The All-American Muscle Car Will Outlive the Doomed Sedan

(Bloomberg) -- The list of passenger cars sent to the scrap heap keeps getting longer. The Dodge Dart and Chrysler 200 are goners, Ford models including the Fusion and Fiesta are going to be finished, and last month General Motors Co. announced plans to cull the Buick LaCrosse, Chevrolet Impala and others. But as Detroit kills off slow-selling sedans, there’s one niche that’s hung on: retro-styled, testosterone-fueled reincarnations of muscle cars introduced in the 1960s and 1970s.

“What’s dying is the commoditized, four-door nothingburger, no-personality cars,” said Tim Kuniskis, who ran the Dodge brand at Fiat Chrysler Automobiles NV from 2013 to early 2018, before taking over Jeep North America. Muscle cars “have a really well-defined personality and positioning.”

They also command respectable revenue. Fiat Chrysler, which kicked off the  sedan-slashing trend in early 2016, commands an average transaction price of around $36,000 for its muscular Dodge Challenger. It might not be enough to match the fat margins on the trucks and SUVs that have become the focus for Detroit, but these powerful throwbacks can be still be moneymakers. And that can help big automakers finance their shift to a more electric future—especially since the initial investment on developing a Challenger (on the same platform since 2008) or a Dodge Charger (2011) has long since been paid off. 

Looking for growth in muscle cars still might be a bit of a stretch. Fiat Chrysler expects to sell roughly 65,000 Challengers this year, about the same as last year and just below the record 66,000 reached in 2015. Sales of the four-door Charger dropped 11 percent this year through November.

Still, compared with the death spiral that’s consumed sedans, the Dodge muscle cars are doing alright. Retail sales of large passenger cars, a segment that includes the Nissan Maxima and Chevy Impala, is down 21 percent in 2018, according to J.D. Power. The Ford Mustang, the top-selling muscle car in America, was down a modest 3.6 percent through last month.

Fiat Chrysler, with less cash to plow into new models than its Detroit rivals, revitalized the Dodge brand by appealing to core drag-racing enthusiasts and regularly one-ups itself with more powerful engine variants with sinister names—Hellcat, Demon, Redeye—that boost horsepower.  “There’s almost been a resurgence with some of the younger (people), even kids that aren’t of driving age that are interested in those products,” said Jeff Schuster, senior vice president of forecasting for LMC Automotive. “Those kind of special additions and add-ons have really put some life into the vehicles.”

David Kelleher, a Philadelphia-area Jeep, Ram and Chrysler dealer who has a marketing agreement with several basketball and football players from the Philadelphia 76ers and Philadelphia Eagles, finds that 20-something athletes often opt for Challengers and Chargers over higher-volume models. “The kids think it’s the coolest thing going,” Kelleher said. “Those are cars that say something about who you are.”

Josh Towbin, co-owner of Towbin Automotive in Las Vegas, has sold Dodge Hellcats and Demons—with 707 and 808 horsepower, respectively—to collectors who find his business on social media. His dealership’s Instagram feed features videos, some with thousands of views, of people doing burnouts in their Challengers.

Manufacturers of more mass-market sedans are trying some of the same tricks—though to a lesser degree—as a way to revive flagging sales. Even Fiat Chrysler is to stanch the bleeding from Americans’ disinterest in compacts by packing more power into their engines. Every Fiat model starting in 2019 will be turbocharged, said Steve Beahm, head of Fiat Chrysler’s passenger brands. U.S. sales for the Fiat brand were down 41 percent through November.

“What we have to do is no different from what we’ve tried to do on Dodge,” Beahm said. “How do we cut against the grain? How do we be different?”

Of course, it’s worth considering that drag racers in Challengers, Camaros and Mustangs are  already being bested by Tesla drivers on the track, a portent of the electric future awaiting the muscle-car world. Kuniskis said he expects performance cars to become more electrified over time, with plug-in hybrid versions taking off in the future. Both he and Beahm declined to go into detail on Fiat Chrysler's product plans, and the automaker so far hasn’t invested heavily thus far to bring in electric vehicles to market.

With their cult following, muscle cars are always going to be a niche segment, leading some analysts to still question how much longer they’ll hang around. The Dodge, Fiat, and Chrysler brands were all left out of the automaker’s five-year strategic plan the company presented in June,  and Schuster of LMC thinks it may be hard to sustain enough volume to keep the Charger and Challenger alive beyond the next three or four years.

Fiat Chrysler’s Beahm insisted the Challenger isn’t going anywhere because it sets the tone for the whole Dodge brand. “I’m not going to tell you it’s going to grow,” Beahm said. “But it’s going to dramatically buck the trend in regards to where passenger cars have gone lately and where they’re going to go in the next couple of years.”

To contact the editor responsible for this story: Aaron Rutkoff at arutkoff@bloomberg.net, Craig Trudell

©2018 Bloomberg L.P.