autos

Brandweek, April 24, 2000 by Jeff Green

HOT BUTTONS

Entry luxury sedans, four-door pickups and small SUVs tight to rise above clutter as new models enter the market

OVERALL

Spending likely continues to increase amid blistering competition

DARK HORSES

Does the Oldsmobile experiment continue? Does Nissan find its new brand footing?

One question hanging in auto circles is whether the selloff of dot-com stocks and the recent spate of bankruptcies and financial troubles among Internet companies will cool online companies' demand on upfront buying and reduce some of the frenzy of last year. But barring a huge swing in consumer spending patterns, there is little doubt that autos will need to spend to get their message out this year--especially among the General Motors, Ford and DaimlerChrysler brands.

With auto sales running at a blistering pace, currently well above last year's record run and on track so far this year for 18.24 million units, according to Ward's Automotive Reports, there's no sign that competition is cooling in the market. A key force is the continuing pressure on the Big Three from Asian and European brands as their market share continues to shrink despite the record volumes--dropping to 68.9 through March, against an increase of 7.4 percent in sales. Asian automakers improved to a 26.4 percent share of the market for the same period, with volume up 22.1 percent. The European brands were at 4.7 percent of the market with a frenzied 25.4 percent

improvement in sales from the year-ago period, per Ward's data.

All this means that the Big Three still need to work harder than everyone else to keep their share of the market. Their emboldened foreign rivals will be working just as hard to capitalize on their gains.

"All the sellers are going to say this is a seller's market. They always do," said one automotive media buyer. "The biggest challenge is exclusivity. Everyone is trying to get it and there are a limited number of specials you can own."

An example of the properties automakers covet is the Pontiac Aztek deal to seal up the CBS Survivors series or GM'S megadeal to wrap up the Olympics through 2008.

The shift is continuing to spend more money on broadly integrated buys that include magazine, Internet, TV and other outlets rather than a strict mass-market approach--especially toward the niche ends of the auto market but increasingly in the mainstream, too.

Among the key vehicle launches this summer and fall that will need heavy support are DaimlerChrysler's PT Cruiser; the automaker's always-vital all-new minivans; and the three Sebring vehicles, a coupe, sedan and convertible. Ford has its new Escape sport/utility vehicle and the Explorer Sport Trac SUV/pickup hybrid that will require a big push on the truck side.

Mercury will be looking for a boost for its 2001 Mountaineer, and Lincoln will have to get behind the new Blackwood luxury SUV/pickup based on its highly successful Navigator. Its Mazda subsidiary will be supporting its Tribute SUV, sibling to the Ford Escape.

General Motors, which has been heavily discounting across its lineup as it fights declining market share, is at a key stage of its rebuilding program as it rolls out new products like the Aztek hybrid SUV and its Avalanche pickup/SUV hybrid. It will be a particularly important fall for Olds as the automaker tries to reposition the flagging Intrigue sedan and launch the new Aurora flagship entry luxury sedan. GM will also need additional support behind new large SUV models like the GMC Denali that roll out this fall. Buick likely will be scouting some opportunities for its new Rendezvous SUV, which hits the market in the spring and will be key for freshening the face of the division.

Asian automakers have plenty to push this summer and fall, too. Toyota's new four-door Tacoma pickup and Nissan's refreshed four-door Frontier will hit big among the blizzard of multi-entry trucks coming to market this fall. Toyota also has refreshed its RAY 4 small SUV and a new Highlander SUV is due. Honda's Acura luxury division will intro its MDX SUV, aimed squarely at the Lexus RX 300 luxury SUV. Lexus will be entering a new segment with its IS 300 sedan, aimed squarely at the BMW/Mercedes entry-level crowd, and will face a new Mercedes C-Class and a myriad of extensions of BMW's 3-Series lineup, including an all-wheel-drive vehicle. Mitsubishi is putting a lot of support behind its new Eclipse and trying to drum up support for the rest of its lineup, while Nissan has to mount a serious push behind the new Sentra and Pathfinder.