Newspaper article THE JOURNAL RECORD

Inexpensive Automobiles Making Comeback / Firms Scramble for Market Share

Newspaper article THE JOURNAL RECORD

Inexpensive Automobiles Making Comeback / Firms Scramble for Market Share

Article excerpt

DETROIT (AP) - The $5,000 new car was facing extinction just two years ago, but the species is making a strong comeback as automakers scramble for shares of the rapidly growing market for cheap wheels.

The rebirth came with the successful U.S. introductions of the $3,990 Yugo, built in Yugoslavia, and the $4,995 Korean-made Hyundai Excel, which sold more cars in this country in its first year than any other import.

``We saw a vacuum at the low end of the market,'' said William Prior, the newly named president of Bricklin Industries, Yugo of America Inc.'s parent corporation.

Now that the waters have been tested, other makers in countries with younger auto industries are jumping in, turning the entry level category abandoned by the Japanese into one of the hottest segments of the new-car market.

``Yugo and Hyundai have reopened the market. Once a few companies start to arrive with brand-new cars, everyone has to get in. That's why five years from now this (segment) is going to be very cluttered,'' said Maryann Keller, an auto industry analyst at Furman Selz Mager Dietz & Birney in New York.

The entry level represents different things to different makers: first-time access to the lucrative U.S. market, an opportunity to hold onto market share or a chance to hook future buyers for more expensive and profitable cars.

``It's the fastest-growing segment of the car business today. Between now and 1987 there'll be about 17 new entry-level cars on the market. The segment should approximate 1 million cars within the next year or so,'' said Jim Fuller, vice president of Volkswagen AG's U.S. sales arm.

Volkswagen plans to introduce its Fox, made by the German automaker's Brazilian subsidiary Volkswagen do Brasil, in the first quarter of 1987, importing 60,000 at a base price below $6,000.

``The key point is that it allows us access to the first-time buyer. We haven't had a true entry-level product in the VW franchise in the past 13 years, ever since the Beetle went away,'' Fuller said. …

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