Detroit's New Focus on Small Cars and Quality Pays Off
Not long ago, each time gas prices shot up and car buyers turned their attention to more fuel-efficient models, Ford (F) and the other Detroit automakers would get hammered.
Their strengths were in SUVs, big cars, and pickups -- in other words, gas-hogs. Buyers wanting good mpg numbers tended to look to the imports -- enough to make Toyota's (TM) Corolla and Honda's (HMC) Civic perennial best-sellers.
Meanwhile, the Detroit crew got by with small cars that weren't very good (or profitable). Although good enough to be sold cheap to rental-car companies, they didn't sell well to consumers -- and when they did, it was mostly because they were priced right.
Oh, how times have changed. And they've changed in a big way.
A Focus on Great Compact Cars
Sales figures back up the fact that drivers are shifting to smaller cars and SUVs. But this time, those sales figures don't come with horror stories about losses and layoffs in Detroit.
Instead, we're hearing stories like the one Ford's PR folks were proud to tell on Wednesday: Ford's sales in January were paced by a whopping 60% year-over-year gain for the automaker's compact Focus.
Now, to be fair, the current Focus was introduced last spring -- that comparison is with sales for the old car. And while the old car wasn't bad, exactly, the new one is superb. Engineered by Ford's small-car experts in Germany, and lavished with development resources and advanced technology, the latest Focus is a huge leap forward.
I can attest to this personally, as my wife and I bought one a few months back. It's a great car, quiet and tight, with a surprisingly luxurious interior. And it gets more than 30 miles to the gallon, week in and week out.
It's definitely not a typical Detroit compact of old – in fact, we liked it quite a bit better than the current contenders from the import brands. And given how the Focus's sales figures have shown, we aren't the only buyers who have noticed.
But It's Not Just the Focus (and It's Not Just Ford)
Ford's smallest SUV, the Escape, is also enjoying record sales -- up nearly 24% over (strong) year-ago totals, its best January ever. What's interesting is that unlike the new Focus, the Escape is an older model, set to be replaced in just a few months. But lots of buyers are still choosing it over Toyota's RAV4 and Honda's CR-V.
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Ford isn't the only company that's onto something with its recent designs. General Motors (GM) is having success with its own compact, the Chevy Cruze. Introduced just over a year ago, the Cruze has found fans all over the world. For a while last year, it was the best-selling compact in the U.S.
Of course, that was while Toyota and Honda were having trouble producing their entries, as they struggled with parts shortages in the wake of the Japanese earthquake and tsunami last March. But Toyota has largely recovered, with sales up 7% in January -- and the Cruze still managed to post a sales gain of more than 10% on the month, while Corolla sales were actually down.
Detroit Is Back, and Its Small Cars Are Better Than Ever
Toyota's not going anywhere, of course. In most every corner of the market, it remains Detroit's fiercest competitor. Despite its troubles in recent years, Toyota still has a large and loyal following. But Ford has nearly caught up. With its wall-to-wall lineup of excellent cars and trucks, Ford is well-positioned for any shift in the market -- for the first time in a very long time. And more and more buyers are catching on.
And GM? GM's product revival is a few years behind Ford's, a legacy of its collapse and bankruptcy a few years back. And it still has some hard feelings to contend with, thanks to the government bailout that gave it a new lease on life. But its best new products are very good, and the company shows every sign of building on that momentum in coming months.
Long story short: if you're shopping for a new car, be sure to give Detroit's offerings a try. You might be very pleasantly surprised.
At the time of publication, Motley Fool contributor John Rosevear owned shares of Ford and General Motors. You can follow his auto-related musings on Twitter, where he goes by @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford.
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