Tuesday, July 05, 2005
How to compete with Korea and soon China
Many are quiet about the impending entry of the Chinese into our market in regards to what the domestic manufacturers should do. GM has their Aveo a rebadged Suzuki or Daewoo, to compete with the Chinese and Korean cars at the bottom of the market. But the cheapest and smallest Ford is the Focus. Chrysler seems to think they don't need anything below the Neon, and with it's replacement the Caliber they seem to abandon the lower end of the market segment alltogether. Ford should not be so foolish.
In years past the Domestic Manufacturers have left the entry level market. This allowed the Japanese to really take off in the 70's and 80's, and eventually they challenged the big three in the mid-size market. Next came the Koreans and even the Japanese seemed to cede this entry level market. Now the Japanese are entrenched in Mid-size cars, SUVs, Compact Cars, Luxury and Compact/Mid-size trucks. Now with their sites set on Full Size trucks. Korea is not to be left out here either, with Hyundai building a new plant in Michigan for the Sonata, a car that is getting favorable comparison to Japanese and American mid-size cars. Haven't the Big Three learned that you can't abandon any segment of the market? Apparently not. Next on deck to compete are the Chinese, and they will flood the market with cheap entry level cars at first, but their plan is to compete with mid-size cars and SUVs also. It may not happen overnight, but before anyone realizes it they could be everywhere.
I've pointed out this one before, the EcoSport mini SUV based on Fiesta mechanicals with optional 4 wheel drive. With the return of Kia's Sportage and the impending arrival of the Chinese products, wouldn't this be a good low cost option at your local Ford dealer? I love the Escape, it's a quality vehicle, but add just a few options and it gets very close to $30k. The EcoSport is a natural to cover the lower end of SUVs. Nobody criticizes Toyota for having every flavor of SUV covered, maybe Ford could learn a lesson here.