COMMENTARY: TOO MANY MODELS, TOO LITTLE FOCUS
It was Detroit's version of a mercy killing. On Sept. 29, Chrysler Corp. pulled the plug on its decade-old Eagle car brand. With a U.S. market share of just 0.2%, Eagle won't be missed. ''Getting rid of it won't amount to a hill of beans to me,'' says Ralph Martinez, a Chrysler dealer in Milwaukee, Ore. ''I have one Eagle Talon on the lot--and it's been sitting there for six months.''
In a market glutted with hundreds of different models, some cars have plain worn out their welcome. Is the market really big enough for both the Pontiac Firebird and the Chevrolet Camaro--two '60s-era muscle cars from General Motors Corp. with virtually identical sheet metal? Chrysler offers three versions of the same slow-selling compact car, including two--the Breeze and Cirrus--in the same Chrysler-Plymouth showrooms. And while Ford Motor Co.'s Ford Contour has been a bit of a dud, its upscale twin, the Mercury Mystique, is an even bigger disappointment. Despite a $1,000 cash rebate, Mystique sales tumbled 24% in the 1997 model year.
DEADWOOD. Sure, cloning multiple versions of the same car keeps dealers happy and generates some incremental sales. But there is a cost. ''It takes more advertising money, more marketing money, more distribution costs,'' says Joseph Phillippi of Lehman Brothers Inc. ''Those resources could go into other product lines.'' So why does it take so long to dump losers? Partly, dealer agreements make it tough. But there is ''an emotional factor'' to dropping a brand, concedes Martin Levine, general manager of the Chrysler/Plymouth/Jeep/ Eagle Div. In the case of Eagle, he says, ''the market made the decision.''
What else is the market telling Detroit? For one, cut the cord on old nameplates that have lost their appeal, as Chrysler did when it dumped its K-cars a few years ago. Ford is trimming some deadwood, such as the Aspire and the Probe, and putting others, notably the Thunderbird, on hiatus. GM--which, with more than 30 nameplates, is the leader in marginal cars--finds it hard to give up on anything, though the Buick Skylark and Roadmaster and Chevrolet Caprice have finally gotten the boot.
The carmakers also need to get a grip on their marginal brands. For Chrysler, it's Plymouth. Levine says Plymouth targets entry-level buyers seeking value and style. That's fine. But Plymouth doesn't have a single unique product of its own, unless you count the tiny-volume, image-building Prowler roadster. The Plymouth Neon, for example, is just a less sporty version of the Dodge Neon. Serving up different price points is good strategy, but Plymouth needs a more distinct identity.
Ford has its own struggle with the Mercury brand. ''A fundamental issue for Mercury since it was created in 1939 is, what is Mercury?'' says Jim Rogers, general-marketing manager of Ford's Lincoln-Mercury Div. Mercury is supposed to fill a price gap between Ford and Lincoln. But is that compelling to younger buyers? Most Mercury customers are in their 50s or 60s. Ford is attacking the problem with a blitz of humorous and irreverent ads, but the money might be better spent propping up struggling cars at the more important Ford division.
Then there's GM's Oldsmobile. In the mid-'80s, it sold a million cars a year. In 1997, it will manage maybe a third of that. Olds General Manager Darwin Clark calls this a ''time of transition'' and says the carmaker is committed to the brand. But Olds has not been able to jump-start sales, despite some rave reviews for models such as the new midsize Intrigue sedan and the sleek Aurora luxury sedan launched in 1994. Olds is a venerable brand and carries the baggage that comes with age. In the end, GM's best bet may be simply picking a few top products and merging the division with the bigger Buick brand or the better-defined Cadillac.
Shedding cars and brands is one of Motown's toughest tasks. There are jobs, investments, and dealers at stake. It's no easier for foreign carmakers, which have their own laggards. But in a brutally competitive market, focus is everything. In this game, more isn't necessarily better.
By Bill Vlasic
Updated Nov. 20, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.