep Camrys and Accords on hand to compare against the new Malibu sedan that arrives later this year.

At the Frankfurt auto show, GM Vice Chairman Bob Lutz said his company’s own focus groups also find consumers instinctively rate GM vehicles below Toyota’s or Honda’s. But he said GM’s scores are getting closer.

Chrysler is also looking for a little more consideration. A few weeks ago, the company began offering a lifetime warranty on its vehicles’ engines and transmissions, an industry first. So far it’s unclear if it is helping sales, but it may be another tactic that import buyers just ignore.

Stan Breon, a real-estate investor in Lawrenceville, Ga., who has been driving Camrys since 1992, said Chrysler’s warranty wouldn’t sway him to consider buying one. “Life’s too short to keep going back to the dealer, even if it’s free,” he said.

Write to Neal E. Boudette at neal.boudette@wsj.com


Corrections & Amplifications:

Barry Engle is general manager of Ford Division Marketing. This article incorrectly gives his title as vice president of marketing for the Ford division.



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

News and Events for the Ford or Lincoln owner and enthusiast.

September 2007
« Aug   Oct »



%d bloggers like this: