Last November, all GM’s eight U.S. brands lost ground. As the automaker’s pretty much shot its vehicular wad, the falling stats have convinced many industry observers that GM’s turnaround is back in turnaround. Of course, there isn’t a turnaround to turnaround. Not now, and not in the last forty years. Since the sixties, GM’s market share has been on a downwards trajectory. In 1962, The General owned over 52 percent of the U.S. new car market. Today, The Big 2.8 combined can’t muster a simple majority. There’s a reason for that.
GM’s inability to see the big picture has led to its downfall. The irony is stunning– the carmaker that was once the world’s largest has proven itself to be the least capable of anticipating the large scale forces controlling its destiny.
For example, how did GM fail to see that the light truck boom was about to go bust? Years before Hurricane Katrina hit, the canaries in the coalmine were singing like Ethel Merman. Gas prices aren’t cheap! Gas prices aren’t cheap! If nothing else, the fact that Toyota, Honda and Nissan were eating GM’s passenger car lunch should have signaled management that the transplants knew something about making popular products– and money– that GM didn’t.
Never mind the inadvisability of GM putting all its eggs in a body-on-frame shaped basket. GM’s success in the car business depends on its ability to see ahead of its five year model cycle– which is often longer and should be shorter but that’s another story. It’s a sad state of affairs when a company with 99 years of automaking experience and virtually unlimited financial resources can’t predict trends as well as a bunch of pistonheads yakking on the internet.
Whether it’s due to executive hubris or bureaucratic bloat or both, GM has been flying blind for decades. More to the point, they’re STILL in the dark. Saturn gets a sports car. Cadillac gets a sports sedan. Buick gets GMC’s crossover. GMC gets Buick’s crossover. Saab gets bupkis. Chevy doesn’t get Pontiac’s El Camino, while Pontiac gets Saturn’s Aura/Chevy’s Malibu. If a decision is only as good as the information it’s based on, well, garbage in, garbage out.
Even if you set aside the ongoing series of duds failing to fill GM’s sales ledger, there’s no indication of a far more important “awareness” turnaround at RenCen. At the moment, GM blames its American doldrums on the general economic climate; the “falling tide sinks all boats” excuse. This GM genuinely believes, despite the fact that domestic boats are sinking a lot faster and farther than the transplants’. But worse, far worse, they’re telling the world that the tide will raise them up by the end of next year.
As Blogging Stock points out, GM expects the key driver of their profitable pickup truck sales– the U.S. housing market– to recover in 2008. In a recent article in the New York Times, GM execs said they expected the American housing market to pick up in the second half of 2008 and that “the industry would finish that year in better shape." Try and find an independent observer who agrees that the downturn will be over in six months. Most experts agree that we’re looking at a two to three year slump. Where will THAT leave GM?
Without a pot to piss in. Say what you will about the brilliance of the new Cadillac CTS or Chevrolet Malibu or Buick Enclave. Tell me that the new Chevy Volt electric – gas plug-in hybrid is the future of automobiling as we know it. I’m not going to dismiss their prospects out of hand. But the thing of it is, at this point, they are an irrelevance. GM’s eight brand hole is so deep and so wide that no one, two, three or half dozen vehicles can fill it.
Just as GM suffered defeats on all eight brand fronts in November, their survival depends on making advances on all eight brand fronts in the future. To do that, GM has to be smarter, faster and sharper than it’s been in its entire corporate history. To think GM can pull off an octo-brand turnaround with the same management that has singularly failed to anticipate future trends, that says it's waiting for the new Energy Bill before finalizing its products plans, is even more delusional than expecting the housing market to magically right itself.
How’s this for a long term view, from a Business Week article dated May Ninth, 2005: “The only question is whether that reckoning comes in the next year, if models developed by Vice-Chairman Robert A. Lutz fall flat; in 2007, when the union contract comes up for negotiation; or perhaps in five years, when GM may have burned through its substantial cash cushion.” So really, we only have part three of the prognosis to go.
When they began building Saabs in Rüsselsheim, and Cadillacs at the Saab plant in Trollhättan, I kind of thought there wouldn’t be any more nuttiness to observe from GM. But then they began building Opel-Saturns.
This is a show that never fails to deliver … cases will be taught, examples will be made – not profits, though.
Shame on GM for not building a single large, rear-wheel drive, bench seat car anymore, like the Mercury Grand Marquis. What the hell happened to Cadillac? They used to make these nice, luxurious cars and now they emphasize sportiness and truckiness. No one, not Buick, not Pontiac, not Chevrolet makes a traditional large sedan anymore.
Tough for you GM that I’m buying a Mercury Grand Marquis. your loss!
What the GM kool-aid drinkers fail to see is that is as good as the CTS, Mailbu and stop gap imports like the G8 and Astra are, they are not enough to save the monolith that is GM. Moreover, GM doesn’t have the resources to spread the wealth to all of its eight brands. What it gives Saturn means there is less for Pontiac, what Pontiac gets means less for Chevy. And not just in terms of product or product development, but all important marketing as well. Look at what Honda can put to advertising the new Accord vs. GM for the new Malibu (while cutting the twin G6 and Aura budgets). One model like that may make all the difference to a lithe company like Honda or Toyota, but for GM its just a drop in the bucket of red ink.
Are they insane, anyone who believes the housing market is going to pick up in 2008 is delusional. It’s going to get much worse before it gets any better, plus the price of gas will keep people downsizing. Did they also forget there is a presidental election in 2008 and the pre-election minirecession we get with it. As long as the current idiots are still running the company they are doomed to fail.
I’m glad we mostly do military and eduction work because if we did strickly multifamily like some of the other places I worked I would be seriously worried about the upcoming mess. We only do section 8 housing and there should be some growth in that sector in the next few years.
If I read this right, GM is betting the company on strong demand for trucks/SUVs/CUVs in late 2008.
If they are wrong, then what? End game?
And to beat a horse to death again, GM must slash brands or reorganize as follows:
Cadillac = lux. (non-fleet)
Chevy = full-line, mass market & trucks (non-fleet)
Saturn = at most two car models and one CUV model aimed at high-end mass market (non-fleet)
Pontiac = two models only, GTO-like coupe and G8
GMC = fleet-only trucks
Buick = livery/rental sedans (decontented Impala or Grand Prix)
Unfortunately, since GM is the least poorly run US automaker, it’s easy for RenCen to believe that they’re doing a great job.
Though time is ticking as the the market has already spoken:
market capitalizations
GM $15.5b
Ford $14.9b
Honda $124b
Toyota $179b
So, they can sell trucks now at huge discounts and somehow survive, but when things get better in ’08 we are supposed to let them return to making huge cash profits on our next truck? And we’ll buy them in droves?
It is somehow like seeing your “hot” date without makeup for the first time, isn’t it?
At today’s close, the market cap of Honda is $62B, not $124B. I know because I drive a Honda and I hold Honda shares.
Honda is the ultimate anti-GM. Honda doesn’t have too many models around. But most of them are leaders in their segments.
Civic: No.2 compact, after Corolla
Accord: No.2, after Camry, for the past several years, probably No.1 for 2007
CRV: No.1 light SUV/crossover
Odyssey: To be No.1 minivan in 2007
With due respect to the poster, I’m not sure the a GM Grand Marquis is the formula for saving GM. 100% emulation of the Japanese automakers isn’t the way either, but how about realizing that they are working a winning formula? Too much overlap, too little differentiation, and too little value are GM problems that have been harped about for years. Well…at least we’ve still got something to harp about.
Are they kidding? They don’t really think the housing market will rebound beginning in July ’08? This is just another pie in the sky wish against reason statement.
The facts remain:
Consumers are way extended already on credit
Oil prices have gone way up and will probably continue to do so
The housing market is in very bad shape
There is a glut of new and used vehicles already out there to buy
Toyota and Honda have the massive resources to stay in the game, even through a recession
GM is saddled with monumental sized debt
They are importing the Astra and will lose money of every one of them
The rebates on the domestics continue to be huge, just to move the 2007 models
But I guess they are reducing fleet sales.
slateslate, I have a better idea. Just use GM as the car brand (just like the car brand Honda from the car company Honda), and make:
Chevy a single car model that competes with Civic;
Buick a single car model that competes with Accord;
Cadillac a single car model that competes with E-class;
Saab a single car model that competes with TSX;
and so on… got the idea?
Even if there is a housing rebound it isn’t going to result in a massive uptick in full sized truck sales.
About 1/2 of the body on frame trucks sold in recent years have been sold to people who have a pressing need for a large truck. The other half have gone to fashion buyers who rarely get the thing dirty.
The fashion buyers have been going away fast and there is no reason for them to come back.
If GM really wanted to participate in any growth in the truck market they would be bringing out a world class compact truck and companion van available with a small turbo diesel to sell as a more efficient solution. Remember all those compact Japanese pickup trucks we used to see in the 1970s and 1980s? GM even had a rebadged Isuzu and Ford sold a Mazda unit.
There is still a substantial market opportunity there. No way, however, is GM working to seize the day. Once upon a time GM led the US light vehicle market, but today they bobble and follow.
An overpriced car based Pontiac truck thing is there answer to that unserved market, but it will be too expensive for the people who would like one, like me. I need some thing small and efficient that I can put my bike in the back of and to move small things. Delusional execs riding high on their egos.
The effect of corporate culture in the Tubes sounds like what happened to someone I know who got laid off from a pharmaceutical company that’s just undergoing its first ever downturn. Everyone new and with different (and realistic) views on the upcoming products and markets got the pink slip, old timers (many pathologic optimists) and brown-nosers kept their jobs. The Culture says the downturn will be temporary, and the new products will make billions. The effect of the Kool Aid overrides all.
Except, they won’t. The spiraling cost of health care, generic (cheaper) competition preceding the launch of an upcoming anticipated blockbuster, increased federal regulation of their primary cash cow products. The Culture has never before encountered decreased sales in their entire history and has no clue how to deal with it.
There are many few parallels between that company’s and GM’s cultures, the inability to deal with failure after having been a market leader for a relatively long time. Arrogant optimism is how I’d describe both that company’s as well as GM’s culture. The difference is that GM has been riding its corporate ass raw on the slippery slope for 3 decades with no end in sight.
Will we be seeing another $39 billion dollar writeoff due to overestimation of market demand a few years from now?
wsn:
Accord: No.2, after Camry, for the past several years, probably No.1 for 2007
Nope. Camry will be #1 again for 2007, and probably for 2008.
Starlight – excellent point.
jthorner – also a good point.
If it were not for union contracts and several other bad influences GM could still be making a profit by doing what they do well. Unfortunately, the government, unions, and management egos make that impossible. The truck market could shrink by a huge margin, but if you were a truck maker they could still weather it well. The problem with GM is that they also have to weather losing tons of cash on all the stuff they keep doing that they stink at.
Nothing wrong with the el Camino concept ,in general, but the lack of a de-contented version with an economical V-6 and stickshift, a delete option on fancy music systems for those of us who just want to be able to feed our MP3 players into a standard radio, rubber matting/composite flooring in place of carpet, manual windows, etc., will turn this vehicle from tool to toy.
Does anyone have any information on GM’s total debt and their ability to pay the interest? On commentator has said that they need to earn at least B$5+ just to pay the debt.
The roots of GM’s malaise are clearly visible as far back as the 50’s. The confusion of brand identities — Buick, Oldsmobile, and Pontiac were at war throughout the late 50’s into the 60’s. The slowness to respond to market trends — for example, it took GM almost five years to respond to the four-seater Thunderbird, which was a hugely popular item for Ford. The tendency to miss the mark when they did respond; the Corvair, for instance, was an interesting piece, but compact buyers showed they’d rather have a Falcon, which was far more conventional, so Chevy lost two more years rushing out the Chevy II. The worrying habit of bringing an advanced piece of hardware to market before it was ready for primetime, then dropping it before (or sometimes just after) engineering worked out the bugs — leading 50’s examples include fuel injection, air suspension, and continuously variable automatic transmissions. (The latter, Buick’s Flight Pitch Turbine Drive and Chevy’s Turboglide, might never have worked well, but GM spend bags of money on them and then dropped them quickly.)
These things are deeply ingrained in GM’s corporate culture, but because GM had enough brand loyalty and momentum it took a long time before the damage became critical. It’s like a heavy smoker with high cholesterol who just won’t change his habits. It might be years before the damage becomes apparent, but eventually it kills him.
I don’t how to save GM, but I do know that my company is replacing its Chevy and Ford vans with Dodge Sprinters, rebadged Mercedes-Benz diesel vans, and that I looked at the Cadillac CTS and concluded that whatever the excellence of its engine, transmission, and suspension, the car lacks many features and benefits that its competitors have at a similar price. I’d like to buy a Cadillac, but its cars are not competitive. I’m glad that I don’t hold GM shares. I’d like to buy American, but every time I have done so, I bought junk: 1983 Chevy X-11, 1986 Chevy Celebrity wagon, 1984 Pontiac 6000 GTE, 1987 Pontiac 6000 GTE, 1987 Jeep Cherokee, 1989 Ford SHO. All troublesome. Now we have two 2007 Subarus, a Legacy spec.B and a Outback LLBean 3.0 R, both of which have been totally reliable and satisfying.
Can anyone tell me why a GM vehicle should be anything other than a….
Chevy
Cadillac
Hummer
Toyota has three brands at the moment. Maybe Subaru will become the fourth.
Honda has two.
Nissan has two
VW has three although Europe is a far different story for them.
Mitsubishi has one
Mazda has… well they’re owned by Ford which has about 7 for right now (Ford, Mercury, Lincoln, Jaguar, Volvo, Mazda, and Land Rover). They may be down to 5 by March 2008.
GM needs to split itself into two different companies. Or at least sell the names and distribution channels of the other five divisions to someone who could use them like the Chinese or Indian firms.
Housing rebound in 08? That IS some strong kool-aid.
To slateslate’s response on how GM should be organized- I really like your ideas. It’s easy to look at the big picture and think… what the hell would I do with this company. But it definitely makes sense to have separate models in the respective brands that don’t cannibalize on each other… like say, every single car made by GM and it’s twin/triplet. Acadia and Outlook… are they even different? Having overlap like that just muddles the brand image that Saturn once had as a “free thinking” company, or something. Also, GMC = WTF. Chevy? What? I just don’t know. I concede that many of their new products are good, but as long as they compete against their GM brothers and sisters, they’re really sort of useless. What’s good Malibu sales to GM when G6, LaCrosse, and Aura sales are all in the toilet? Sigh.
This housing market recovery … I’ve learned that corporate planners can put a spin on everything, why not say that: “The continued fall in the housing market will free considerable capital that Americans will invest in their cars, instead of taking up large mortgages.”
Actually sounds more likely than a recovery in housing. Just ask http://www.doctorhousingbubble.com, who will be mightily surprised if housing continues its exuberant trajectory in 2008.
How can we save gm? how can we compell a lazy obese man , who has been mouthfed all his life, to get up his buttcheeks and start working? How do you build up muscles, without working out? how do you make a shark vegetarian? how do you sell a tanning lotion to an Arabian nomad? How can you make a country stand for achievements, if all it stands today for ,is clay legs of services ,debts and no-brainer.
How can you teach a company, that if they are a car company they should make more products?
how can you teach a car company that quality is a must, not an option?
How can you teach a car company that a fair game is a must, and rebadging and outsourcing is like a morphine-just a pain reliever?
How can you teach a car company that as diverse is the holy costumer, so should be your product range?
How can you teach a car company that,if they need more cash for investment, they simply make more better products that simply generate more revenues?
How can you teach a car company that they should take care of the products, and the sales will take care of themselves?
How can you push a car company not to be allergic to a physical input and presence in real engineering?
You little poor CEOs , how much money do we have to pump in you before you get stuffed with money and say ` enough`? before you say, now I can really take care of the company? Little, obese, bald, and lonely, buiding a greenback hideway to drink away the bitterness of wasted life and strangling lack of true love………sorry.
As Starlightmica and Argentla wrote, corporate culture is a huge factor in GM’s problems.
When you get into the heart of RenCen, it looks like a completely different, Bizarro world. The Michigan media fawns over each and every Detriot vehicle and makes thinly-veiled racist/commie/terrorist associations with “foreign” cars.
Everyone needs a SUV to go hauling, hunting, fishing and towing. Everyone. Because GM’s old-boy network of aging executives say so, despite being given mountains of research saying otherwise. They call it “vision”. Others call it “madness”.
As I said before, I think the only way that real, significant change can happen is for the 2.8 to pick up and move their management out of Detriot. The enabling culture is too strong there.
Moving the horrible corporate culture someplace else wont solve the problems, that culture in it’s entirety needs to be eliminated. Easier said then done, obviously. They need to replace this tired old gaggle of execs with people who will hold them selves accountable for the decisions they make. And the corporate infighting does no good for the companny as a whole. It would probably require a lot of the people at the top to fire themselves and find visionary replacements, which is not going to happen.
I think GM is too broken to fix.
“It’s a sad state of affairs when a company with 99 years of automaking experience and virtually unlimited financial resources can’t predict trends as well as a bunch of pistonheads yakking on the internet.”
I’d have to disagree the majority of the time. In fact I lauged out loud when I read this. It’s so easy for us to take pot shots, because we’re judging decisions that GM made 7 years ago. Hindsight is truly 20/20 as they say.
Redbarchetta, you’re making me look like an optimist. Yikes! :)
“It’s so easy for us to take pot shots, because we’re judging decisions that GM made 7 years ago.”
And we ‘net pistonheads have been criticizing GM for not having competitive CARS for longer than that. How long have outsiders been screaming at Detroit that if they don’t get their reliability up to Japanese standards they aren’t going to survive?
Then there is the California dataset. For many, many years California has been the first state in the nation to demonstrate and establish new trends. Detroit lost the marketshare war in California decades ago. What did they do, fight back? No, they closed their west coast factories (well except for the one which was gift wrapped and given to Toyota). Ford got the bright idea to put top management and design for their Premier Auto Group in Southern California, then quickly said never mind and left.
Meanwhile Toyota USA is headquartered in …. Torrance, California.
Now the Japanese juggernaut has captured the market on both coasts and is steadily hollowing out the heartland. Only trucks have kept Detroit alive. They gave up even trying to be competitive in cars for a decade or two. GM and Ford are trying to claw their way back into the car part of the market, but their efforts are mostly too little too late.
The top management of these companies is paid obscene amounts of money for their irreplaceable talent, insight and skill. The shareholders, employees and customers are not getting their hundreds of millions of dollars worth of management they are paying for.
GM executives are so mind-boggingly stupid. It just amazes me. The first manufacturer to come out with a small pickup with a turbo-diesel will have a huge sales increase, and I bet incentives wouldn’t even be needed. With current fuel prices, why would anyone want to buy a truck with a massive gas powered V8 when you can potentially do the job with something smaller and more fuel efficient? Even if you want a diesel GM pickup now, you have to buy a Silverado 2500 and pay ~$6000 for the Duramax option, which brings the price to ~$35000 (before discounts). Bring out an updated S10 and put a 6 cylinder Turbodiesel in it that averages about 35 MPG or more. I’m still waiting for VW to bring back the Rabbit pickup, but I don’t see that happening. There’s obviously money to be made with the right products. But if GM is counting on the housing market improving overnight and sales of their trucks magically shooting back up to levels from 3-4 years ago, they are extremely delusional/f#&ked in the head.
If GM cars are so bad, then why is GM the largest car company in the world? Doesn’t that mean that GM sells more cars than anyone else? Doesn’t sound like a company that makes crappy cars in the public view, if more people buy their cars than anyone else’s.
ionosphere:
An oversimplification: say, car GM is going at 75mph, but slowing down. Car Toyota is driving alongside in the next lane but is going at 74mph, but speeding up with the pedal to the metal.
What’s going to happen next?
ionosphere- Habit, blind loyalty, family pressure, ignorance, psuedo-patriotism, employee discounts…there are many reasons people by cars that are not the best for them (not just GM cars). And don’t forget that fleet sales are a big part of the “lead” (some estimates of the retail gap between GM and TMC are small, Toyota is the number one retail brand in the USA)
The retail sales trend lines tell us how the buyers “shopping the field” are moving. GM’s getting creamed. Remember how big they were?
Keep in mind when you see “owner loyalty” surveys that the domestics have one large advantage (and it’s not enough. In Smalltown & Flyover USA (grew up there, live there) they operate virtually without competition from transplants. Each of these dealers contributes a small amount to the figures but there are thousands of them and you can bet the loyalty scores they have are huge.
In competitive metro areas I suspect the domestic market share is pathetic. Their problems are probably worse than they think.
Just some thoughts.
Bunter
Keep in mind when you see “owner loyalty” surveys that the domestics have one large advantage (and it’s not enough. In Smalltown & Flyover USA (grew up there, live there) they operate virtually without competition from transplants. Each of these dealers contributes a small amount to the figures but there are thousands of them and you can bet the loyalty scores they have are huge. In competitive metro areas I suspect the domestic market share is pathetic. Their problems are probably worse than they think. Swap domestic for import and smalltown flyover USA for east and west coast and it’s the exact same sentiment.
korvetkeith-not sure you got my point.
With it’s 7000 dealers GM is (over?)represented in every market. If few on the coasts chose to buy from them it is not because there are no dealers close by. Out in Da Middle there are a lot of folks who have nothing but domestic dealers nearby. Especially GM.
My contention is that this will inflate the domestics “loyalty” ratings, not because the product retains the buyer, but because the geography does.
Toyota has less than 2000 dealers and their retail share is close to GM’s (estimate) without accessing all markets.
Every market they are in has a wide spectrum of other choices. They have to earn all the loyalty marks in a competitive pool.
BTW, I’ve only had one Toy, 3 GMs, and find most of Toy’s products to be Yawn City. This isn’t “fanboy” stuff.
Worth a thought.
Take care,
Bunter
” The top management of these companies is paid obscene amounts of money for their irreplaceable talent, insight and skill. The shareholders, employees and customers are not getting their hundreds of millions of dollars worth of management they are paying for.”
That was worth repeating.
It ticks me off that the economy (especially here in MI) is highly dependant on the decissions these guys make.
All this confirms a conversation with one of the assembly line workers I had whilst touring the Arlington, Texas factory way back in 1998 when the truck was king of the sales chart.
Sitting in the then-new GMC truck that graced the lobby of the building, said employee indicated that trucks and SUVs were responsible for 90% of GM’s operating profits at the time. Keep in mind that this was in the deepest part of the 90s “oil-glut” that depressed prices to the point that a gallon of regular sold for as little as 66.9 cents in my Georgia neighborhood.
I asked him what would happen when gas prices begin their inevitable climb out of the cellar.
He said, “We’re f—ed”.
It doesn’t take a management genius to figure out that, even when the party was at it’s height, bad times lay ahead.
We don’t have to look far to see how true this employee’s sage (and obvious) prediction has become.
In competitive metro areas I suspect the domestic market share is pathetic. Their problems are probably worse than they think. Said another poster.
TRUE. Here in the NYC area, american cars are rare…but once I get past the NYC “money line” I see a lot of those sad, forgettable boxes.
It’s because in NYC, 50 k year is a good secretary, but outside, that’s real $$$, hence the Cobalts and stripper Caravans, not the BMW’s and Full Boat Siennas here in the gilded NYC burbs.
The issue here is, how much does it cost GM to build a car. It seems they have been going broke for a long time.
This is the great “secret” of the car biz, how high the profit margins really are. Now, I’m sure this is like asking for the Record industry to give a straight accounting, but there has to be a LOT of profit for the constant loss of money, huge executive bonuses, and decent union contracts (you can’t get angry…in this world, these guys are just tossed a bone).
What does it cost to make a Cobalt ? What does it cost to make an Escalade ? What does it cost to make a Vette ?
How bout the high end ? What does M-B pay to make an S Classe ? How about the low end…what does it cost to make a Rabbit stripper ?
Is this why everyone fears the Chinese ? While the first few generations will be a “no buy”, they threaten to do to the car industry what they have done to the electronics industry…
OK TTAC, do a “what it costs to make a car” article.
I don’t think the Chinese carmakers have a chance unless they make good cars. Remember the Yugo? Cheap alone won’t cut it anymore….at least not in this country. We won’t buy garbage.
FunkyD:
Ford’s attitude at that time was, we’re building the Expedigator in 3 shifts around the clock, in the world’s most profitable car plant. What do we need to worry about? A decade later, Ford’s survival is in doubt.
ionosphere:
If you’re typing a message here on this forum, most likely most of the computer or other hardware was built in China. Good enough, right?
Chinese cars will likely arrive stateside within a few years. Chrysler and Ford are expected to then be importing B-cars under their nameplates, and Honda is exporting Chinese built Fits to Europe. Chinese companies under their own nameplates? we’ll see, Europe’s already getting them with mixed results.
True most electronics here are made in China and their quality is fine. But if Chinese car companies think they can sell cars here if they are super cheap yet the quality of Yugos, they will be in for a rude awakening. We won’t buy them.
The Chinese have been selling super cheap almost junk motorcycles and scooters here for a few years now and people by them. I like to think of them as disposable junk but they have been selling in small quantities.
If it’s cheap enough people will buy it, just look at the old Hyundai’s, 2 for the price of 1 normal car. Sure it damaged their brand but if the Chinese improve quickly(which they have been doing very fast over the last decade) they will start to sell in numbers.
Yesterday, in the Los Angeles Times, Dan Neil flatly wrote that Cadillac makes a better car than BMW, Mercedes, Infiniti and Lexus, in the form of the 2008 CTS. His declaration is unequivocal:
“So here’s a new thought, worthy of defending: Cadillac makes a better car than BMW or Mercedes or Lexus or Infiniti, and that car is the 2008 CTS. No other car in the mass market, with so much at stake for its makers, dares so much as this expressive and audacious bit of automotive avant-gardism. In a segment that lives and dies by European benchmarks, the CTS sets fire to the bench and throws it through the shopkeepers’ window.”
http://www.latimes.com/classified/automotive/highway1/la-hy-neil12dec12,0,2495261.story?coll=la-class-autos-highway1
Thanksgiving week, I spent two solid days at the Los Angeles Auto Show, taking the time to see every vehicle on display but more important, to watch and listen. I gathered notes on hundreds of tire-kickers up and down the automotive class ladder.
At the Saturn stand, what looked to be a run-of-the-mill, making-progress cubicle inhabitor (polo shirt, khakis, clean-cut, glasses), seeming about 37, sat in a Saturn Sky Redline, beaming. Mrs. Polo, a chipper, generic, California coastal middle class workout blonde (first crowlines forming and possibly sporting a spray tan) stood alongside.
Mr. Polo (gripping the wheel with both hands and eyeing the view over the sculpted hood): “I can see myself liking this car as my commuter for a long time.”
Mrs. Polo (wrinkling her nose): “It’s a beautiful car, honey, but all the people you work with would see you driving into your building in a Saturn!”
Mr. Polo: “So?”
Mrs. Polo (looking annoyed that Mr. P hadn’t gotten the point): “Isn’t this an American car? Don’t you want to look at the Honda sports car instead?”
Mr. Polo (arching eyebrows): “No! It looks too plain. I love this car!”
Mrs. Polo: “Well, how about the BMW?”
Mr. Polo: “It’s ugly.” (referring to the Z4)
Mrs. Polo: “Well, I’d rather drive an ugly foreign car than a pretty American one. My cars have to be imports.”
Mr. Polo gets out of the car looking both exasperated and dejected; says nothing, walks off in the direction of a Corvette nextdoor.
Me: Reminded myself, chuckling, how many people in an 1100 message thread tried to convince me import bigots don’t exist.
The point of raising these two extremes is to highlight the scope and complexity of GM’s problem. True; a combination of epic misjudgment, persistent arrogance and the inevitability of a more competitive market have conspired to erode market share for 40 years. It’s also true that a few model introductions in one season aren’t going to prompt a “V” in the trend, that you can pinpoint to the day, week or month. In fact, I’d guess you’ll only be able discern the trough and the point of turn-around in retrospect.
Only prospects getting quickly interested in the contextual reasons for fairly and squarely evaluating GM’s newer products can drive the immediate, this-month, turn-around you keep looking for. Lacking community interest and foresight, it’s going to take longer. When spouses are putting a drag on American car purchases because they’re worried about their husband’s street cred at the office, it’s going to take more than a few good cars to win back share.
As for a housing recovery, the fact is, no one knows. Housing is going to perform very differently region-to-region. We even see this in SoCal, with median sales prices still going up in some zip codes, holding stable in others, slipping in others, and plunging in the exurbs. Further, we don’t know how far the Fed is willing to go to ease credit and solve the jumbo mortgage problem. Nor how far the Chinese are willing to let the American economy slip. We also don’t know how well employment will hold up in the US. If it stays solid, housing’s slump will mitigate. Growth will prevail.
Everyone thinks that it takes a housing recovery in the form of new home building to spur improvement in truck sales. Not exclusively. As we saw routinely in the market sags and credit crunches between 1978 – 1983, when people couldn’t buy an upgrade, they improved what they had, even in high stagflation years. DIY and the roots of today’s Home Depot / Lowe’s economy were laid. When homeowners boost DIY, they are inclined to buy more trucks or utility vehicles for personal transportation. Americans have also shown continuing ability to absorb energy costs. Both the economy and personal spending are much less energy-intensive in share and real dollars than during the peak-cost energy years 1980/81. The Ford F150 will continue in 2007 as the country’s most popular vehicle. Pickups and SUVs of all types continue to show general lack of concern for serious improvement in the economics of fuel.
I wouldn’t bet on a housing recovery as cornerstone for corporate strategy in 2008, but on the other hand I would not pull my hat over my eyes and ears if housing stays in the doldrums either. The truth is that the entire auto industry got hooked on exceptional unit sales years in the US as some kind of new average, not just GM.
I agree that a flash initiative to bring a modern S10/Ranger to market would be rewarded with success. CUVs are surging. At the bottom, the Chevy HHR is becoming ubiquitous here as an accessible trucklet/wagon.
However, breaking Toyota’s and Honda’s grip on the perception by the polo shirt set that they make a superior car, on an economically meaningful schedule, is going to require a combination of incisive marketing by the brands, and conscious open-mindedness by the market of calcified-perception prospects. Product isn’t any longer the kink. With Malibu, Fusion, Taurus, Impala, Aura, real domestic alternatives for mainstream sedans with sufficient competitiveness are here. CTS is a real luxury contender. Putting aside the onus I place on import bigots and the great middle who are just apathetic to change, marketing is now the fat man standing on the hose. That’s a separate post topic. Market behaviors are prone to inertia. Monthly inspection of the data for evidence of turnaround is likely to be frustrating for awhile. GM has to turn the pivotal mainstream sedan buyer in its direction to win momentum in the rest of the contests outside of body-on-frame trucks, Corvette and Viper.
Phil
“GM has to turn the pivotal mainstream sedan buyer in its direction to win momentum … ”
So far we have seen exactly zero indication that GM has a clue about how to do so.
Big $150M Malibu ad campaign when there are hardly any vehicles in the sales channel?
Big advertising campaign for the Saturn Aura which is already dead in the water?
Bringing in the Astra but forgetting to fix the clock to US style timekeeping?
Paying big bucks to get the New Camaro a movie placement deal years before it will be available to buy?
The guys at the top still have their heads in the sand.
Phil,
That’s two. The SL-550 guy and Mrs. Polo. Keep hunting, you’ve only got 999,998 to go. They may exist but as market forces, they’re not significant. Not anywhere near as significant as Detroit’s history and their current lackluster product lineup.
