American Producers Get Big Hopes for Small Cars

In an unforeseen industry turnover, manufacturers are looking at ways to sell more of their smaller cars while refitting them with premium features as seen on the currently poor selling pick-up and SUV segments. As if staging part of Swift's “Gulliver's Travels”, US car-makers are currently rehearsing a role in play that they say, has a high chance of drawing the crowds back into showrooms.

With profits lost from their XXL sized car lot, pushing the lilliputians to the front seems like a viable option. However, the process come with its own intrinsic costs that are far greater than those of a simple makeover. "It comes down to product execution. You can't just put leather and a sunroof in an EX or an XLE version of your C-D car and expect people to get excited.", said Ford Motor's group marketing and communications vice president, Jim Farley.

Once great US builders such as GM and Ford are both following the same strategy as they focus on fitting their small cars with technology that would hopefully persuade customers into buying their cars. Emphasizing good mileage and low emissions, Ford is looking to add its EcoBoost powertrains on its future car lot that will cross the sea over form Europe to US while GM is considering similar approaches for its vehicles.

The conversion is expected to take up to three years, during which time, companies will reassess their strengths and weaknesses while keeping an eye out for emerging consumer demands. Although the idea may turn out to be a real life-saver, analysts say that manufacturers should also keep a close eye on the price tags as precarious balance between the future car's level of equipment and cost can be easily harmed by making the wrong choices.

As US-based auto-makers fully rely on volume sales, raising the bar on the price tag can seriously hurt sales. Competition such as BMW's Mini holds the advantage of great niche targeting hence the car's higher price. Strap the same sticker to a small Chevy or Ford and you might as well get on a boat and wave your customers good-bye.

According to analysts, American producers have to keep three things in mind if the aforementioned solution is to show any positive results: fit the cars with enough content to justify higher prices, sell enough cars to counterbalance SUV and pick-up sale drops and manage inventory to avoid price cutting. Bottom line is, makers should eye the price scale as, "Once you get over $25,000 in ... small cars, then you're getting into the next category and diluting sales, unless there's something hot about that car”, executive director of industry analysis for Edmunds, Jesse Toprak said.