Detroit’s Big Three are pushing to finish development on new lines of vehicles that will rejuvenate the market and bring in profits for their ailing companies. Many of these new vehicles come with higher sticker prices that they hope will translate into higher profit margins for the auto giants.
The process costs automakers hundreds of millions of dollars and can take years; however, it must be done to keep models fresh and exciting for new car buyers. Accomplishing the redesigns is doubly hard when faced with the dwindling cash reserves and lagging sales that marked the first half of the fiscal year.
Ford Motor Company has a plan to redesign the models that are most popular in North America and other regions by 2012. Two years later, in 2014, Ford says that it will be through one cycle and into the next, which is much faster than in previous decades.
Typically, automakers revamped models every four to five years, sometimes waiting even longer than that. However, in today’s market, that’s no longer an acceptable amount of time to expect buyers to wait for the latest new vehicles.
Ford CFO Lewis Booth compared the car models to donuts: “The ones you want to buy are the fresh ones, and they don’t get any fresher on the dealer lots. We’re going to have fresh products.”
Ford is the only one of the Big Three to turn down government bailout money and avoid bankruptcy. The company reported its first year-over-year sales increase in nearly two years last month thanks, in large part, to redesigned models.
The new Ford Fusion was rolled out last spring. Fusion sales have risen 27% over 2008 numbers since then, which is a major victory considering the dismal first quarter sales in the midsize car market overall.
Both GM and Chrysler are taking huge steps forward as new companies, having gone through government bailouts, bankruptcies and restructuring within the last year.
Chrysler is not making announcements yet and hasn’t given any executive interviews since bankruptcy. Yet Ron Bloom, head of the Obama administration’s auto taskforce, says that they are ready to make some bold moves.
Bloom said, “I think you will see Chrysler moving very, very quickly. They will be fast; they will be nimble in the market.”