Of course, on reflection, I can see where the really uptight might think Detroit cars are associated with “loser” status. So many of Detroit’s cars are really… junk. Junk with low resale value and a history of failure. Who wants that? More of it simply appeals to rednecks. I’m thinking of the Monte Carlo; 300hp, wrong-wheel drive and two-doors. That’s sooo 1979. And some of it is just a blunt instrument, like the Chrysler 300s. Sure, some people like the style but if you don’t, what’s the point in buying that car? None whatever.
A friend just bought an ’07 Honda. Since it’s the end of the year, he saved $5K off list to get a really well-equipped car that’s shockingly nice. I’m tall, yet I’m comfortable in the back. And the V6 really moves the thing out when he wants and it turns in over 32mpg on the highway. And, if he tires of it, he can unload it quickly on favorable terms. And Honda has a well-deserved reputation for building reliable cars.
Why would I buy a GM? A Chrysler? A Ford?
They pissed off – and away – a generation. That was stupid.
Look on the bright side; it appears they’re getting a $25B bailout. I hope they don’t waste it on a new line of giant, gas-sucking SUVs. But I won’t be surprised if they do. The Tahoe hybrid suggests that’s exactly what’s going to happen.
Oh, and Home Depot will rent you a truck, with a bigger load bed than any normal pickup, for $20/hour. I wouldn’t waste any more time daydreaming about truck sales picking up. Crappy housing market, mediocre employment numbers, declining median wage, rising gas prices… it’s a perfect storm of reasons not to buy a pickup truck.
You might go back and re-read FunkyD’s note from a few hours ago. It was painfully obvious to people on the lower rungs that rising gas prices would screw Detroit over. Did they prepare? No.
Did they take care to keep their customers, as recommended in Business 101? No.
Should I step up to the plate and buy Detroit car to fix their past sins? No.
That’s two. The SL-550 guy and Mrs. Polo. Keep hunting, you’ve only got 999,998 to go. They may exist but as market forces, they’re not significant.
Well, actually, I simply committed two examples to writing here on TTAC so far. In two days at one 10 day auto show in one city, I observed many hundreds of individual interactions with cars, and easily hundreds of examples of import bigotry were among them. It’s not the exclusive market force putting drag on the Detroit 3, but it’s one of the big 3 or 4, and enough to make a difference if it weren’t present.
More of it simply appeals to rednecks. I’m thinking of the Monte Carlo; 300hp, wrong-wheel drive and two-doors.
What’s wrong with giving a certain subculture what it likes?
Oh, and Home Depot will rent you a truck, with a bigger load bed than any normal pickup, for $20/hour. I wouldn’t waste any more time daydreaming about truck sales picking up. Crappy housing market, mediocre employment numbers, declining median wage, rising gas prices… it’s a perfect storm of reasons not to buy a pickup truck.
Yeah, that truck rental thing at HD works some of the time. Like when the truck is there when you need it. There’s more to home improvement than transporting what you buy from HD back to the house.
Daydreaming is bad for business unless it’s the kind that leads to an innovation. Truck sales “picked up” continuously from 1970 through 2005, through multiple recessions, double-digit inflation, double-digit prime rates, 14% mortgages, record real dollars (1981) fuel prices, a couple of stock market crashes, terror attacks…you name it. Take the Detroit 3 full-size pickups alone and it’s clear it’s a sector that is far from finished. What will change is that if cars are offered that deliver what car people went to trucks for, then car people will revert to cars.
You might go back and re-read FunkyD’s note from a few hours ago. It was painfully obvious to people on the lower rungs that rising gas prices would screw Detroit over. Did they prepare? No.
You’re right, Detroit’s management didn’t prepare for a shift in fuel pricing and an emotional shift on environmental perceptions. I’d slap them up one side of their heads and down the other if they were in front of me for that. Especially since it’s a mistake they’ve made at least 3 times now in 35 years. BUT, the trucks are incrementally more efficient and powerful. There are more good medium and small engines in GM’s stable than 7 – 10 years ago. And quality and execution on new automobile models from Ford and GM is markedly up. The dogs among Detroit 3 car models are declining in number and proportion; there are plenty of good American alternatives that meet a wide range of differing owner requirements.
A friend just bought an ‘07 Honda. Since it’s the end of the year, he saved $5K off list to get a really well-equipped car that’s shockingly nice. I’m tall, yet I’m comfortable in the back. And the V6 really moves the thing out when he wants and it turns in over 32mpg on the highway. And, if he tires of it, he can unload it quickly on favorable terms. And Honda has a well-deserved reputation for building reliable cars.
I spent a lot of time in each and every Honda, Toyota and Nissan at the LA show, and then went out and drove some. One thing was shockingly clear just having all those cars juxtaposed for easy comparison — plastic is plastic. No one can wax about the Civic’s interior and then complain about Cobalt and Focus. Just stop pretending there’s an actionable difference. People who claim a Honda interior is somehow nicer due to materials than that of any equivalent domestic model are deluding themselves and anyone they make the claim to. “Cheap” feeling controls? They’re the norm now throughout autodom. Maserati, Bentley and some exotics like Spyker being the exception. Mercedes interiors photograph much better than they are experienced through tactile and visual senses. Same with Lincoln. BMW, Audi, Jaguar? Please, don’t insult me. Going from a Cadillac CTS, STS-V, XLR-V, SRX, Malibu, Denali to other mass market marques, the advantage went to GM. Which was a turnaround from a few years ago. Lincoln on the other hand, while having a brand-specific visual design, has slipped badly in touch terms from the magnificent Mark VIII interior from 10 years ago. The switchgear on a Cadillac now feels more robust than does same on a Mercedes S-class. The interior door panels of a Cadillac now feel plusher and more firmly attached than do same on a Mercedes or BMW sedan. That Honda you refer has all the interior charm and flex of a postwar California GI ranch house. That’s not criticism in the way you might think — it’s a sector problem and an industry problem. Materials are more durable than 10 and 20 years ago. Interface gaps are tighter. But it all feels progressively cheaper, and cheaper and cheaper. Except for GM right now. Nothing lays bare the lack of objectivity people have about cars than witnessing in close proximity the reality of modern car interiors vs. the claims made about them.
And as for the post-show refresher on driving some mainstream machines I’m unlikely to buy: I’ll declare the Camry evidence of communal madness, like the Pet Rock, the Chiapet, Wayne Newton and Celine Dion. It’s a horrible, annoying car, not merely bland but both emotionally cryogenic and dynamically numb compared to superior alternatives. That the vastly better Honda Accord, Chevy Malibu, Ford duo, Buicks and Pontiacs post inferior sales numbers singularly illuminates either the power of marketing or the deep dysfunction of our market — or both. But that Honda is merely good, not great. Different drivers with specific preferences can find dozens of reasons to prefer a Detroit alternative. The appeal of a Nissan sedan is completely lost on me. A Mazda 6 shows its makers really took an interest in it. As does Malibu. Lexus has mastered the illusion of a quality interior. Beauty is now but a femtometer deep….
Phil
“When spouses are putting a drag on American car purchases because they’re worried about their husband’s street cred at the office, it’s going to take more than a few good cars to win back share.”
But since there’s hardly any real people who are too timid to drive what they like, that is the least of GM’s worries.
But since there’s hardly any real people who are too timid to drive what they like, that is the least of GM’s worries
Then one of us would be out of touch with “real people” — and it isn’t me. Worse, when people aren’t even trying cars, they don’t even know the scope of what they might like.
Phil
There’s nothing wrong with “giving a certain subculture what it wants.” However, Mrs. Polo might not like what that brand comes to represent and then she’s not likely to buy it. There’s a difference between simple snobbery and import bigotry. I’d recommend catering to the demographics with money.
And as for “committed two examples to writing,” there’s a problem with your anectdotal evidence… what you perceive as “import bigotry” may, in fact, be something else. A different observer might come to a different conclusion.
There are plenty of very good reasons to avoid GM, Ford or Chrysler. In my friend’s case, he got a really nice car at an excellent price and he has been satisfied with those cars for years.
As for the Camry being bland, numb, etc… the market finds something in that car that’s appealing. If it was that bad, the test drive would turn them off; they’d go elsewhere.
