Playboy's Automotive Report

Simply stated, the automobile industry is in chaos. Manufacturers who expected to sell 14,000,000 cars and trucks in 1991 (compared with the 16,000,000 sold in 1986) will be lucky to top 13,000,000. They not only overestimated demand but introduced an abundance of new makes and models at a time when consumers just weren't buying. And they're paying dearly for the miscalculation: Temporary plant closings are increasing. Layoffs and other cost-cutting measures have gone into effect. Detroit's Big Three have even reduced first-quarter dividends in an effort to free operating cash.

Blame it on economic uncertainty, growing unemployment or the dreaded R word. Whatever the case, the surge in consumer confidence that was expected after the Gulf war has yet to materialize. Americans apparently are still apprehensive about making major purchases, and nervous bankers, who are tightening consumer credit, aren't helping.

Compounding their own problems, domestic auto makers are selling "program cars"--clean, low-mileage former fleet or short-term rental vehicles that are available at very competitive prices. Given a choice, beleaguered shoppers are snapping up these hardly tarnished former Hertz and Avis wheels--slicing deeply into new-car sales and reducing used-car values dramatically. In 1990, nearly 30 percent of Lincoln's sales volume came from program cars.

As we go to press, there seems to be no relief in sight. Undercapitalized dealers who can't ride out declining sales are slowly sinking. One dismayed participant at the sparsely attended National Automotive Dealers Association convention said, "Selling cars today is like dying the ancient Chinese 'death of a thousand cuts.' "

Ironically, as domestic sales plunged, Mercedes-Benz launched its new S-Class, which required nearly a decade and one and a half billion dollars to develop. The top-of-the-line 600SEL sedan pictured on this page boasts an electronically controlled, 408-hp, 48-valve V12 engine, optional hydropneumatic adjustable suspension, power door closers and even double-glazed side windows (to prevent fogging). Its price tag: about $150,000 after taxes.

The S-Class was an overnight hit in Germany, where Daimler-Benz claims two years of advance orders. Dr. Wolfgang Peter, chief of passenger-car development, (continued on page 159) Automotive Report (continued from page 124) is justifiably proud of the vehicle but acknowledges that people today are more concerned with fuel efficiency than when the monumental project began. Realistically, the 600SEL will account for only one percent of Mercedes' sales volume. And most of the S-Class cars sold here will be the less expensive, more fuel-efficient 300SEs, 400SEs and 500SELs.

On the home front, Chevrolet's portly new Caprice continues to challenge Ford's fashionably slender Crown Victoria. Chevrolet jumped off to a big lead while it pumped units into police-car and taxi sales. With "real" consumers voting, the more contemporary-looking Crown Vic is battling back.

Full-size pickup trucks are an extremely profitable category in the United States, and one of the few that have yet to be penetrated by the Japanese. Detroit auto executives aren't holding their breath. Toyota is planning to introduce its own full-size pickup soon, a fact that particularly worries Ford and Chevrolet, the two top sellers.

Cadillac's Euro-styled 1992 Seville won early rave reviews, despite the fact that the long-awaited 32-valve North Star V8-equipped version won't be off the assembly line until 1993. Cadillac still concentrates its volume in the lower tier of the luxury price range, generating nearly 30 percent of its sales with program cars. Furthermore, the Seville is cheap to rent, which tends to diminish the car's prestige.

Even with the launch of its new Saturn, GM's real success story is Buick. Four years ago, general manager Ed Mertz, along with marketing boss Darwin Clark, decided to return the division to the values that made Buick's reputation: "powerful, mature cars with muscular grace." The philosophy holds true with the recently revived Roadmaster and the new-for-1992, supercharged Park Avenue Ultra.

Aided by two back-to-back years of favorable J. D. Power and Associates Initial Quality Survey, Buick (the only American make in the top ten) has staged a comeback. Its market share is up, and earlier this year, it briefly outsold Honda and nearly did the same to Toyota. Now, if Cadillac would push its model and price mix upward, instead of encroaching on Buick with cheap leases, GM could make some real progress.

The book that blew the lid off

Japanese car makers have come a long way since their awkward first efforts in the Fifties. In addition to leading in new-car quality, they have a decided advantage: They know how to build cars at substantially lower prices than their competitors'.

For example, Nissan's Sentra SE-R offers a 16-valve, 140-hp engine and ABS brakes in an $11,370 sporty coupe that's lighter, more powerful and much less expensive than BMW's $28,000 318i.

What's more, the successful sales of Lexus and Infiniti have confirmed that Americans will switch from expensive European luxury sedans to new Japanese name plates if prices are right. Competitors accused the Japanese of "dumping" these cars. A fascinating new book, The Machine That Changed the World, reveals just how they did it.

