PTCCmike
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Posted: Jun 20, 2005, 8:53 AM
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From Fad to Trend - Auto Makers Love Retro-Styled Hits
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From Fad to Trend
Auto Makers Love Retro-Styled Hits,
But Not as Much as Profitable Trends
June 20, 2005
The Wall Street Journal
Hollywood thrives on big hits that capture or create pop-culture waves. So do auto makers. Perhaps this is why in the car business, as in Hollywood, remaking past hits is so popular.
You can get a lot of arguments about whether "retro" cars -- those clearly inspired by earlier hits -- are a good or a bad sign for the creativity level in Detroit, Japan and Germany. The real challenge for car makers is how to manage the situation when a car designed to appeal to a certain niche -- for instance, one with nostalgic styling -- catches or creates a pop-culture wave.
Consider Chrysler's PT Cruiser, which created a sensation when it was launched in 2000. With its 1930s-gangster getaway-car looks, cutely compact size and innovative features -- such as a panel in the back that could be positioned as a picnic table -- the PT was the Hot Car of 2000 and 2001, the year that Chrysler sold nearly 145,000 of them.
But fashion is fickle. By 2003, PT Cruiser sales had slumped to 107,759 cars, and Chrysler was forced to offer discounts to keep the mini-wagon moving. Sales bounced back up to 115,955 cars in 2004, but still remained well short of the peak.
This fall, Chrysler will launch a moderately revamped PT Cruiser. It's still basically the same car, but now the grille and front end will look more like other new Chrysler models, the back end will be a touch sleeker, and the interior will be upgraded to a more 21st-century look. The most powerful of three available engines will get a bump to 230 horsepower from 220 horsepower, and engineers have taken various steps to reduce noise inside the car by about five decibels.
Chrysler's timing is first-rate, because this fall, rival General Motors will launch the Chevy HHR, a vehicle that will strike a lot of potential buyers as, shall we say, an homage to the PT Cruiser. Like the PT, the Chevy HHR is a compact wagon with a distinctly retro flair. Like the PT Cruiser, the HHR offers a multi-purpose cargo and people-carrying capability in a maneuverable package priced well below $20,000. GM says the HHR's starting price will be $15,990 when the vehicles start shipping in late summer. GM executives say their inspiration for the HHR's design was a 1949 Suburban, not the PT Cruiser. This makes Chrysler executives chuckle.
"We think imitation is the sincerest form of flattery," says John Critzer, senior product planner for the PT Cruiser. "Why buy the imitator when you can buy the original?" Mr. Critzer says Chrysler isn't revealing prices for the redesigned PT Cruiser just yet, but he promises that "we'll be right with them" -- meaning Chevy -- on an apples-to-apples comparison.
But the real challenge for the PT and the HHR -- and several other high-design, high-concept models coming to market -- will be to navigate their way to long-lived profitable sales. Or to steal a line from a Ford market-research team, to make the transition from fad to trend.
The PT Cruiser's sales curve -- a 25% fall from peak to trough -- suggests the market for funky, retro three-quarters-sized wagons had a lot of faddist froth at the beginning, with most of the excitement around the car's quirky styling. Intended to attract younger buyers to the Chrysler brand, the PT wound up being a car for graying Baby Boomers -- the median age of owners is 50 years old.
Of course, there's nothing wrong with graying Baby Boomers. We may not be as much fun at a party as we used to be, but there are a lot of us, and the fortunate among us have the money to buy a new car, which is more than most people in their 20s can say. Still, as the PT and its audience have matured, Chrysler has had to build a more-sustainable case for buying the PT, in part by emphasizing the car's more-substantial attributes -- such as its versatility -- and investing in various special-edition models, plus a convertible.
Chrysler is on the downslope of the fad curve with the PT, and if it is successful, it could do a good business selling around 100,000 to 120,000 PT Cruisers a year.
Ford, on the other hand, is in the often-perilous initial-rush phase of demand for its new Mustang. Demand for the new Mustang, particularly the V-8-powered Mustang GT, is so hot that Ford likely won't be able to deliver all of the 2005 cars that customers have ordered within the 2005 model year. Stephen G. Lyons, group vice president in charge of Ford's North American sales and marketing operations, says some customers could wait as long as six months for cars they have special-ordered. Ford has about 14,400 customers waiting for special-ordered Mustangs, with specific colors and features.
"I haven't seen this in 20 years," Mr. Lyons says.
In Hollywood terms, the new Mustang is a highly successful and well-executed remake. Its exterior design is an homage to the Mustangs of the late 1960s -- rent the Steve McQueen action movie "Bullitt" and you'll see the car Ford designers had in mind. The fundamental concept of the GT model is, likewise, a remake of a classic old formula: big V-8, in a light rear-drive car. The marketing proposition? Classic as well: "Great looks at a great price," as Mr. Lyons says.
What Ford would like to avoid during its trip down memory lane is repeating some of the mistakes it and others have made when early sales of a hot car have blown past expectations. The natural inclination when a company has a hit product is to figure out how to make more. But in the case of a specialty car like the Mustang, the risk is that sales will follow the same curve, or an even more-exaggerated curve, as the PT Cruiser: a big start, followed by a big drop.
Ford executives considered investing the money to boost Mustang production past its current maximum of 192,000 cars a year, Mr. Lyons says. But they didn't do it.
"It's a fundamental decision -- I could count examples of where we had something hot, found out how to build more and did so until we had one too many" and had to start discounting the cars, Mr. Lyons said. "That's the fool's gold here."
Instead, Ford is going to modify its distribution policies to give special-order cars priority -- shipping those to dealers who otherwise aren't due to get more Mustangs under the normal allocation system. Ford also will try to divert some of the demand for the V-8-powered Mustang GT by offering a V-6-powered model with a "Pony Package" that gives the lower-powered car more of the look-and-handling feel of the top-of-the-line GT.
For customers who are waiting for a Mustang GT, Ford's decision could be frustrating. For those who already have one, it's a sign that Ford is at least trying not to flood the market and run down the resale value and image of the car.
For those who wish that car designers (and film makers) would stop reaching for tried-and-true ideas and come up with something fresh, cars like the new Mustang (or the Chevy HHR, or even the Mini) might be a disappointment. For those folks, however, there's always the Scion xB. It looks like nothing else on the American road -- at least, right at this moment.
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