The four times I’ve put my hard-earned dough for a car, an import has earned it every time. The Detroit 3 have not made products with the most up to date safety features, or simply not made products in a market category in which I was looking to purchase. I wouldn’t be surprised if a bunch of other buyers have found themselves in the same situation, finding features or options wanting.
My father-in-law, age 75 asked me what he ought to get in case he needs to replace his decade-old Camry. My response: 2008 Accord, as it has side torso + pelvis airbags – a feature few, if any other vehicles on the US market have. Elderly folks in car accidents die at a higher rate than the non-elderly, and they need all the cushioning they can get.
I know this might be a shocking controversial view but believe it or not not everyone in this world has the same likes and taste in cars. Just because one finds something distaste full or objectionable does not mean others will see thing in the same way as your self. People buy cars according to their own taste and budget. Believe it or not people who buy Camrys actually like them.
Believe it or not people who buy Camrys actually like them.
Say it ain’t so. I’ve read the GM Inside News forums, and according to them, everyone who buys these things has been brainwashed by a league of conspiring Asians who have allied with Consumer Reports to plot the overthrow of the United States.
My plan is to fight them on the beaches, with my trusty Cobalt to take me there. Well, that is if the tow truck operator ever arrives.
There’s nothing wrong with “giving a certain subculture what it wants.” However, Mrs. Polo might not like what that brand comes to represent and then she’s not likely to buy it. There’s a difference between simple snobbery and import bigotry. I’d recommend catering to the demographics with money.
Well, Saturn didn’t build the Monte. There isn’t a difference between simple snobbery and import bigotry if said snobbery also snubs luxury cars that aren’t imports. If all car companies only catered to the demographics with money, people with less money would exclusively have to drive used cars. No volume manufacturer caters only to the money demo.
And as for “committed two examples to writing,” there’s a problem with your anectdotal evidence… what you perceive as “import bigotry” may, in fact, be something else. A different observer might come to a different conclusion.
For the sake of brevity I relayed only a portion of the conversation I heard. The import bigotry was explicit and unmistakable. In all the conversations I heard where this was present as a sentiment, the vast majority of any other observers would have the same conclusion, though some might endorse the sentiment themselves and not see it as a problem.
Believe it or not people who buy Camrys actually like them.
I don’t doubt this at all. But the reasons people say they like the Camry and the actual experience of the car don’t align. This misalignment between claim and experience isn’t apparent with the Accord however, nor with Malibu in the few cases where I’ve met people who have bought them. Nor Passat, G6, etc. If you’re Honda or anyone else trying to make a car that will knock the Camry out of the number 1 sedan position, you’d be forgiven for concluding that the market is urging you to make your car worse in every way.
Still, the basic premise of the editorial does hold. GM has an opportunity to become the fastest adapter to market changes and doing so would no doubt help them. Market drag will retard the rate at which such a change would be recognized and rewarded, however and for that both GM and the market of buyers share blame.
Phil
I want to know what happened to Saturn. Wasn’t that the company to take on Toyota and Honda?
Back when Saturn started they offered two cars, the sedan and the coupe. I believe they only had two engine options as well. How did they turn into the same bloated mess that all other GM brands are?
Hi Phil,
More than half of GMs brands are below average in the JDP VDS.
More than half of their models are below average in CR, and they dominate the bottom 20 or 30 slots, 5 of the bottom 6.
Their highest scoring model is a Toyota (Vibe).
As data accumulates at True Delta a similar scenario is unfolding.
Sure GM is starting to have SOME good designs.
Sure they have SOME reliable cars.
They may even have a car or two that combine good design AND above average reliability in the same package. Maybe not.
There are companies that are far more consistent in both design and reliability (combined!)in nearly every category, that the consumer has excellent reasons, even today, to have more confidence in. Maybe that does result in some “bigotry”.
But the “bigotry”, if it exists in meaningful numbers, is not the problem. It is a result of the PROBLEM. GM is inconsistent.
Why should the average consumer pour effort into examining their product line looking for “pearls in the cowpies” when they can get what they want somewhere else with well justified confidence?
We, as enthusiasts, are anomolies in the market, pouring over data, reading tests, argueing like half-wits (come on, smile) about cars.
Most have and should have, other priorities. It is entirely up to the domestics to change the consumers perception. Half measures presented as “job complete”, won’t cut it. GMs reliability (outside of the mind of fanboys and Mr. Lutz) is a loooooooooong way from the top as a whole. Comparing the last few years of data from VDS and CR it might even be sinking again. Not saying it is, just might be.
Most of their products falls short of competitve in either reliability or design. Or both.
“Import Bigot”, blah, blah, blah…
The PRODUCT is still GMs biggest problem and that is why their retail sales are still slidding.
BTW, Ford’s reliability scores are starting to impress.
Just some thoughts.
Have a lovely weekend.
Bunter
Back when Saturn started they offered two cars, the sedan and the coupe. I believe they only had two engine options as well. How did they turn into the same bloated mess that all other GM brands are?
Loss of bureaucratic independence within GM and prevailing lack of marketing and strategic planning discipline throughout the corporation. Additionally, since Saturn’s creation, the market has further fragmented from the 1980s conditions that instigated its founding, making additional vehicle types advisable to support its proposition. However, those vehicle types have lost the original idea’s differentiation.
Phil
My oh my, I leave a few days and miss a whole new round of “import bigot debate 2007”! Phil, I’m not sure how to say this … at least your stories are entertaining. I mean no disrespect, but first it was timid Mr. Mercedes, then it was kids who were unimpressed by a Veyron, and now it’s Mr. and Mrs. Polo. Is the polo-shirt set related to the milquetoast set? I know this is your pet theory, and all 1k+ posts in the original “debate” (if you could call it that) served to do nothing but show that you wouldn’t budge an inch in your domestic (GM, especially) kool-aid stance. In fact, I’m going to go ahead and dub my own ‘set’ – the ‘kool-aid set’.
I’m not trying to be rude, but I can’t help but read denial into your posts. To your credit, however, you did say this:
“…a combination of epic misjudgment, persistent arrogance and the inevitability of a more competitive market have conspired to erode market share for 40 years.”
only to follow it with this:
“When spouses are putting a drag on American car purchases because they’re worried about their husband’s street cred at the office, it’s going to take more than a few good cars to win back share.”
Sigh.
But, I do wholeheartedly agree with you on two counts.
A) I don’t find the HD/Lowe’s rental trucks a viable solution for needing a vehicle with greater cargo capacity than my small sedan. “There’s more to home improvement than transporting what you buy from HD back to the house.” How true.
B) “Hard”/”low-grade” interior plastics are nearly ubiquitous. Reviewers harp on interior plastics in some models, but nary a mention pops up for others. Case in point, I’m shopping CUVs, and many Outlander reviews point out ‘hard’ plastics – but very few RAV4 reviews make the same complaint, despite its presence – I’ve spent time in both.
I’ve just taken up a lot of comment space without much relevance to the topic at hand, but I’m not sure what to add to the GM deathwatch discussion – other than every time I read one of these entries I’m even more astounded by the ineptitude of the folks running GM.
But the “bigotry”, if it exists in meaningful numbers, is not the problem. It is a result of the PROBLEM. GM is inconsistent.
Bigotry becomes its own problem when an existential threat to the domestic companies removes the luxury of waiting for unmistakable proof of their reform, if you care about their survival for other reasons. For the actionable time horizon, I don’t care about GM’s inconsistencies. Buy what’s good from them and the bad will whither. As I’ve written in other threads, I’ve owned and driven over a dozen Detroit 3 cars over the past 25 years with Lexus-like reliability and consistency. You just have to choose correctly.
I know this is your pet theory,
No, it’s not my “pet theory.” It’s an observation of a *one* real phenomenon imposing drag on the pace of market recognition and reward for what the Detroit 3 are doing right. It’s not the only one. But consumers bear a responsibility in any market where they care about the survival of domestic companies. With thousands writing about the Detroit 3’s mistakes, my voice isn’t needed there. That volume is deafening here, and now overstated.
