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U.S. Carmakers Try Flashier Approach

January 12, 2004

In the face of fierce competition, United States automakers are turning to flashy "halo" cars -- niche models that draw looks if not huge sales -- in a bid to lure customers back into showrooms, according to the Christian Science Monitor.The best example at this year's auto show, according to the Monitor, was the Chrysler ME4-12, designed to outmuscle Lamborghini and Ferrari. It's an inherently risky strategy, analysts say. "In some cases... such wild show cars are an act of desperation," says Art Spinella, president of CNW Marketing/Research, an automotive consultancy in Bandon, Ore.Detroit is in a bind, analysts say, trying to please customers but really aiming to placate Wall Street, which punishes automakers for every quarter-point slide in market share. So, finding enough sales to stay on top can mean filling every imaginable niche to build incremental volume.The math, according to Spinella, goes something like this: In 2003, the entire auto industry had to sell 16.5 million cars in the U.S. to break even. Of the 16.7 million it actuallysold, 200,000 were small-volume niche models. In the end, those niches represent automakers' profit. No wonder they're creating so many ofthem, according to the Monitor.And Ford and Chrysler aren't the only automakers struggling, the Monitor noted. "Toyota is the most vulnerable it has ever been," says Spinella. The company lost as much market share as Ford, he says, and Honda dropped as well. The big winners are Nissan - its popular Maxima sedan, Quest minivan, and Murano SUV are stealing sales from Honda and Toyota - and resurgent Korean automakers, according to the Monitor.
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