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The Honolulu Advertiser
Posted on: Wednesday, March 6, 2002

Carmakers hope to boost profits with dual-purpose chassis

Advertiser News Services

GENEVA, Switzerland — Ford Motor Co., General Motors Corp., Mazda Motor Corp. and other carmakers are squeezing minivan bodies onto the chassis of subcompact cars to lure buyers as industry sales shrink.

Porsche is banking on its new Cayenne sport utility vehicle, which analysts say could add $1.4 billion in annual sales. The Cayenne is the first Porsche that isn't a sports car.

Associated Press

"People want something different and the development costs for putting a new 'head,' or top, on a car platform are peanuts," said Peter Schmidt, a consultant with Auto Industry Data in Warwick, England. "It's absolutely essential for carmakers in Europe to enter these new product niches because the profit margins in the conventional business are becoming very small."

By using their existing car platforms, the automakers will save much of the $1 billion or more it costs to develop a new model. Ford and Fiat SpA, which lost money last year, will be able to charge more for the small minivans, with sales expected to triple by 2004, than for subcompact cars, analysts said.

The new models, debuting at the 72nd International Motor Show in Geneva yesterday, are intended to win back consumers who consider subcompact cars too small and sport utility vehicles too expensive. Carmakers are also trying to cut costs as global sales drop, analysts said.

Ford is presenting the Fusion, based on the Fiesta car and on sale this fall. General Motors, which is unprofitable in Europe, is presenting Concept M and Mazda the MX Sport. Volkswagen AG and Fiat will follow with similar models. The five-seat vehicles are expected to cost about 15,000 euros ($13,042), analysts said.

Compared to GM and Ford, DaimlerChrysler AG's Chrysler Group is a niche player in Europe with just 0.7 percent of the market. It hopes to increase that to 1 percent by 2004 with the help of a new convertible version of its popular PT Cruiser and its Crossfire sports coupe.

The PT Cruiser convertible will go into production in 2004, first in the United States and then in Europe. Chrysler will build 20,000 Crossfires next year at its plant in Toluca, Mexico, and export three-fourths of them to markets outside North America.

Meanwhile, Porsche AG plans its first mass-market campaign to promote the new Cayenne sport utility vehicle in the United States, expected to be the biggest market for a model that analysts say may add $1.4 billion in annual sales.

Porsche will use television, magazines, the Internet and direct mail and maybe billboards to promote its first vehicle that isn't a sports car, said Kevin Nicholls, the automaker's U.S. manager of marketing communication. Porsche, which released the first pictures of the Cayenne yesterday at the auto show, wouldn't say how much it will spend on the campaign.

Porsche, which has annual sales of about 50,000 sports cars including 23,000 in the United States, developed the Cayenne with Volkswagen AG. Volkswagen will have its own version of the sport utility, and the two automakers will share some engines.