Carmakers put brakes on options to cut costs

DETROIT (AP) — When American consumers start buying new cars again, they’ll likely find fewer combinations of moon roofs, seat upholstery and stereo systems to choose from. As with better fuel economy, it’s a case of U.S. automakers’ taking a cue from their Japanese counterparts.

A buyer of the 2008 Ford Fusion could choose from the various models and extra features available and come up with 2,600 combinations. For the 2010 version due in showrooms this summer, the number drops to 104.

The Toyota Camry and the Honda Accord were the two best-selling cars in the U.S. in 2008. The people who purchased more than 800,000 of them combined last year picked from a total of just 15 versions. For the Accord, the models or trim levels were limited to just four, each level complete with a variety of extra bells and whistles.

The American carmakers need to cut costs. Sales are at a 26-year low. General Motors Corp. and Chrysler are surviving on government loans. A reduction in options not only streamlines the manufacturing process, but also cuts engineering, design and marketing costs, said Laurie Harbour-Felax, an industry consultant. Those costs often total more than the manufacturing costs.

“The industry has way too many brands, too many models, too much choice, to be efficient,” said Mike Maroone, president and chief operating officer of AutoNation Inc., the largest automobile retailer in the country. The Japanese companies’ approach “may not serve every niche but it’s a much more efficient business model.”

Domestic automakers and dealers have tried to guess which combinations will resonate with consumers, and build more cars of that configuration. Still, if only 1,000 people buy a particular combination the company will keep offering it, even if it’s not cost effective, said Harbour-Felax.

“It’s driven hugely by the sales and marketing guys, that’s 1,000 people they don’t want to lose,” she said. “The Japanese will not create complexity at really low volume to keep one customer.”

Harbour-Felax said Honda Motor Co. is a leader when it comes to simplicity and eliminating customer confusion. The car buyer spends less time in the dealership.

And customers save money because adding options individually often costs more than upgrading to the next trim-level. For example, a Chevrolet Impala LS sells for about $23,000 while the Impala LT costs $800 more. It would cost $2,000 to add the LT’s additional options to the LS model, said Michael Carr, sales manager for Bobby Layman Chevrolet in Columbus, Ohio.