For '77 an Amazing Shrinking Act

As General Motors goes, so in the long run goes the rest of the auto industry--but what happens in the short run can be unpredictable. Especially in the new model year about to begin. For 1977, GM is putting on an amazing shrinking act: over the past two weeks, it has unveiled a gallery of standard-size cars that on the average are nearly a foot shorter and 700 lbs. lighter than their 1976 counterparts. Ford and Chrysler by contrast are making only minor changes, and ailing American Motors is actually making its glassy Pacer longer.

So the stage is set for a bruising grille-to-grille marketing battle. Superficially, GM seems to have picked an odd year to proclaim that less is more. During the 1976 model run, consumers, who had been choosing smaller cars ever since the late 1973 Arab oil embargo, unexpectedly shifted back to the bigger models.

Will GM, by trumpeting gas-mileage savings on its smaller cars, be able to reverse the trend and add to the 47% of car sales that it won in the 1976 model year? Or will the other companies make what Ford officials call "conquest" sales to drivers who bought GM cars in the past but do not want smaller cars now? The question is complicated by price increases of almost 6%, which will raise the price of an average GM car to about $6,000--a shocking figure to the motorist who bought his last car three years ago and has been out of the market since. (Though other automakers have not yet announced their prices, they undoubtedly will follow GM by the time their new cars go on sale in October.)

The stakes in the battle are titanic. For Detroit, each percentage-point gain in an auto company's share of the market translates into some half-billion dollars in added revenues. For the national economy, whether or not the automakers achieve the record 1977 sales that GM officials are predicting could go far toward determining if the recovery, now slowing, can pick up speed again next year.

In the years beyond 1977, there is no question how the battle over car sizes will come out. Whatever their marketing analysts--or even their sales charts--might indicate, Ford, Chrysler and American Motors eventually will have to adopt GM's "downsizing" strategy in order to comply with federal law. That law, the Energy Policy and Conservation Act, requires U.S.-made autos to get an average 20 m.p.g. by 1980 and 27.5 by 1985.

Electronic Gizmo. The most obvious step was to make cars shorter and lighter. Trimmer cars can be driven by smaller engines that drink less gas per mile. Technology was also refined. Emission-control devices, always the enemies of fuel economy, were built in, not slapped on, making for more efficient engines. Ignitions were more precisely tuned. GM's Delco-Remy division developed an electronic gizmo called MISAR, which monitors driving conditions and adjusts ignition-spark timing for optimal performance (for now, only the Oldsmobile Toronado sports the device at GM, although Chrysler has installed a similar device on several models). By 1976, the GM fleet average had risen to 16.6 m.p.g. With the 1977 models it will jump 10%, to 18.3 m.p.g.

Now, with 44 big-car models made more fuel efficient (the interchangeability of parts and technical data among various name plates made so big a change possible), GM has a jump on the competition in complying with federal mileage requirements. A sampler of its new lineup:

> Cadillac. All other models join the already downsize Seville and measure from 8 in. to 12 in. shorter than last year. Though they are also 3.5 in. narrower, their headlights are positioned farther apart to make them look as wide as ever. Standard engines are no bigger than 425 cu. in., in lieu of the brobdingnagian 500 cu. in. of 1976.

> Buick. The LeSabre sedan is 665 lbs. thinner than in 1976. Fully 437 lbs. have been pared off the body, 135 of them by substituting aluminum for steel in bumper reinforcements.

> Oldsmobile. In 1974 the Olds 98 managed only 7.6 m.p.g. on city streets and 11.2 m.p.g. on the highway. In its 1977 incarnation, with a smaller engine, it posts marks of 16 and 21 m.p.g., respectively.

> Pontiac. New four-and eight-cylinder engines, incorporating the latest in anti-emission and fuel-economy technology, grace both the newly shorter standards and small-size Pontiacs. These light cast-iron engines will be used by other GM divisions in the future.

> Chevrolet. The full-size Impala and Caprice, 11 in. shorter than last year, are 4 in. narrower to create a boxlike shape. No longer is a 350-cu.-in. V-8 standard for both models. Buyers now have three choices: the 350, a 305-cu.-in. V-8 or a gas-stingy 250-cu.-in. six-cylinder engine. New Chevies have terminals for connecting with a special diagnostic device, on hand at GM dealerships, that can check up on 60 automotive functions.