The book is the culmination of a five-year, world-wide MIT study of the auto industry. Secrets of Japan's clever "lean production" show why the Japanese methodology has rendered traditional American mass production and European "craft" (largely hand-built) production expensive and obsolete. Here's a shock: Toyota can build the Lexus LS 400 for one sixth the labor cost of a comparable European luxury car.

The authors, James P. Womack, Daniel T.Jones and Daniel Roos, believe that American and European auto makers will remain at a tremendous disadvantage if they don't adopt lean production methodology. They make a convincing case that pursuing cheap labor (building cars in Brazil, Mexico, Spain, Korea, even eastern Europe) only yields short-term gains. With their present archaic methods, Europeans simply can't manufacture cars as efficiently as the Japanese can.

Class of the field

With their competitive price tags, Lexus and Infiniti lured luxury-car buyers away from virtually all other manufacturers, including BMW, Mercedes, Jaguar, Volvo, even Cadillac and Lincoln. Wrapping up its first full sales year, Lexus came within 112 units of BMW's total sales. Infiniti moved about one third as many cars as Lexus, but it's catching up after adding the higher-volume G20 sports sedan.

We're particularly impressed with the Lexus SC 400 coupe. Its svelte, aerodynamic shape was designed in Newport Beach, California, at Toyota's new Calty Design studios. The SC 400 employs a reworked LS 400 platform (but adds stiffer suspension, quicker steering, bigger brakes and more aggressive tires) and carries over the sedan's powerful 250-hp, four-cam V8 engine and smooth electronic automatic transmission.

When BMW dropped its classy 6-Series and moved up to the larger, more expensive ($77,700) 850i, it left a gaping hole. "Don't think we're not grateful," said Lexus group vice-president Dave Illingworth. In contrast to European auto makers, who charge a healthy premium for 2+2 coupes, Lexus priced its SC 400 at $38,000--$1000 less than the LS 400. A six-cylinder version, the SC 300, also will be available this fall.

Safety: A growing priority

After a cold reception a decade ago, when Lee Iacocca unsuccessfully pushed seat belts, padded dashes and deep-dish steering wheels, safety has once again become fashionable. A growing number of consumers are convinced that the extra cost of a safe, well-engineered car is tantamount to a life-insurance policy.

European auto makers lead the pack when it comes to safety, but competition is heating up. Volvo's long-term advertising focus is being challenged by Mercedes-Benz, which for decades quietly pioneered most safety advances, including air bags. Audi, Saab and lately even Subaru have developed safety pitches. And led by Honda, the Japanese are rushing to catch up.

Back in the States, Iacocca, once an air-bag foe, has now become the device's biggest advocate. And why not? Chrysler's ads, which focus on inexpensive air bags and antilock brake systems, have helped stretch the appeal of its aging product line and are likely to continue doing so until the highly touted midsized LH platform cars arrive in 1993.

To rate the safety of various foreign makes, Germany's highly respected Auto Motor und Sport magazine conducted a series of government-supervised crash tests--an expensive, politically sensitive proposition no car magazine in America would dare undertake.

Instead of running its eight "victims" head-on into a barrier, as most tests do, Auto Motor und Sport staged devastating 55-mph offset crashes. In such crashes, one third of the auto hits an immovable object (in this case, a 100-ton concrete block), resulting in an impact in which all the damage forces are concentrated on the front (driver's side) corner rather than distributed across the car's width. The logic behind offset-crash tests is that in a real accident, a driver will generally swerve to avoid head-on impact.

When the dust--and metal--settled, there were some big surprises. Although none of the cars were equipped with air bags, the BMW 5-Series and the Mercedes-Benz 200 were closely matched in terms of minimizing injury. Keys to safety here are a rigid cabin and well-built deformation area, or crush zone, which protect the driver. Volvo's 740 and Nissan's Maxima were third and fourth, respectively. In comparing the latter two, the study showed that the head of the driver of the Volvo 740 was more likely to strike the steering wheel, while the driver of the Maxima was likely to receive severe leg injuries due to the downward movement of the steering column.

The Acura Legend was among the extremely poor performers. "Occupant safety could scarcely have been the decisive factor behind [the Acura's] success," said the magazine's testers. Others that proved even more hazardous included the Renault 25, the Opel Omega (built by Germany's GM subsidiary) and the Fiat Croma.

Little is known about how American models would fare in offset crashes, which aren't yet a part of the Department of Transportation's test procedures. (The Germans are lobbying for them to be included, though.) We predict that safety concerns will continue to be a priority among car buyers. Chances are, you'll be hearing and reading more.

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