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Companies move cars into new price brackets

3562 Views 1 Reply 2 Participants Last post by  fhrblig
02-03) 04:00 PST Detroit -- Inside the cavernous Cobo Convention Center where the Detroit auto show is held each year, it's easy to lose your way among the hundreds of new models.

But at this week's show, the feeling seems magnified by the cars themselves, which in some cases appear, at first glance, to be sitting in the wrong display area.

Consider the sporty new Nissan Altima coupe, whose sleek design looks a lot like the Infiniti G35, a car that Nissan's luxury division sells for thousands of dollars more.

A short walk away is the concept version of a Honda Accord coupe, with crisp, muscular lines and an aggressive stance that would look far more at home across the Cobo center aisle in the display for Acura, Honda's upscale brand.

Confusion over models from the same automaker historically has been a problem for U.S. auto companies, who have been forced through the years to build different versions of essentially the same vehicle for their various brands. By contrast, Japanese carmakers, which were far smaller than their Detroit competitors, deliberately kept their lineups lean. But now these foreign companies are introducing new models at the high and low ends of their respective brands that may cause some unintended double-takes among consumers.

European carmakers may be getting in on the act, too. BMW makes Mini Coopers, but it eventually will be competing for similar buyers and budgets when BMW brings its 1-series cars to the United States.

This trend -- call it "brand bumping" -- essentially describes what occurs when car companies move a brand or a nameplate in a new direction, generally further up or down in price, in hopes of creating a new identity and attracting more buyers.

Because it is hard for automakers to make big moves with cars that have clear identities, they often have to do this a step at a time, through new designs or by adding more powerful engines.

"You're moving the car halfway out of one brand slot and into another brand slot," said David E. Davis, editor of Winding Road, an online car magazine. "It does have the effect of moving the car up one level to the next price class or the next size class."

The phenomenon is different from "badge engineering," in which auto companies take what is basically the same vehicle and sell it under one or more nameplates, making cosmetic changes to the front end, tail lights or putting on another name.

That practice reached comedic levels in the 1980s when Lincoln poked fun at a series of look-alike cars from General Motors in one of its ads. And Japanese companies fell victim to that a decade or two ago themselves, when they were branching out from their original mass market brands to luxury models, and had to use those car and truck platforms until they could develop unique ones for their new brands.

One reason for this new shift in branding is that car companies want to keep growing and they have, for now, run out of new types of vehicles, like SUVs and crossovers, that have fueled growth in the past.

"We're sitting in the lull," said Wesley Brown, an industry analyst with Iceology Inc., a marketing firm in Westwood, Calif.

When Nissan wanted to start selling a two-door coupe, it clearly turned to its Infiniti division for inspiration to design the new Altima coupe. That new Altima is part of Nissan's effort to jump-start its U.S. sales, which declined in 2006 after rising since the start of the decade.

Many say the similarity between the two cars is striking. One Web site, Autoblog.com, has dubbed the Altima coupe the "poor man's G35." To be sure, the two cars may not compete for buyers very long, if at all. Nissan, which plans to begin selling the new Altima coupe this summer as a 2008 model, has already released sketches of the next-generation G35. It will also be sold as a 2008 car, although Nissan has yet to say when the new Infiniti coupe will reach showrooms (sketches of the new G35 suggest the changes may be subtle to everyone except car buffs).

For their part, Nissan officials insist there are clear differences between the two brands. Their lineups have just one vehicle with similar architecture, the Nissan Armada and Infiniti QX56, both big SUVs. The Altima Coupe is a front-wheel-drive car; the G35 is rear-wheel-drive (though both will be available in all-wheel-drive).

"There's a difference in the way the vehicles feel when you're driving them," said a Nissan spokesman, Fred Standish. "It's very important that these brands be distinct and have distinctive identities."

And Honda officials said they were not concerned about the new Honda coupe bumping into the Acura brand. "There's very little, if anything, shared" between the brands now, said a Honda spokesman, Chuck Shifsky.

Brand identity is likely to become even more important in coming years. European companies like Alfa Romeo, Citroen and Fiat may well make a return to the U.S. market, while newcomers from China, like Geely and Changfeng, could appear within a few years.

Some auto company executives said another factor behind these branding shifts was that buyers simply were not following the patterns of the past, when they began with starter cars and worked their way up to more expensive models.

According to this theory, people in their 20s might buy a Scion, trade up to a Toyota sedan in their 30s, and then, when perhaps they are older and have more money, they might move up to a Lexus. The goal is to keep a buyer moving through the three divisions, all owned by Toyota.

But now, some Scion buyers are trading up directly to sporty Lexus models, like the IS sedan, despite an effort to make Toyotas look more stylish.

In the 1990s, consumers "for the most part bought cars by the pound," meaning the big SUVs and pickups then in vogue, said James Lentz, executive vice president of Toyota Motor Sales USA.

Now, he said, "kids want smaller, but not cheaper." Lentz said the average buyer, who is 25 years old, pays $18,000 to $19,000 for their car, including accessories like wheel covers and interior features.

While it is a big leap from there to the Lexus price range, Lentz said it may be time for Lexus to consider selling something cheaper. "The luxury market over time has really evolved," he said, and Lexus is considering "the fringe of each end," meaning smaller cars and those priced above $100,000.

A smaller and less expensive Lexus would be entering a market dominated by the Mini Cooper, which is sold by BMW at separate Mini dealerships.

For its part, BMW faces its own potential brand-bumping issues with the 1-series, a small hatchback about to enter its second generation in Europe. It has never been sold in the United States, although BMW's new chief executive, Norbert Reithofer has said it is eventually headed here, though it has not set a date.

BMW already has the experience of selling 1-series and Mini in Europe, Michael Ganal, a BMW board member said in an interview last year. "Their character is so different that they do not" overlap, Ganal said. But BMW does not sell a hatchback in the United States, where such cars have a cheaper reputation than sedans, he pointed out.
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The phenomenon is different from "badge engineering," in which auto companies take what is basically the same vehicle and sell it under one or more nameplates, making cosmetic changes to the front end, tail lights or putting on another name.

That practice reached comedic levels in the 1980s when Lincoln poked fun at a series of look-alike cars from General Motors in one of its ads. And Japanese companies fell victim to that a decade or two ago themselves, when they were branching out from their original mass market brands to luxury models, and had to use those car and truck platforms until they could develop unique ones for their new brands.
Yeah. Lincoln Zephyr/MKZ-Ford Fusion, anyone? Oh sure, it's nowhere near as blatant (or crappy) as the '80s Cadillac Cimarron was, but I find it funny that they now do what they made fun of then.

Now, he said, "kids want smaller, but not cheaper." Lentz said the average buyer, who is 25 years old, pays $18,000 to $19,000 for their car, including accessories like wheel covers and interior features.
Ford said they couldn't bring the european version of the Focus here because they'd have to charge too much for it. Now we're stuck with a frighteningly ugly warmed-over nine-year-old design that will go over like a lead balloon. Sigh.

I like Ford and I want them to do well, but they need to remove their heads from their nether regions.
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