Too Small, Too Soon

A gloomy stillness enveloped Ford Motor Co.'s normally bustling assembly plant in Metuchen, NJ. The plant was closed all last week to reduce a mounting backlog of unsold Pintos and Mercury Bobcats, two of the smallest models Ford produces. At the same time, a bulging inventory of Chevrolet's sub-compact Vegas prompted General Motors Corp. to eliminate a second shift at its huge superautomated plant in Lordstown, Ohio.

The cutbacks underscore a paradoxical development in a confusing model year. Sales of the 1976 cars that went on display in September have raced 37% ahead of a year earlier and are building close to a boom. Volume for calendar 1976 could easily hit 10.25 million cars, making it the third biggest year ever, after 1973 (11.35 million cars) and 1972 (10.48 million). Production is climbing; this March it reached 2.5 million cars, nearly a million more than in March 1975.

But the sales are not coming where Detroit's automakers had expected. For all the stress on fuel economy and thinking small that followed the 1973 Middle East oil embargo, the public is now largely spurning the industry's tiniest models. Instead, motorists are buying larger, somewhat gas-thirstier compacts and intermediates that offer a bit more leg room, somewhat more trunk space and in some cases even a touch of high style.

"It's a mixed-up market," says American Motors Corp. President William Luneburg, "and anybody who says he fully understands it is crazy." A vice president of another auto company reports on a meeting with officials of two major ad agencies: "Six months ago, they told us what to do: advertise gas economy, small size; advertise American, no-nonsense thrift. And who gets the action? Chrysler Cordoba and Volare--foreign names, foreign actors on the TV screen, 'Corinthian leather,' the look of 'elegance.' I asked the admen 'What the hell is this all about?' They could not explain it."

Part of the reason for the shift in taste is that the public has got over its fear of gas shortages, become inured to pump prices of more than 50-c- per gal., and is willing to spend a bit more for a larger car. In any case, the decline of the subcompacts, which usually carry sticker prices of $2,900 to $3,400, is striking: from 10% of the market just after the embargo to 7.7% now. While inventories of most other cars are sufficient to supply only 60 days of sales, dealers have a 100-day supply of Ford Pintos and even bigger pile-ups of Chevy Vegas.

Far Off the Pacer. Chevrolet's economical Chevette, introduced with great fanfare last October, is expected to fall well below its sales target of 275,000 to 300,000 units this year. Another disappointment: AMC's Pacer, which took off briskly when introduced a year ago, posted sales of more than 100,000 in the first ten months or so, then abruptly fell out of favor. To get sales moving again AMC is now throwing in free $425 air conditioners with all Pacer purchases.

Small imports, which range in price from $2,700 to $3,400, are also feeling the chill of buyer indifference. They now account for no more than 14% of U.S. sales v. almost 18% last year. Among foreign makes, Volkswagen, long the leader in import sales to the American market, has fallen to third, behind Toyota and Datsun.

The subcompacts' troubles have stirred some talk of a big-car revival. It is wildly mistaken: the cars that are moving now are still shorter and lighter than the standards of the early 1970s. Big, standard-size cars (Chevrolet, Ford, Buick, Plymouth, Oldsmobile and Pontiac), which cost from $4,200 to more than $5,000, held almost 35% of the market in 1973. Their share shrank to 26% in 1974, 20% in 1975 and is currently 19%. Luxury cars (Cadillacs, Lincolns, Chrysler New Yorkers) are very slowly increasing their share of the market, now around 6%.

The biggest sales gains are being made by compacts priced from $3,200 to $4,500: Chevy Novas, Ford Granadas, Dodge Aspens and Plymouth Volares, which are only slightly larger than the most diminutive models. The compacts' market share has gone from little more than 14% two years ago to almost 19% today. Intermediate models, such as the Oldsmobile Cutlass and Chevrolet Monte Carlo, the Chrysler Cordoba and the Ford Elite, are also advancing, from 22% of the market last year to almost 26% this year. Their price range: $3,700 to $4,500.

Anyway, automakers are going to continue shrinking their cars and will even bring out more subcompacts in the belief that small cars will be the big wheels of the future. Besides, they really do not have much choice. The energy act passed by Congress last year requires the average new car to get 27.5 miles per gal. by 1985--about double the average performance of the 1974s and far greater even than the 17.6 miles per gal. average of current models. The only way to achieve that is to make cars shorter and lighter each year.

Slimming Down. GM, which now offers seven different subcompacts, is aggressively pressing multibillion-dollar plans to slim down most of its larger cars. The 1977 model of the standard Chevrolet Impala that will roll out next September will be only a few inches longer than intermediates like the Chevelle. Says Chairman Thomas Murphy: "By 1980 cars under 3,500 pounds may account for more than 70% of all GM sales compared with about 20% now."

Ford President Lee Iacocca believes that for the next few years there will still be a substantial market for standard cars--"especially four-door sedan styles"--but eventually most standards will shrink to about intermediate size --or smaller. To compete temporarily against GM's slow-moving Chevette (which carries a back seat as optional equipment), Ford has introduced an extra-economic version of the Pinto (38 miles per gal.). Next year, Ford will import a minicar assembled by its subsidiary in Germany and offer a trimmed-down version of its once popular Thunderbird.

Cash-strapped Chrysler is stepping up preparations to bring out its first domestic subcompact late next year. It has also begun importing a Japanese-made subcompact, the Plymouth Arrow. Pleased by brisk sales of his company's compact Volare and Aspen, Chrysler President Eugene Cafiero says: "The core of the market next year is going to be compact vehicles."

American Motors is planning production of a station wagon version of its wide, glassy Pacer. It will also have a fresh version of its aging subcompact Gremlin; the new model will use a Volkswagen-designed four-cylinder engine. Indeed, car buyers will find an even wider range of models of all sizes in showrooms round the nation next autumn. GM alone will sell no fewer than 40 models with four different kinds of engines. Whatever kind of car the public may want, Detroit hopes to have it ready, thus coping with buyers who think small one moment and bigger the next.

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