I’m not trying to be rude, but I can’t help but read denial into your posts.
Denial of what? I haven’t ever denied there have been and remain deficient, uncompetitive American cars. That’s just not the whole story.
served to do nothing but show that you wouldn’t budge an inch in your domestic (GM, especially) kool-aid stance.
Show me what I’ve said that qualifies as “Kool-Aid.” My premise is simple. There’s more to a car purchase than the car; your buying decisions have consequences and are a vote for something beyond product whether you like it or not; good American cars have been continuously available and we have more today than, say, 10 or 15 years ago; the best Detroit 3 cars are competitive, narrowing sufficiently or eliminating meaningful differences with imports. There’s no denial of what’s gone wrong at Ford, GM and Chrysler in that chain.
I’m even more astounded by the ineptitude of the folks running GM.
You cannot in the 21st century recruit the best business executive talent available in the US to live & work in Michigan, nor in a hidebound bureaucratic social and management culture. And Ford flying Mark Fields in from Florida doesn’t qualify as hiring talent where it lives.
Phil
You cannot in the 21st century recruit the best business executive talent available in the US to live & work in Michigan, nor in a hidebound bureaucratic social and management culture.
amen
Phil,
You said
“But consumers bear a responsibility in any market where they care about the survival of domestic companies.”
But you see, the average consumer doesn’t care. they care about the price of their car, the resale value and the looks and performance. Consumers have been inundated with “Buy Ammerican, Buy American no matter how crappy, because otherwise you are a terrorist (or trator, or stupid, or contributing to the downfall of the country)” Then those same companies go to China, Mexico, or anywhere else they can get the cheepest parts and labor.
Sure my latest car was built in Japan, the one before that was built in Mexico from German plans with an engine from Argentina, The one before was built in America in a Japanese factory by American workers. The only thing I care about is which one runs better, an which one I can sell for more when it’s time to trade it in. One of those criteria is very subjective, but the other is extremely market controlled.
GM, Ford and Chrysler have as far as I (and many other consumers) are concerned screwed themselves. They produce crappy cars for years, screw their customers, then announce “hey we’ve changed, our cars are great now!” but experience with the companies makes former customers worry, so they say “Buy American! but don’t look where that American car is made.” Then we are told to ignore the reliability and resale and buy the car damn it.
The upshot of all this is that the American car makers will eventually go out of business. There will no longer be an “American” car maker. That is sad, but the economics and lack of foresight by management have forced this. Is there a chance for a turn around? Perhaps, but it will take a lot of change, and at most one of the 3 will probably make it.
Does that suck for the country? Absolutely. Does that suck for the US economy, probably not any more. Is it sad, absolutely. The car industry was practically invented here and we are pissing it away, but you can’t blame the public for making the choices that are the best for their situation.
Phil, can I get some of whatever it is you’re smoking? ‘Cause it must be some kickin’ weed!
You wrote:
“Still, the basic premise of the editorial does hold. GM has an opportunity to become the fastest adapter to market changes and doing so would no doubt help them.”
That made me laugh out loud. Their top car guy hasn’t seen a problem that couldn’t be solved with a transverse V-8 or an “SS” sticker. He’s such an egomaniac that his business cards say “Fighter Pilot.” He’s from the “Because I Say So” school of management and he’s still at GM in spite of what is probably the biggest blunder in recent automtive history, the decision to ignore hybrids until Toyota could get themselves firmly established in the market.
GM is not going to be the fastest adapter to anything except bankruptcy until they get rid of at least one layer of dinosaurs.
Then you wrote:
“Market drag will retard the rate at which such a change would be recognized and rewarded, however and for that both GM and the market of buyers share blame.”
If you’re not drinking the Koo-Aid, you’re surely carrying it for them. Market drag is a fact of life. And the customer is NEVER to blame for low acceptance of product.
Finally, in 1K+ worth of posts last month, you repeatedly declined to provide numbers to back up your assertions that import bigots were of any statistical significant, nor could you point out where Detroit is actually “competitive” as you frequently asserted. These are not insignificant omissions, they go to the core of your argument.
If you’d like to “discuss” this further, I suggest we meet over in “In Defense of…” and drive it to 2K posts.
You said
“But consumers bear a responsibility in any market where they care about the survival of domestic companies.”
But you see, the average consumer doesn’t care. they care about the price of their car, the resale value and the looks and performance. Consumers have been inundated with “Buy Ammerican, Buy American no matter how crappy, because otherwise you are a terrorist (or trator, or stupid, or contributing to the downfall of the country)” Then those same companies go to China, Mexico, or anywhere else they can get the cheapest parts and labor.
Obviously, not enough consumers care beyond the price & attributes of the car. I made the point amply elsewhere that caring about a larger context is in American consumers’ self-interest, but too many just can’t or don’t see it. This is emphatically *not* a “Buy-American-no-matter-how-crappy” proposition. It’s a “Buy-Competitive-American” proposition and consider the effects of your purchase decisions. Bad product should not be rewarded.
The upshot of all this is that the American car makers will eventually go out of business. There will no longer be an “American” car maker. That is sad, but the economics and lack of foresight by management have forced this.
No, management hasn’t “forced” this. They may have instigated the long crisis, but consumers interested in the configuration of their own economy have the option to keep these companies in the game. You can cede your influence and view yourself as a passive spectator or you can make yourself a contributor.
The car industry was practically invented here and we are pissing it away, but you can’t blame the public for making the choices that are the best for their situation.
I can when choices that would be equally suitable for their situation are available domestically and ignored.
You wrote:
“Still, the basic premise of the editorial does hold. GM has an opportunity to become the fastest adapter to market changes and doing so would no doubt help them.”
That made me laugh out loud. Their top car guy hasn’t seen a problem that couldn’t be solved with a transverse V-8 or an “SS” sticker. He’s such an egomaniac that his business cards say “Fighter Pilot.” He’s from the “Because I Say So” school of management and he’s still at GM in spite of what is probably the biggest blunder in recent automtive history, the decision to ignore hybrids until Toyota could get themselves firmly established in the market.
Your rejoinder is a non-sequitur. I wrote “GM has an opportunity….” It does. It may not grab it.
However, on your points about Bob Lutz: what you say is true insofar as they also don’t exclusively define the man nor his contribution to success and failure at GM. I don’t know him except through the lens of media. The media stupidly feeds the ego of guys like Lutz by building disproportionate hope around them. GM needs a fair dose of “because I say so” management to cut through the ass-covering committee bureaucracy and the product-killing power of the small-minded finance folks permeating influence throughout that company. Sometimes that style of management will be wrong. Still, don’t you have to admit that there has been more positive product change at GM since Lutz arrived than in any comparable period of the last 30 years? Who gets the credit? Maybe it’s not Lutz. Is it Wagner? Is it someone unsung Lutz has empowered? Alot of people?
If you’re not drinking the Koo-Aid, you’re surely carrying it for them. Market drag is a fact of life. And the customer is NEVER to blame for low acceptance of product.
We differ here. I’m not endorsing of America’s prevailing “It’s-not-my-fault” social outlook. Markets are complex systems with economic consequences. You can’t unlink the relationships between major production and consuming sectors, economics, social consequence, politics and the individual’s ability to shape his world. We certainly have the *right* to maintain an illusion that a US without a domestic auto industry just happened and buying a Camry instead of a Malibu or a Tundra instead of a Silverado or a Mercedes instead of a Cadillac had nothing to do with it. We want out companies to be responsive? OK. Now when they are, I want consumers to be responsive too.
Finally, in 1K+ worth of posts last month, you repeatedly declined to provide numbers to back up your assertions that import bigots were of any statistical significant, nor could you point out where Detroit is actually “competitive” as you frequently asserted. These are not insignificant omissions, they go to the core of your argument.
I’ve never seen an independent third party research this explicitly. So in that thread you saw a lot of back-and-forth of statistics that triangulate to conclusions that support each side. But I don’t need a third-party study. The evidence is all around me every day, no matter what city I travel to or what economic strata I listen and observe in. Moreover, bigotry is the aim of brand marketing, so bigotry is an ingrained buyer behavior even when it isn’t pernicious in the form of American’s being unresponsive to improved products from their own companies.
