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Midcycle updates grow more extensive, more expensive

Nissan, for example, took no chances in revising its two biggest-selling sedans for 2016: the Altima and Sentra. It freshened their designs to incorporate Nissan’s new grille, added a suite of active safety systems and upgraded the suspensions and infotainment systems.

“We invested three to four times more than we typically would invest” in a midcycle update for the two cars, says Pierre Loing, Nissan product strategy chief. “The competition is getting stronger.”

Nissan isn’t alone. Ford, Toyota, Honda and Chevrolet are among other brands that have upped the enhancement ante years before scheduled overhauls.

A fresh example may play out at the Detroit auto show next week, when Ford touts midcycle changes on the Fusion.

Gone are the days when automakers could get away with a “freshening” — a new nose, a new tail and some new wheels — and leave major changes for the redesigns that typically come every six to eight years. These days, midcycle changes look more like major makeovers.

At the Los Angeles Auto Show in November, Ford introduced the 2017 Escape with two new engines, new interior and its new Sync 3 infotainment system. And Toyota used its 2015 midcycle Camry as the launch pad for a corporate mission statement directly from Akio Toyoda, who wants more emotion in Toyota vehicles. Toyota spent roughly three times as much on the face-lift as it would have previously, estimates Monte Kaehr, the Camry’s chief engineer, who declines to give a figure.

“The 2012 Camry was doing well in the marketplace,” Kaehr said. “We did research with customers and intenders to see what they appreciated and what needed to be approved.”

Consumer feedback convinced Toyota that the 2012 Camry “was very appealing from a rational standpoint, but we saw from the reviews, it was not as emotionally appealing,” he said.
Tough competition
A number of factors are driving the trend to more extensive midcycle changes:

• Competition, particularly in such segments as mass-market midsize sedans and compact crossovers, is getting brutal.

• Tightening fuel economy requirements are pushing carmakers to speed the cadence of powertrain improvements.

• The incursion of mobile connectivity devices into the car makes infotainment systems obsolete faster than normal automotive product life cycles. Sophisticated software enables quicker upgrades in everything from suspensions to the exhaust note.

• And carmakers are going to global platforms. With those come global corporate design themes.

Chris Theodore, former vice president of product development at Ford and vice president of platform engineering at Chrysler, believes the trend started with the 2010 Ford Fusion.

“That’s the first time a face-lift won Motor Trend Car of the Year,” says Theodore, now a consultant in Detroit. “In the old days, face-lifts were too modest, and the customer didn’t notice.

“The manufacturers have learned [a face-lift] has to be much more than it used to be in the past. You have to give customers reason to come in and buy a new one. And you’ve got leasing, so you have customers coming back every few years,” he says.

“In the old days facelifts were too modest and the customer didn’t notice. They were probably $10 million to $20 million jobs,” whereas more comprehensive revisions these days could now run in the $100 million to $200 million range, he estimates.

Ralph Gilles, global design chief for Fiat Chrysler Automobiles, says the company has become much more proactive in what he calls “life cycle management.” Ten or 15 years ago, a midcycle enhancement was different, he says: “The product would be three years in the market, and we’d touch the bumpers, paint and grille. These days, we’re touching the product every two years, and in some cases, every year.”

Effect on sales
The upgraded freshenings can make a difference in sales.

Says Stephanie Brinley, analyst for IHS Automotive: “You can see from sales data that vehicles that have not changed are losing ground and need to be supported with more incentives.”

She cited two examples: The Ford Focus, with incentives up through November, while sales were down 6.5 percent through November, and the Ford Fusion, again with incentives up through November but with sales falling 3.2 percent. An update of the 2017 Fusion is to be shown at the Detroit auto show next week.

John Murphy, auto analyst for Bank of America Merrill Lynch, wrote in his annual “Car Wars” report earlier this year: “As automakers emerge from the trough in the cycle, more are aiming to spur demand by launching fresh product rather than discounting stale models at the expense of margins.”

