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GM, Ford load up small cars for bigger profits

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GM, Ford load up small cars for bigger profits

Jamie LaReau

and Chrissie Thompson

Automotive News -- January 18, 2010 - 12:01 am ET

DETROIT -- At the Detroit auto show, General Motors and Ford revealed their comeback strategy for small cars: Adorn them with features seldom seen in domestic econoboxes, such as roomy interiors, computer gadgets, turbocharged engines and sporty sheet metal.

For example, the redesigned 2012 Ford Focus -- Ford Motor Co.'s biggest splash at the show -- has touch-screen controls for navigation, phone, climate control and entertainment. The car, due in early 2011, also can download applications used on Apple's iPhone.

The small-car segment, which has been dominated by Asian automakers, will be a key battleground as gasoline prices rise and federal mileage standards get tougher. But the many Americans who equate small with cheap may balk at high stickers on small cars.

Ford and General Motors Co. are offering a range of high- and low-end versions of the new cars. At the high end, Ford wants to offer consumers "aspirational" small cars that appeal to affluent buyers, says Jim Farley, Ford's Motor Co.'s group vice president of global marketing.

"If you look at small cars over $16,000, [the Honda] Civic is the market leader," Farley says. "We intend to be deadly serious about competing for the small group of customers at the very high end of the segment by offering them features and series that they have never seen from Ford."

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100118/RETAIL/301189932/1115#ixzz0cylCNPks

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I really hope this works for GM and Ford, small cars are needed... But small cars have proven time and time again not to be money makers for both GM and Ford. However I am not saying that cannot change but I would not bet the farm on this, GM and Ford enjoy a healthy profit on trucks/SUV's but small cars have never big money makers. I will believe it when I see it. Domestic small car buyers tend to want everything on the cheap, very few options, and a great price lots of money off just like a larger car or truck. Problem is 3,000 off on Silverado stickering for 30K is one thing but when you do that on a small car that eats up ANY profit very fast because it is a larger percentage of the price, and that is what domestic small car buyers expect. My dealer still has a '09 Aveo5 1LT with an auto, cruise, power windows, power door locks, and has had no bites (for nearly a year) and he is willing to dump it for about for several thousands off of sticker, profit? No it will be sold at a loss.

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