Big Three: We Will Do More In 2004

DETROIT John Porretto writing for the AP reported that the Big Three automakers are unofficially dubbing 2004 "the year of the new product push." Together, they're beefing up their lineups with more new cars and trucks than any year in recent memory.

But read between the lines and 2004 might be called the year when Detroit's automakers take aim at foreign companies that have been whipping them on their own turf.

Actually regaining market share lost to Japanese and other automakers will be difficult for General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group. Still, most analysts say the improving economy and tide of new products give them an opportunity to boost sales, and to reduce consumer incentives that have hurt profits so much in the past few years.

The consensus of six industry analysts and executives interviewed by The Associated Press is that U.S. sales of new cars and trucks will rise about 2 percent to 3 percent in 2004, from already healthy levels in 2003.

Most said foreign companies such as Toyota Motor Corp. and Nissan Motor Co. remain in a position to continue their expansion, aided by vehicles like Toyota's new hybrid Prius and Nissan's Quest minivan.

But unlike the past few years, GM, Ford and Chrysler now appear better situated to take on their overseas rivals at home.

"I think there's a whole host of buyers in North America that have no problem buying a Big Three vehicle," said Mike Wall, an analyst with the forecasting firm CSM Worldwide. "They just need a compelling reason to do so."

That's where the barrage of new vehicles comes in.

J.D. Power and Associates expects major automakers to introduce 31 new and 31 significantly redesigned vehicles in the U.S. market in 2004, up from 27 new and 21 redesigns in 2003 and 30 new and 19 redesigns in 2002.

The bulk of new offerings will come from the Big Three, which J.D. Power analyst Jeff Schuster says stems partly from timing -- many vehicles are at the end of their planned lifecycles -- and partly from necessity.

GM, which is trying to post a third straight year of U.S market-share growth in 2003, will lead the way with 28 new or redesigned models in 2004. The additions range from the entry-level Chevrolet Aveo to the upscale Cadillac STS, which replaces the Seville.

"The Big Three can't sit back and watch everyone else beat them to the market with product," said Schuster, J.D. Power's director of North American forecasting. "All three will be more competitive by the end of 2004 than they are right now. But that may not spell additional market share, because everyone else is more competitive as well."

The two companies with the most on the line are Ford and Chrysler, both of which need several successful product launches to improve profits.

Ford's focus is on cars. The world's second-largest automaker behind GM has labeled 2004 "the year of the car." The roster includes the large Five-Hundred sedan, the GT supercar, the new Mustang and the Freestyle, a roomy car-based utility vehicle.

Ford lost a combined $6.4 billion in 2001 and 2002 but expects to reverse that trend in 2003 and post a profit of roughly $1.8 billion.

Chrysler's product plans are even more aggressive, though its circumstances are likely more critical. Chrysler's U.S. market share has fallen steadily and it's on the spot to reach a break-even profit target in 2003. The root of the trouble, analysts say, is an aging vehicle portfolio, poor product planning and stiff competition from Asian and European nameplates.

Chrysler will roll out nine new or redesigned vehicles in 2004, including two rear-wheel-drive cars, next-generation minivans and a revamped Jeep Grand Cherokee.

"It's time to go on the offensive," Chrysler chief Dieter Zetsche said at a November product preview for automotive journalists.

The numbers show the Big Three certainly need a lift.

Through November, combined U.S. sales for the Big Three were off 3 percent from the same period a year ago -- not encouraging, considering consumer incentives have been at record levels in 2003.

Meanwhile, Asian and European brands each saw U.S. sales rise 3.2 percent through November -- a trend few predict to end as foreign companies continue to add U.S. manufacturing capacity and retail outlets.

"When they're moving into new segments, such as pickup trucks, it makes it tough for them not to gain market share," Wall said.

Nissan's first full-size pickup, which went on sale in the United States in December, is priced $2,600 to $3,000 less than comparable models from GM, Ford and Dodge.

In a recent research report, Merrill Lynch cited the Titan pickup as a reason why Nissan likely is on the verge of another wave of increased sales and profits.

"The launch of the Titan ... marks Nissan's direct assault on the Big Three's last bastion of profitability," the report said.

Big Three executives say the keys to increasing profitability are lowering the cost of making vehicles and improving pricing by reducing consumer incentives, an industry trademark since soon after the Sept. 11 attacks.

They're all working on cost. But pricing remains a question.

Paul Ballew, GM's executive director of global market and industry analysis, said he's hopeful the wave of new products will allow the automaker to ease up on incentives in 2004.

"The question for us is going to be: As the economy continues to strengthen, how much relief do we get on pricing?" Ballew said. "We don't think by itself it's going to give us complete relief because competition is so intense."