None of GM's innovations comes cheap. By 1980, the company will have spent $15 billion on design and retooling over a seven-year period. GM Chairman Thomas Aquinas Murphy contends that increases in other costs "will add substantially more to the cost of the average 1977 GM car than we will recover" by raising the prices of the cars. Labor, he says, has become 9% more expensive in the past year, and "aluminum, copper, lead, glass and plastics are all up." Last week's decision by steelmakers to postpone or cancel price boosts scheduled for October (see following story) will probably have little effect on the automakers' pricing plans.

Murphy does not expect the price boosts to hurt sales. He thinks that 1977 new-car sales could better the 1973 record of 11.4 million, and expects GM to increase its market share. Car prices, he argues, have risen no more drastically than the prices of many other consumer goods. He also points out that the auto buyer who in the past got a 36-month loan can now commonly borrow for 42 or 48 months.

Perhaps--but what if car buyers feel gypped because GM is offering them a smaller car for a bigger price? GM stresses that its new cars are just as roomy inside as last year's. Still, customers may continue to equate size, weight and length with comfort. All in all, GM is placing a heavy bet on its new cars --a bet that Ford in particular, for the past five decades a restless second fiddle, is raring to take.

"We have the widest choice of car sizes available," says William Benton, general manager of the company's Ford division, appropriating a boast long made by GM. "There are customers who do not want to compromise the six-passenger comfort and the many other attributes of the family-size car. We are going to continue to meet this sizable market."

The Ford LTD is as big as ever, and a new, luxurious 1977 Continental Mark V is as long (but not as heavy) as its predecessor. Thunderbird, however, is 10 in. shorter this time to compete with the snazzy intermediate Chevrolet Monte Carlo and Chrysler Cordoba. A new LTD II replaces the Ford Torino in the intermediate camp, where cars sell for less than GM's barely larger full-size cars, in the hope of winning over former GM drivers.

Chrysler lost $260 million in 1975 and so would not have had the money to make extensive changes this year even if its officials had wanted to. They did not; back solidly in the black, thanks largely to the success of the intermediate Cordoba and the compacts--Plymouth Volare and Dodge Aspen--Chrysler is tinkering with the three only a little. Volare, for example, gets a "super six" engine that is 20% more fuel efficient than its old 318-cu.-in. V8.

American Motors, whose best hope, the squat Pacer, was a terrific sales disappointment, lost $43.2 million in 1975. It has stretched the Pacer 4 in. to make it a station wagon. Gremlins and the intermediate Matadors are newly sweetened by having some of last year's options as standard equipment.

In their internal struggle for sales, the domestic four have little reason to worry that cheap imports will walk off with the prize. Foreign cars took 18% of U.S. sales in 1975, but are getting only 13.8% now. What is more, nearly all the foreign automakers last spring were targets of complaint to the Treasury that they were dumping cars in the U.S.--that is, selling them for lower prices than in their home countries. To escape a tariff increase, most of the foreign makers agreed to raise their U.S. prices--by coincidence or not, about as much as Detroit's prices will go up.

Whoever wins the great scrap of 1977, all the automakers are already at work down-sizing their cars for 1978 and later years. GM will reduce the size of its 1978 intermediates, then its 1979 compacts. The smallest cars will have front-wheel drive to eliminate the transmission-train "hump" that decreases back-seat leg room. Next spring Ford will trot out a pint-size Lincoln called the Versailles and in another year will be bringing over its subcompact Fiestas from Europe (TIME, July 12). In 1979 both Ford and Chrysler are expected to introduce new full-size models no larger than their 1977 intermediates. American Motors has a subcompact even smaller than the Gremlin on the boards, probably for 1979.

The amazing shrinking act will continue through the early 1980s. "Unless some miracle occurs in material or technology," says William Luneburg, the outspoken president of American Motors, "the only thing we can do to increase mileage to these high levels [i.e., the government-ordered 27.5 m.p.g. by 1985] is to take the size of the cars down." By the early 1980s, all the current car classifications--from luxury car down to subcompact--will almost certainly describe autos one category smaller than now. A few very big cars will probably always be around to indulge the ostentatious or the nostalgic. But within a decade, the obituary of the fin-festooned living room on wheels, so often written prematurely during the oil embargo of 1973, probably will finally become fact.

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