Originally created 12/30/98

New Neon gets big-car features



DETROIT -- Gone are the neon paint schemes and bright confetti splashes of color on the seats -- the second-generation Dodge and Plymouth Neon is too sophisticated for such garishness. This is a small car with big-car pretensions.

The 2000 Neon, unveiled Tuesday at the Los Angeles Auto Show, follows the industry's trend of packing big-car features into subcompacts to make them more appealing to buyers who really want a larger car or truck, but can't afford one. Like its competitors, the Neon is designed to revive a market for smaller cars that is stagnant and generates paltry profits.

Such conveniences as a rear-window defroster, split folding rear seats and intermittent wipers, along with more luxurious interior trim, are standard on the Neon. It also includes new amenities the buyer doesn't see, like added sound insulation and a larger muffler for a quieter ride.

"We've made many traditional options standard because the subcompact customer demands more," said Walt Battle, Neon planning executive at DaimlerChrysler AG's U.S. headquarters outside Detroit.

The first Neon, introduced in 1994, helped the former Chrysler Corp. re-establish its engineering image. It looked and performed nothing like its predecessors, the undistinguished Dodge Omni and Plymouth Horizon of the late '70s.

Since then, more than 1.5 million Neons have been sold, most in North America.

"The Neon has been an absolute success," said analyst George Peterson of AutoPacific Inc. "It reinforced Chrysler as a company willing to take chances."

The new Neon was unveiled at a Hollywood news conference and will go on sale next month. It arrives as U.S. small-car demand continues to languish, a victim of low gasoline prices and a robust economy. Small cars were about 14 percent of the market this year, down from 24 percent a decade ago.

"In this market, people usually will not buy a small car unless they're forced to," said Mr. Peterson. "They'd rather have larger, more powerful cars. We find in our research that only 5 or 6 percent of buyers would consider a small car the next time they buy."

The Neon will face some tough competition from Ford Motor Co. and Toyota Motor Corp., among others. Next fall, Ford will begin selling its innovative Focus subcompact while Toyota introduces a new entry-level car that it's hinting will be priced lower than any competitor.

Small cars generally offer automakers the smallest profit margins. Some are sold at a loss, which automakers consider a necessary evil to meet federal fuel-mileage regulations for their entire fleets. The more small cars they unload, the more high-profit, gas-guzzling sport utility vehicles they can sell and still keep their fuel-economy average in line.

But by cutting costs and making small cars easier to build, automakers are hoping to make them pay their way.

The new Neon, for example, uses under 1,900 parts compared with about 2,500 for its predecessor -- a 24 percent reduction.

It will be offered only with four doors -- the coupe has been eliminated. It has fewer options and comes in only two levels of trim. The new chassis and major components are expected to eventually be used for a small sport utility vehicle and possibly a midsize sedan.

The company also saved time and money by using more sophisticated design software and by modifying equipment and processes at Neon's assembly plant in Belvidere, Ill.

Overall, the car took only 28 months to develop at a cost of $703 million, compared with 31 months and $1.3 billion for the first generation.

"Even though the car is substantially better than the car they had before, because of the efficiency in design and assembly they were able to reduce the per-unit price of the car," Mr. Peterson said.

DaimlerChrysler has not announced prices, but they're expected to remain close to those of the current version, which begin at $11,725.

The new Neon's body has the same basic look of the original, but with more refined, aerodynamic lines and more pronounced wheel arches. The windshield's base has been moved forward 3 inches, accentuating the car's "cab forward" look. The Neon's 2-liter four-cylinder engine has been modified to reduce noise.

"It has a more compliant ride, it's more comfortable. All around, it's a much improved automobile," said Mr. Peterson.