In the report, which focuses primarily on major redesigns and all new models, Murphy writes that average showroom age has been “on a steady decline since the early 1990s.” He adds that “there is an increasing focus by many OEMs to make more substantial midcycle enhancements.”
Let’s get emotional
Major advances in infotainment and safety systems mean carmakers don’t have to wait for a redesign to offer customers significant improvements. Take Ford’s much-maligned MyFord Touch infotainment system, which was introduced in 2011. Its glitches and complexity damaged Ford’s customer satisfaction.

“MyFord Touch looks extremely dated today compared to some of the other stuff in the market,” says Dave Sullivan, analyst for AutoPacific. That’s why the 2017 Escape will get Ford’s new Sync 3, the system that’s replacing MyFord Touch.

Milton Wong, chief engineer of the Escape, says midcycle actions offer a chance to change more than just a single feature: “There’s a lot of new technology and new features we continue to bring into our car lines, so midcycle actions are places we can deploy a lot of new technologies or technologies already deployed on other vehicles.”

Asked whether he thinks more extensive midcycle face-lifts are the car industry’s new normal, Nissan’s Loing, who has been assigned to work in Japan beginning Jan. 1 as divisional general manager over global life cycle management, says: “Part of me hopes not.”

But he acknowledges vehicles such as the Altima and Sentra are crucial for the company.

“The fight is becoming tougher,” Loing says. “If you want to remain there, you need to invest and show consumers you have a credible offer.”2016 Nissan Altima

• The skinny: Trying to gain market share even as sedan sales shrink, aggressive Nissan spent three to four times as much as it normally does on a midcycle face-lift on the recently introduced 2016 Altima midsize sedan.

• What changed from the previous model: Significant design changes including Nissan “V-motion” grille, improved aerodynamics; highway gas mileage improved from 38 to 39 mpg; D Step continuously variable transmission simulates the shifts of a normal automatic; improved ride and handling; acoustic laminated glass to improve noise, vibration and harshness; suite of safety systems including rear cross-traffic alert, adaptive cruise control, forward emergency warning and forward emergency braking; SR sport appearance package.

• What Nissan says: “The competition is getting stronger. The two other Japanese competitors are always strong. We want to keep our stick in the ground. That’s why we were convinced the company would invest significantly higher.” — Pierre Loing, Nissan vice president of product strategy and planning. Loing won’t say how much Nissan spent.

2015 Toyota Camry

• The skinny: The Camry, perennial midsize sedan sales leader that was redesigned in 2012, was riding high in the market, but surveys told Toyota that customers found the previous-generation car an uninspiring appliance. Toyota CEO Akio Toyoda told his team that Toyota products needed a jolt of emotion.

• What changed from the previous model: More dramatic exterior styling including more aggressive grille; upgraded interior materials including satin chrome finishes and ultrasuede seats; major suspension upgrades for more connected road feel; new sporty XSE model with V-6; new safety features including adaptive cruise control, lane-departure warning and a collision-warning system.

• What Toyota says: “Akio Toyoda has told us he wants us to be putting a smile on our customers’ faces. It has been ingrained into our work force. When we set out to do this, we had a lot of engineers coming with ideas. We may not have dreamed so big in the past.” — Monte Kaehr, Camry chief engineer

2017 Ford Escape

• The skinny: Ford has a winner with the current Escape, which was redesigned in 2013 on Ford’s global C platform. But with new entrants crowding into the red-hot compact crossover segment, Ford couldn’t afford to sit still with its second biggest seller behind the F-150 pickup.

• What changed from the previous model: Two new EcoBoost 4-cylinder engines, fuel-saving stop-start, a new interior and new safety systems. The Escape will get Ford’s Sync 3 infotainment system, which replaces the oft-maligned MyFord Touch.

• What Ford says: “At Ford, midcycle actions are big things. We treat them differently these days. When we clay up a vehicle for a midcycle action, we’ll get the leadership together and we’ll bring out a current model and bring out the clay for the midcycle model. We’ll stand back 50 feet from it and take a look at it. This late spring or early summer, a customer will be able to stand in the showroom and see the current Escape and the one just being launched. The customer needs to be able to discern that there’s significant difference.” — Milton Wong, chief engineer, Ford Escape