Payne: As Detroit dumps cars, Asian rivals go all in

Posted by Talbot Payne on November 28, 2018

The all-new Mazda 3 hatchback hews closely to the concept that wowed LA Show audiences in 2017.

Los Angeles – Detroit automakers are abandoning sedans, but their Asian competitors are all in.

The fetching new Mazda 3 that debuted at the Los Angeles Auto Show here Tuesday joins the Mazda 6, Toyota Corolla, Toyota Prius, Toyota Camry, Subaru Impreza, Hyundai Elantra, Kia Forte, Honda Civic, Honda Accord, Nissan Altima and more as all-new cars introduced in the last two years — as Japanese and Korean automakers double down on entry-level cars they see as crucial to attracting new customers into their automotive family.

“We want owning a Mazda to enrich our customers’ lives so they see us as a partner in their journey through life and stick with the brand for the long haul,” Mazda says in its press materials announcing its Mazda 3 in sedan and five-door hatchback form. The 3 is “a model aimed at first-time car buyers, shows our determination to earn customers’ trust and become an essential part of their lives.”

With a powerful, yet fuel-efficient new engine and premium good looks, the 3 hopes to win over millennial buyers with a $20K-something car with the sex appeal of a $40k European chariot.

The onslaught of new Asian cars comes as General Motors Co. joined Ford Motor Co. and Fiat Chrysler Automobiles NV this week in gutting its sedan lineup. In shuttering four plants that produced the Chevy Impala, Cruze, Volt, and Cadillac CT6 models, GM eliminated all but its midsize Chevy Malibu and subcompact Sonic and Spark cars.

Ford has announced plans to end all car production but for its iconic Mustang coupe. In the FCA stable, only the Fiat 500, Dodge Challenger and Charger muscle cars remain — with the Chrysler 300 reportedly on the chopping block.

Detroit companies are investing in new trucks and utility vehicles here like the Jeep Gladiator and Lincoln Aviator — yet Honda and Hyundai intros of new SUVs mean Detroit gets no respite from Asian automakers on the SUV front. The Passport, Honda’s fourth SUV, is aimed right at the new Ford Edge and Chevy Trailblazer.

The contrast highlights competing corporate visions as automakers adapt to a changing U.S. auto market and make investments in future autonomous technologies. Asian automakers have long seen small cars as their franchise vehicles — they got a toehold in the U.S. market decades ago with reliable, fuel-sipping vehicles. And while that market has shrunk in recent years, automakers like Honda, Toyota, and Nissan still see the 2.6 million vehicle compact sedan market as an entrée into more profitable SUVs.

“The (compact) market serves as a foundation for growing people through the brand,” John Morel, Honda’s senior manager for business intelligence and strategy, told The Detroit News this summer. “Civic buyers are tremendously loyal; more than 60 percent return to the Honda brand, which is among the best in the industry, and that feeds future volume to future Civic sales, CR-V sales and eventually across the line.”

Indeed, the Big Three Japanese automakers all claim the three best-selling SUVs in the market in 2017: Toyota RAV4, Nissan Rogue, and Honda CR-V.

“You need product across all economic status,” Toyota spokesman Curt McCallister told The News last year. “Small cars get our buyers hooked from cradle to grave. If you get them into the family early, then you can keep them on up the family tree.”

The Big Three Detroit automakers, on the other hand, see trucks as their franchise vehicles. With profit margins in excess of $8,000 per vehicle on sales totaling over 2 million trucks combined, the Ford F-150, Chevy Silverado, GMC Sierra, and RAM 1500 dominate the pickup market, while Japanese makers like Honda with its best-selling Tacoma have only penetrated the mid-size pickup market.

Pickup profits in turn fuel capital-intensive Big Three investments in autonomous cars, mobility services and electric vehicles, the purported foundations of a next-generation auto industry.

The end of production for the battery-powered Volt is a particularly bitter pill for GM. The plug-in Volt was GM’s answer to Toyota’s battery-powered green hit in 2011, but never gained market traction. While the Prius is the best-selling battery-powered vehicle ever, the Volt never sold more than 1/3 of Prius sales.

Here in LA, Toyota will showcase an all-new Prius with all-wheel-drive aimed at northern states. With 50 mpg, it boasts the best fuel economy for any gas-electric AWD car.

The demise of GM sedan production in Ohio and Michigan also leaves Japanese makers as the dominant producers of cars in the U.S. The new Accord (Ohio), Camry (Kentucky), Altima (Tennessee), Impreza (Indiana), and Civic (Indiana), for example, collectively employ thousands of workers across America’s industrial heartland.

In a stark illustration of the contrast in Japanese and Detroit business models, the North American Car and Truck of the Year finalists will be announced Wednesday morning in LA. Of the 14 semifinalists for Car of the Year, 9 are from Asian automakers. Only one, the German-made Buick Regal, comes from a U.S. maker.

Of the three truck semifinalists, all three are Detroit brands.

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