1987 Seen As Rugged Year for Car Sales
Car sales will drop off in 1987, and that will combine with the introduction of four new economy cars in the United States to make for a “hyper-competitive” market next year, according to a research survey by an Irvine automotive advertising agency.
In an annual study released to its approximately 60 clients recently, USP Automotive Advertising predicts that there will be “a lot of iron on the ground” next year, auto-talk for a serious oversupply of cars.
But in the perpetually optimistic world of car sales, such a condition will spur “all kinds of innovative solutions,” said Jeremy Anwyl, president of USP, which had $20 million in billings last year, expects billings of $30 million this year and sees $50 million for 1987.
Among the changes Anwyl forecasts in the industry for 1987:
- Increasing sales by dealers who locate showrooms in shopping centers.
- More financing programs as car makers react to intense competition.
- An increasing domination of smaller market areas by dealers with multiple lots.
- The emergence of the first publicly held car dealerships. Anwyl said he thinks the first such company will emerge in Orange County.
- A splitting up of a car dealer’s functions, with showrooms and new car lots remaining in the city and service garages moving to the less expensive land in the suburbs.
Those changes are just part of an industrywide adjustment that promises more changes in the marketing and sales of cars in America over the next few years than the industry has seen for decades, Anwyl said.
About 15.5 million cars and trucks are expected to be sold in the United States this year, but sales could drop to about 13 million in 1987.
More significantly, “the way people are buying cars is changing dramatically,” said Anwyl. Traditionally, he said, car dealers have stressed prices in most of their advertising, thus appealing to the budget-minded.
But that group comprises just 19% of the car-buying public, and the other 81% are ignored, he said.
Target Groups
To an increasing degree, Anwyl said, he expects advertising to target one or more of the five other distinct life-style groupings that USP employs in helping clients focus their advertising.
In addition to the price-conscious, Anwyl said, car dealers must begin focusing their advertising to reach: Status conscious-trend setters; affluent but conservative families and businessmen, a group whose taste runs to “classic product lines”; the blue-collar car and small truck buyer; younger buyers, both single and married, who are economically “comfortable” but still clip coupons, and the retired--a group that is 55% female and that prefers quality to style or performance.
For next year and beyond, car ads increasingly will become more creative and will target specific groups, Anwyl said, demonstrating a radio ad for Mazda pick-up trucks that is accompanied by throbbing rock music.
‘Find Niche’
“The way to be successful is to find a niche,” he said. He noted that ads for beer, toothpaste and a variety of other products already strive to do just that.
In 1987, success for car dealers will depend on finding niches.
Car dealers at a recent briefing of Anwyl’s seemed to be believers.
“Useful information,” mused Julian Rosenthal, general manger of Martin Honda in Westminster. “Everything he said is applicable to our business 100%.”
For Rosenthal and other dealers of small cars, four new competitors will enter the market next year. Ford will begin selling the Korean-made Festiva, Mercury will unveil the Mexican-made Tracer, Volkswagen will present the Brazilian-made Fox, and Mitsubishi will debut the Korean-made Precis.
With all the new entrants, Anwyl predicts a buyer’s market in 1987.
