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Lost in SUV crowd, Axiom sales disappoint Isuzu

Rough start
Reasons for the Axiom's falter
  • Overcrowded segment
  • Inadequate marketing
  • Lack of incentives
  • Low brand awareness
  • High sticker price: $26,595 base, including freight
    A truism
    At current rates, Isuzu will have a hard time reaching its goal of 12,000 Axiom sales this year
      SALES
    April 242
    May 489
    June 791
    July 587
    Aug. 623
    Total 2,732
    Source: Automotive News Data Center

  • LOS ANGELES - When the radically styled Isuzu Axiom hit showrooms in April, its goal of 12,000 sales this year seemed modest enough. But the Axiom hasn't hit a single monthly sales target. It hasn't even come close.

    Instead, the Axiom has become an illustration of how brutal the U.S. market can be when a small player with low brand equity jumps into the overcrowded sport-utility segment of 50-plus vehicles.

    Only 2,775 Axioms have been sold through August.

    Duke Hale, senior vice president and COO of Isuzu's sport-utility division, said larger automakers with larger ad budgets have simply outmarketed Isuzu, spending more on ads than Isuzu had anticipated at the Axiom's launch. Hale joined the company in November, replacing Bob Reilly.Among Axiom's competitors are the heavily marketed Ford Explorer and Toyota 4Runner. And Isuzu has said focus groups consider the Volvo V70 Cross Country and Lexus RX 300 competitors as well.

    But the Axiom's signature slab sides, narrow greenhouse and bold grille - which helped it win sport-utility of the year awards from Eyes on Design and Auto International Association, among various other award nominations - evidently haven't taken the place of pure marketing dollars.

    "It's tough for Isuzu to outshine Toyota and Honda," Hale said. "It's tough to compete when they're shouting as hard as they are. There is an enormous amount of money being spent out there."Central to Isuzu's problems, Hale said, is that the company hadn't aired TV commercials since the fall of 1999.

    "Isuzu was basically off the air for a year and a half," Hale said. "Our overall brand numbers were no doubt very, very low."

    But since February's reintroduction of Joe Isuzu, the prevaricating pitchman from the 1980s, Isuzu's visibility among consumers has improved by as much as 25 percent, according to an internal study. Analysts agreed that Isuzu's brand recognition had jumped.

    Still, marketing may not be the truck's only problem. Dealers and analysts also have blamed weak Axiom sales on a disproportionate number of incentives on Isuzu's product line, which has drawn attention away from the Axiom to other Isuzu trucks.

    "When they launched the Axiom, they had a lot more dealer cash on the Rodeo and the Trooper," said George Peterson, president of AutoPacific, a consulting firm in Tustin, Calif. "They thought the strength and style of the Axiom would pull people into it, but it just didn't happen."

    Isuzu has responded by shifting incentives toward the Axiom. According to CNW Marketing Research, a marketing firm in Bandon, Ore., incentives related exclusively to the Axiom have increased by 50.7 percent, from $971 to $1,463 per unit - from June through August.

    Meanwhile, Isuzu dealers ponder other reasons for the sport-utility's slow sales, such as a base price of $26,595,including freight.

    "With so many product lines out there today, you can't make that price point stick," said Russell Gwatney, who owns six stores, including one Isuzu franchise, near Memphis, Tenn.

    Generally, the strongest call is for Isuzu to strengthen marketing of its entire brand-an increasingly difficult challenge as the economy slows and companies with larger advertising budgets tend to stay uppermost in customers' minds. Already this year, when U.S. sales of light trucks are down 3.9 percent through August, Isuzu's all-truck lineup is down 8.9 percent.

    "A major part of it has to do with the overall marketing of the Isuzu line," said Russ Darrow, president of the Russ Darrow Automotive Group in West Bend, Wis., which owns several dealerships in Wisconsin and Illinois. "I'd like to see better distribution, marketing and certainly incentives. That way, the dealer body would put more behind the national advertising programs when they come out."

    Rick Balsiger, Isuzu's vice president of marketing and product planning, says Isuzu is moving into the second phase of marketing for the Axiom.

    "We're going to use traditional media in key markets," Balsiger said. "We'll also have some campaigns with direct response through the Isuzu.com Web site-and even some targeted messages to some Isuzu owners."

    The first phase included promotions with McDonald's restaurants, Disney's family movie "Spy Kids," and Radio Shack, which sold toy versions of remote-controlled Axioms.

    Hale, meanwhile, is showing little patience as he guides the first new product launched on his watch: "The experts tell us you can't rebuild the brand in six months - but we're working on it."

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