March auto madness
Starting today, the spring selling season will be more frantic than usual, says Fortune's Alex Taylor.
NEW YORK (Fortune) -- This week marks the opening of the spring selling season for automakers and dealers. Get ready for some especially intense activity.
Sales have been weak this year as buyers struggle with collapsing real estate prices and slower economic growth, and auto companies need a lift - badly. DaimlerChrysler's (Charts) Chrysler unit is up for sale, Ford (Charts) is facing its worst-ever financial crisis and GM (Charts) is just emerging from one.
Ford and Chrysler fired the first shots last week when they rolled out new incentives to spark some sales-floor action. Ford is offering cheap leases and subsidized payments, while Chrysler is pitching cash rebates along with free upgrades to Hemi engines.
A strong spring season can be make-or-break for automakers. They need to move a lot of metal when customers are in a mood to buy it. And they only have a short time in which to do it, because the end of the model year is just around the corner. By July, dealers will be running clearance sales to get rid of their '07 inventory so they can begin stocking '08s in the fall.
Smart shoppers may find some surprising bargains. Sales of Mustangs, one of Ford's hot sellers, have cooled off in '07, falling 19 percent in the first two months of the year. If the Mustang is going to gallop again, spring is the likeliest time to do it, so expect Ford to lend a helping hand with some enticing incentives.
Although age reversal drugs are all the rage, they have been no help for Buick. Its two newest models, the LaCrosse and Lucerne sedans, are showing clear signs of premature aging. GM will have to take some swift action to keep Buick from ending up in retirement home alongside Oldsmobile.
Over at Chrysler, it looks like the all-new Sebring is going to need some help too. I liked driving the car - it's solid, peppy and a good value - but customers are staying away. Sales of the sedan rose just 11 percent in February compared with a year ago. That's not much for a fresh product. Sebring's success may be stunted by the mechanically-identical but more aggressively-styled Dodge Avenger.
Some savvy buyers this spring will be clutching the new list of recommended cars from Consumer Reports. They may be surprised to discover that four of the least reliable brands on the list are luxury makes. Mercedes-Benz finished dead last among 36 brands, closely followed by Land Rover, Hummer and Jaguar.
A Mercedes spokesperson took issue with the findings, claiming that today's Benz's are the best Mercedes had ever built. "If the survey doesn't reflect that," she added, "there's something wrong with the survey."
Not likely. Consumer Reports polled hundreds of thousands of car buyers and its findings usually parallel the work of J.D. Power and others. There's an old rule about not picking fights with people who buy ink by the barrel - and Mercedes just violated it.
A lot of attention will be focused this spring on the pitched battle being fought among pickup truck brands. Sales of last year's leader, the Ford F-series, have fallen off badly. Where Ford sold around 900,000 last year, it expects to move only about 750,000 this year. Pickups are the ultimate contractor's vehicle, so part of that decline can be blamed on the slump in new home construction.
But the competition in the segment has dialed up from hot to scorching. Chevy thinks it has a winner with its new Silverado, sales of which were up 27 percent in February - its best result for that month in five years. And Toyota (Charts) is roaring out of the gate with its new Texas-built Tundra and expects to sell more than 200,000 of them this year - nearly twice as many as the previous model.
What else to keep an eye on this spring? Some fresh-out-of-the-design-studio vehicles are showing surges in buyer interest. A couple to watch are the Jeep Compass, Ford Edge and Honda (Charts) CR-V crossover SUVs, and Nissan's Altima.
Meanwhile, Toyota has shown that reports of the death of the gas-electric hybrid have been premature. Despite continued moderation of gasoline prices, it sold a record number of hybrids in February, with the leader being its flagship Prius. Prius nearly doubled sales from a year ago, racking up an astonishing 12,227 deliveries. That makes it more of a mainstream vehicle than the Jeep Grand Cherokee or the Chrysler 300. All those hybrid skeptics out there, please take note.