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Amid industry's deluge of image vehicles, not all 'halos' are golden

November 23, 2010
A popular refrain from some automakers is, "If we could only get the customers into the dealerships. Once they see and drive our product, they would be ready to buy." One way to get people into dealerships is through an image or "halo" vehicle. In the past, the halo market was populated by higher-priced, lower-volume sports cars. However, the segment is by no means limited to sports cars and increasingly has included offerings from cars to trucks to crossovers, all with various volume scenarios. Furthermore, automakers are ratcheting up investment in the design, development and production of image vehicles for the so-called halo effect that is generated. The theory-that the popularity of an image vehicle will rub off onto other vehicles in a company's lineup and hopefully increase overall brand image-seems simple enough. But is it? In the not-so-distant past, image vehicles typically were low-volume offerings. In North America, vehicles such as the Dodge Viper and Plymouth Prowler comprised the extreme lowend of the volume spectrum, at 2,000 to 3,000 units a year. The Chevrolet Corvette encompasses the upper end of the production range, with 22,000 to 35,000 units a year. However, the introduction of the Volkswagen Beetle in 1998 model year and the Chrysler PT Cruiser in 2001 changed the volume landscape significantly. Instead of generating a halo effect with oftentimes unattainable, highpriced vehicles, both Volkswagen and DaimlerChrysler generated significant buzz with well-designed, unique offerings priced reasonably for the masses. Notwithstanding the positive buzz and improvement in brand perception an image vehicle can create, it is difficult to quantify the volume impact of the halo effect. For example, in the first year the Beetle was launched in the United States (1998 calendar year, presumably when the most initial showroom traffic would be created), overall Volkswagen division sales increased by 51 percent relative to the previous year. Of that increase, roughly 80 percent was directly attributable to Beetle sales while the remainder (just under 14,000 units) was comprised of incremental Volkswagen division sales. While the Beetle gained significant attention, it did not seem to vault the overall brand to new sales highs. A comparable analysis is difficult to perform with the PT Cruiser. While the Chrysler division registered significant gains during the launch of the PT Cruiser in the 2000 calendar year, the overall brand also undoubtedly benefited somewhat from the demise of the Plymouth brand around the same time. Despite of the difficulty in equating the halo effect to increases in overall brand sales, automakers are increasing efforts to launch the "next big hit." With the advent of the crossover utility vehicle, one could view the Nissan Murano and Infiniti FX35/45, with their unique design and flexibility, as vehicles that could create a halo effect in their own right. Several image/halo vehicles have hit the U.S. market during the past few years, and some have performed better than others from a sales perspective. Some image vehicles currently on the market include the Hummer H2, Nissan 350Z, Chevrolet Corvette and Dodge Viper. The aforementioned Beetle and PT Cruiser, while initially very successful in the market, have experienced a down side of having a stylish and unique design: Once everyone has a unique vehicle, how unique is it anymore? As a result, both Volkswagen and DaimlerChrysler are working furiously to launch enhancements to and/or variants of the vehicles-e.g., turbocharged engines and convertibles. On the other hand, automotive history is littered with cautionary tales on image vehicles. Ford had its share of recent struggles with the short-lived Lincoln Blackwood and the Ford Thunderbird. Notwithstanding design issues with both vehicles, perhaps just as important was the fact that Ford experienced significant production problems early on in the launches, which precluded a "big splash" in dealerships. Simply stated, in order to sell them, you have to be able to produce them. Another case includes the slow-selling Pacifica, once hyped as a vehicle that could create a halo effect in Chrysler dealerships. DaimlerChrysler officials now tout the Pacifica as a likely  recipient of a halo effect that will be created by the forthcoming German engineered Chrysler Crossfire. While the image vehicle concept is relevant and its presence can, if well executed, improve a brand's exposure in the market, not all image vehicles are created equal. There are a plethora of new vehicles slated for the market in the coming months and years, all designed with the hope of creating a valuable halo effect. There undoubtedly will be both winners and losers, and the competition will be intense. The key for both automakers and the companies who work with them is to maintain a fairly rational eye on the outlook for any particular vehicle and work to execute a launch as free from problems as possible. Seems simple enough. But is it?