Gizmos increase costs, not sales
Automakers zap gadgets
By Joe Miller / The Detroit News
DETROIT -- At first glance, the 2003 Cadillac DeVille luxury sedan looks much like the '02 model.
But take a closer look and you will find some onetime nifty features missing. Gone are the electronically tinted side mirrors, air filtration system and cargo net.
Welcome to Bob Lutz's new General Motors Corp.
After a major review of its massive North American model lineup, the automaker discovered what its new product chief already knew: GM's cars and trucks feature a lot of content that add dollars and cents to its manufacturing and materials tab but do little to attract buyers.
Just as the world's top automotive engineers gather in Detroit this week to unleash their latest gadgets and product advances, Detroit's automakers are taking a bigger ax to unnecessary equipment and scrutinizing the latest Buck Rogers-style offerings.
DaimlerChrysler AG's Chrysler Group and Ford Motor Co. blame their current financial woes in part on equipping and stocking new cars and lights trucks with excess features most consumers weren't willing to pay extra for.
At GM, Lutz has railed against the overuse of features such as rear-seat headrests and voice-activated radios ever since being hired as vice-chairman of product development last summer.
"Much of today's content is useless in terms of triggering purchase decisions," the 70-year-old industry veteran said in a well-publicized staff memo last fall.
"The thought that huge advances in voice-recognition, or screen-technology, or multifunction displays or ever-trickier consoles, or embroidered floormats ... will somehow override other (vehicle) deficiencies is wrong."
The backlash has implications for auto parts suppliers and electronics firms that see the automobile as the next entertainment frontier, mobile office or comfort zone.
Some analysts expect a shakeout among companies that build voice-recognition controls, electronic navigation devices and other products being showcased this week at the 2002 Society of Automotive Engineers World Congress.
"There's going to be greater definition (of the market) and greater consolidation over the next several months," said Myles Rush, vice-president of Phone-Or Ltd., a small technology company trying to market a state-of-the-art microphone for voice-recognition controls to automakers and suppliers.
"We're trying to cover all of our bases right now," Rush said.
The scramble to remove once standard equipment could backfire for automakers, some experts say. Automakers increasingly rely on new features to make new and aging models stand out from the crowd. And some customers want more.
"People basically are wanting more and more (in a vehicle), but are not necessarily willing to pay for it," said Rik Kinney, executive vice-president of the Dohring Co.
The California research firm says consumers put the highest priority on safety equipment, but are highly interested in in-vehicle entertainment, too.
If one car model doesn't have the right features, "they're likely to look at another vehicle," Kinney said.
Needs, wants weighed
For automakers, it's a constant act to weigh consumer needs and wants.
"We have to strike the right balance between what consumers really want and what they are truly willing to pay for," said Chrysler spokesman Bryan Zvibleman.
Under Lutz's direction, GM is taking some standard equipment on 2003 models -- such as air filtration and cargo nets on the DeVille -- and making it optional.
Other features are being eliminated altogether or being replaced by less expensive versions.
For example, the high-tech "electrochromatic" side mirrors on the DeVille will give way to simpler glare-resistant, blue-tinted mirrors.
The 2003 hit list includes sun visor extenders, excess power outlets, excess spare fuses and manual lumbar support controls.
"It all adds up," GM spokeswoman Julie Hamp said. "We benchmarked competitors to see what they offered. And in a lot of cases we were over-contented. There are some things we don't need to have as we put more money toward higher quality and better materials."
Automakers are under pressure to offset increased spending on mandatory new safety and fuel-saving technology to meet federal regulations and consumer demand.
"They are looking for some leeway to keep the actual vehicle costs the same," said Michael Robinet, an auto analyst with CSM Worldwide in Northville.
Telematics devices -- electronic navigation, accident avoidance devices and vehicle tracking features -- are facing some of the toughest scrutiny.
Suppliers say cost pressures, financial problems and uncertain customer demand have forced automakers to become more cautious when it comes to high-tech gear.
GM remains committed to OnStar, its subscription-based service that provides an electronic concierge and emergency services, satellite-based vehicle monitoring and other services, being rolled out across the automaker's car and truck lineup.
OnStar is also offered by Acura, Lexus and Audi.
Ford and Chrysler, with their telematics systems still in development, are taking slower approaches as the market evolves.
Ford has scaled back plans to launch the Wingcast system, and Chrysler is working with AT&T Wireless Services Inc. on the U-Connect system, which would let drivers use their existing cell phones.
Safety becomes priority
Three years ago, Sun Microsystems Inc. Chairman Scott McNealy touted cars as a potential Internet browser on wheels. Now, automakers and suppliers are shying away from that approach, focusing more on safety-and-security features such as video navigation and diagnostic checks, or entertainment features such as satellite radio and DVD systems.
Car companies were "very eager" to get driver information systems -- featuring Internet access, navigation and concierge services -- into their vehicles, said Thomas Dunn, marketing director for Panasonic Automotive Electronics.
"(But) after the dot-com bubble collapsed, people took a hard look at what's really the (customer) demand here," Dunn said.
At the SAE show, Panasonic is displaying its latest vehicle DVD video and audio systems. Intel Corp. is exhibiting a voice-activated system developed with Johnson Controls Inc. that wirelessly links a vehicle to a handheld cell phone. Denso International America Inc. is pushing its video navigation system.
Jim Ruthven, IBM Corp.'s program director of telematics for the Americas, believes technology must first be relevant to the consumer.
"I don't think delivering things like news, weather and stocks is. You can do that now," Ruthven said. "But wouldn't it be nice to know exactly why your Check Engine' light came on?"
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