Bigger, Faster...and Cheaper

By John Greenwald

From the redesigned Jeep Grand Cherokee to the all-new BMW 3 Series sports sedans, the 1999 vehicles now rolling into showrooms are bigger, faster and more powerful than their forerunners, which is only fitting for the final model year of this automotive century. What's more surprising, perhaps, is that many of them are cheaper as well. The new cars and trucks boast some of the most technically advanced features ever loaded on as standard equipment--items such as a computerized traction-control system for the Chrysler 300M, and a keyless entry system for the BMW models that also lets individual family members program their own sound, seating and climate-control preferences. (The claim in Detroit is that today's autos pack more computer power than moon rockets did in the 1960s and '70s.)

Some 1999 models shape up as virtual bet-your-company gambles. General Motors has sunk more than $3 billion into its new Chevrolet Silverado pickup truck to appeal to suburbanites who want cargo capacity and a rugged look without any loss of creature comforts. GM put its money under the hood and into the transmission with the aim of creating a quiet ride and responsive handling both on and off the road. To recoup its investment, the company hopes for Silverado sales totaling $14 billion--a sum equal to Microsoft's revenues for all of fiscal 1998--in the next 12 months.

No market remains more hotly contested than the one for sport-utility vehicles, which account for 18% of all U.S. car and truck sales. Chrysler has spent more than $2.65 billion to expand the interior and improve the ride of its new Jeep Grand Cherokee, which will cost about $250 less than the 1998 model because features like the CD player will no longer be extra. Chrysler hopes to overtake the Ford Explorer as the market leader. But moving up will be tough in the increasingly crowded SUV category. Newcomers include the Lexus RX300, which competes with the Cherokee on price but carries a luxury nameplate. (The Cherokee's wider track and improved power shifting make it more nimble than the RX300 in off-road driving.) Among other new SUV entrants: the Cadillac Escalade, a luxury version of the Chevrolet Tahoe, and the Suzuki Grand Viatra.

When it comes to sedans, automakers are seeking to reclaim some neglected markets in 1999. Chrysler's 300M, its first true luxury car in a decade, is intended to buff up the company's image. Chrysler pulled out of the luxury field in the late 1980s to concentrate on Jeeps and minivans. But while that strategy proved profitable, it seemed to suggest that Chrysler could not compete when it came to high-quality cars. At the same time, Ford hopes to rev up sales of its once wildly popular Mustang with a retooled model that combines the silhouette of the '60s original with what the company calls sharper-edged and more contemporary styling.

For car and truck buyers, fierce competition throughout the market has prompted some of the biggest automotive bargains in years. Dealers currently offer discounts that average nearly $2,000 off sticker prices through rebates, subsidized lease rates and other incentives, marking the largest price breaks since the 1990-91 recession. And while automakers yearn to reduce or eliminate such concessions next year, the crowding of U.S. and foreign companies into every segment of the market makes significantly higher prices unlikely. "We're in an environment of no--or very small--price increases," says Chrysler president Thomas Stallkamp.

But that hasn't stopped automakers from enjoying a highly profitable year. Ford and Chrysler recently reported record third-quarter earnings, thanks largely to robust growth in the U.S. (GM is still struggling to recover from a 54-day strike last summer.) Detroit expects its sales of cars, trucks and minivans to surpass a solid 15 million units in 1999. Like the rest of the world's top carmakers, it bets that not even jittery financial markets will keep consumers from driving off in the stylish, microchip-powered vehicles that are arriving on showroom floors.

--Reported by Joseph R. Szczesny/Detroit

With reporting by Joseph R. Szczesny/Detroit