Automotive: Bevy of new models cause swoon

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Today's auto industry could be likened to an overmatched soccer game. Much of the play is at midfield but most of the action is at one end where industry high-flyers are generating double-digit sales growth.

A bounty of new models is helping the brands with strong returns. And it doesn't hurt to be a foreign marque or a luxury brand to be among these best performers (see accompanying chart).

The industry offered a total of 1,314 models in the 2002 model year vs. 1,165 the year before and just 910 in the '95 model year, according to Advertising Age sibling Automotive News.

"New product drives the market," says Steve Sturm, VP-marketing of Toyota Motor Sales USA's Toyota Division. "There's a huge amount of fresh product." As an example, Toyota currently is launching the Matrix in a campaign from Publicis Groupe's Saatchi & Saatchi, Torrance, Calif., and earlier this year introduced the new Corolla.

Toyota spent $37 million in measured media in first quarter 2002, reports Taylor Nelson Sofres' CMR, which would annualize to its 2001 expenditure of $152 million.

All-new or redone models have traditionally sparked sales. In recent years, consumers are buying, not out of necessity but from a desire to have the latest cool new arrival, says Art Spinella, VP of consultancy at CNW Marketing/Research.

Marketers enjoying big sales gains with new products include Jaguar with the X-Type (handled by WPP Group's Y&R Advertising, New York) and Land Rover with the Freelander sport-utility vehicle (Omnicom Group's GSD&M, Austin, Texas), both owned by Ford Motor Co. and priced for entry-level lux buyers; General Motors Corp.'s Cadillac CTS sedan and Escalade EXT sport-utility (Bcom3 Group's D'Arcy Masius Benton & Bowles, Troy, Mich.), Buick Rendezvous SUV (Interpublic Group of Cos.' McCann-Erickson Worldwide, Troy) and niche player Saab's 9-5 sedan and sport wagon (Interpublic's Lowe, New York).

common themes

Other big winners include BMW of North America's top-of-the-line 7-Series (Publicis' Fallon, Minneapolis), Nissan North America's Infiniti G35 sedan (Omnicom's TBWA/Chiat/Day, Playa del Rey, Calif.), Mitsubishi Motor Sales of America's Lancer sedan (Interpublic's Deutsch, Los Angeles) and Kia Motors America's Sedona minivan (independent davidandgoliath, Los Angeles).

Most makes in at least temporary decline share common themes: low ad investment, poorly conceived marketing plans, limited new product.

Auto brands with declining vehicle sales include Isuzu Motors America (Omnicom's Goodby, Silverstein & Partners, San Francisco); Ford's Lincoln and Mercury brands (WPP's Y&R Advertising, Irvine, Calif.) and Ford's Volvo (Havas Advertising's Euro RSCG MVBMS Partners, New York); Porsche Cars North America (Interpublic's Carmichael Lynch, Minneapolis); Mazda North American Operations, in which Ford has a controlling interest (independent Doner, Southfield, Mich.); and GM's Oldsmobile (Bcom3 Group's Leo Burnett USA, Chicago) and Saturn (Omnicom's Goodby).

Isuzu, 49% held by GM and unprofitable, launched its all-new Axiom SUV last year in ads that brought back its 1980s spokesman Joe Isuzu. "The Axiom is a nice product, but Isuzu's marketing plan in 2001 was poorly conceived and poorly executed," says Jim Sanfilippo, exec VP of auto consultancy AMCI.

Rick Balsiger, Isuzu VP-marketing and product planning, admits the brand faded from buyers' radar screens because of "very little if any investment in advertising" in 1999 and 2000. In 2001, the marketer spent $36 million, CMR reports.

Mercury is using only regional advertising for its models. But the carmaker most likely will return to national advertising for the upcoming launch of Marauder, a high-performance version of the Grand Marquis sedan.

Earlier this year, Ford indicated it would discontinue Mercury's Villager minivan and Cougar coupe as part of its restructuring plan to return to profitability. Sales of the brand's Sable midsize sedan and full-size Grand Marquis are also sliding. Mercury's Mountaineer SUV, redone for the 2002 model year, "is keeping them in the game now," says Mr. Sanfilippo, noting Ford-owned Volvo also is "waiting anxiously" for its first true SUV later this year. Volvo is suffering because it's losing buyers related to its new styling and added focus on vehicle performance, according to CNW research.

New vehicle styling and a strong ad effort are behind the success of both Cadillac and Infiniti, says Mr. Sanfilippo. Mitsubishi's gains are "much more marketing driven" than some brands showing sales gains, he says. Pierre Gagnon, president-chief operating officer of Mitsubishi, says the brand's ongoing campaign from Deutsch "is having a major impact on sales" even though Mitsubishi doesn't have a lot of new models. The Lancer did replace the Mirage sedan this year. Although its national ad budget has declined, Mitsubishi has more than tripled the ad dollars from its regional dealer groups over the past three years because dealer funds rise with sales volumes. Dealer groups' ads have the same look as the national, but put more emphasis on vehicle features.

zero-down, 0% financing

Mitsubishi has been tagging all its national and regional TV spots with a zero-down and 0% financing message since 1999. But Mr. Gagnon says the marketer's incentive costs have fallen since then, with a 25% drop in the first quarter of 2002 over the same `01 period.

A staple of the industry for years, incentives accelerated in earnest during 2001's fourth quarter in the weeks after Sept. 11. GM jumped in first with its "Keep America Rolling" 0% financing national campaign. Others followed, lifting the industry to its second-best sales year with a total of 17.2 million vehicles sold in 2001.

Mr. Spinella says CNW's buyer surveys in the weeks after Sept. 11 revealed incentives drove people "who weren't even intending to buy a car" to showrooms "because the deals were so good. There's substantial money on the table" with the exception of American Honda Motor Co.

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