I could point out which Detroit 3 products I think are competitive, and it wouldn’t be too hard to infer what that list might look like in my aggregate posts there. I didn’t, because what I think is competitive is unimportant. I pointed out that a neighbor came to the conclusion that a Cobalt is a better car than a Civic. Everyone has their own idea. The only thing that matters to me is that people give Detroit 3 cars equal, objective consideration and evaluation while deciding how they’ll spend. I’m not interested in arguing that a Malibu is better than a Fusion or Taurus if a shopper thinks the opposite because I’m neutral about who gets that business.
We have a near-term existential threat to the Detroit 3. Some people here on TTAC would be happy to see them die. Others wish for their success. Most seem to think they’re stupid and doomed. Americans as a whole can ensure these companies get back on their feet *if they want to*. There are two phases to fixing this industry as an American concern. If we get through the immediate threat, which is at least as much up to consumers as it is management, then revamping the American auto industry requires that its management move out of Michigan to a location with a more global outlook and more favorable environment for recruiting talent. And that’s just a start. Citing Apple’s daring and successful thrust into music, I love Andy Grove’s appeal to Jeffrey Immelt for GE to build an electric car.
Phil
It’s deja vu all over again! Phil contributes a thoughtful and well-reasoned post, and it triggers a visceral response from those who feel they–or their views–were maligned.
BTW, I live with an import bigot, and it’s my own fault. When my wife and I got married, she thought a Chevy was the only car to have. And I have to admit, that first Impala was a nice ride. (Though it had a host of quality-control failures.) Later we got to buying Japanese sedans, and she became convinced those cars are better built and have superior engineering. It’d be tough now to convince her a LaCrosse or a Fusion is as reliable or nice to drive.
Phil contributes a thoughtful and well-reasoned post…
Forgive me, but I’m not seeing how these fantastical anecdotes and a dearth of factual evidence to support one’s claims can be construed as being either “thoughtful” or “well reasoned.” Repeating the same unsubstantiated argument with vigor and frequency does not prove it.
Nor is an anecdote, real or imagined, a substitute for data. An anecdote that can be used to illustrate a point otherwise proven or supported by data can be useful; an anecdote used to defend an unsupported argument utterly lacking in factual basis is not.
I’m fearing that Mr. Ressler is becoming a one-trick “bigotry” pony, riding a horse that no one else who doesn’t loiter at the GM Inside News forum is able to see. There is an abundance of data posted on this site and elsewhere that shows why the Detroit automakers are losing share. Those have everything to do with consumer product preferences and requirements not being met, and nothing to do with the Klan. Kixstart said it best: “And the customer is NEVER to blame for low acceptance of product.”
“There are two phases to fixing this industry as an American concern. If we get through the immediate threat, which is at least as much up to consumers as it is management, then revamping the American auto industry requires that its management move out of Michigan to a location with a more global outlook and more favorable environment for recruiting talent. And that’s just a start. Citing Apple’s daring and successful thrust into music, I love Andy Grove’s appeal to Jeffrey Immelt for GE to build an electric car.”
I’m not sure about either of those points.
I live in MI, so I’m familiar with the crappy weather. But people have always made a decent life here – at least those with money. Bloomfield Hills really isn’t such a bad place to live. If the state itself were the problem, MI wouldn’t have any businesses at all – everything would be located in Hawaii.
Rather than GE building a car, they should just concentrate on an electric motor specifically desinged for an electric car. A team approach between GM and GE would make sense.
GM should never have dumped Oldsmobile. Oldsmobile had a lot of nice, large sedans. Saturn serves no purpose and should be dumped, as they did to Geo.
The new Chevy Malibu tv ads are silly. All they say is “a car you can’t ignore” without showing anything about it or why we should buy. Because chevy might have built a car that doesn’t suck, we’re supposed to be excited by it?
I can and am ignoring it GM. I’m buying a Mercury Grand Marquis. A REAL car!
You know, I found it humorous when one of the posters here was trying to deny that there was any import bigotry and then made the statement that GM builds some cars for “rednecks”. That is a bigoted term because it is a perjorative term like “nigger” or “kike”. but while the latter two are acknowledged as being bigoted the former is considered to be “ok”.
We are all bigoted to some degree. So I believe Phil, because he has observed it first hand. The real argument isn’t that it exists, but how widespread it is and how much damage does it do. Some will say a lot and some will say it’s negligible. That’s all well and good. But don’t deny it doesn’t exist when you can’t even refer to fellow citizens who live in rural areas without a discriminating label.
Forgive me, but I’m not seeing how these fantastical anecdotes and a dearth of factual evidence to support one’s claims can be construed as being either “thoughtful” or “well reasoned.” Repeating the same unsubstantiated argument with vigor and frequency does not prove it.
The anecdotes you refuse to believe are real are factual evidence and are cited as anecdotes because they are useful for making real in writing what is in fact a significant problem. I don’t think anyone objective who has been through a previously-mentioned prior thread will agree my view is unsubstantiated. So we’re going to disagree on that and it’s fine with me.
I’m fearing that Mr. Ressler is becoming a one-trick “bigotry” pony, riding a horse that no one else who doesn’t loiter at the GM Inside News forum is able to see. There is an abundance of data posted on this site and elsewhere that shows why the Detroit automakers are losing share. Those have everything to do with consumer product preferences and requirements not being met, and nothing to do with the Klan. Kixstart said it best: “And the customer is NEVER to blame for low acceptance of product.”
I am sure also that anyone who has followed the full scope of my posts here will agree that I have more than a single opinion to voice. The data that “shows why the Detroit automarkers are losing share” is mostly valid but also an incomplete explanation of why the market is slow to reward change. In any case, I don’t spend my time contributing further to the argument that they dug their own hole because there is nothing further to be said. Again, true but incomplete. While the Detroit 3 were digging their own grave, I was still able to buy and drive their products with nothing more than routine maintenance as an expense most of the time spanning 1982 through today. And I am far from the only one. The Detroit 3 put something near 250,000,000 vehicles into our market during that time. Lots of people did just fine owning and driving the better products among them. When I take the time to write here, I’m alert to what’s missing. Hence…..:
Those have everything to do with consumer product preferences and requirements not being met, and nothing to do with the Klan.
Product is only part of the story but you’re right, the Ku Klux Klan is completely out of the picture.
“And the customer is NEVER to blame for low acceptance of product.”
Said customer is responsible when there is something larger at stake and success is impeded by irrational behavior. Again, we’ll probably permanently disagree on this, and that’s fine with me.
I live in MI, so I’m familiar with the crappy weather. But people have always made a decent life here – at least those with money. Bloomfield Hills really isn’t such a bad place to live. If the state itself were the problem, MI wouldn’t have any businesses at all – everything would be located in Hawaii.
Weather is only a minority factor but it’s significant. When the auto industry started in the US, the Michigan location was set by the proximity to raw materials, installed transportation (including the great lakes) and proximity to the bulk of the market population. Culturally, the country was northeast and upper-midwest oriented and conservative. Business talent tended to stay close to where it grew up and was trained.
Today, we have a national transportation and distribution system, and the west coast is woven into the Pacific economic sphere. The country is no longer dominated by trends and life in the northeast and upper midwest. California is a major world economic and talent engine all by itself. I grew up in a four-seasons state and know Michigan’s weather. Detroit is off the grid. You can have a nice life in Bloomfield Hills or Grosse Point, and many other areas of Michigan, but the best executive talent has many more options now. Michigan isn’t a competitive magnet. In fact, the Michigan location of the auto business deters some people from even considering the industry, even if it interests them. They think about how career progress leads to Detroit and some say “no.” I’ll do something else.
Hawaii only has weather as an advantage, nothing else, and hence its economy is always a little worse than the mainland’s. But HQing the Detroit 3 in California, New York metro, Boston — hell, even Chicago — or decentralizing operations so CEO and the business side are in an area with a more global outlook, roads that require steering and, and the cultural attributes top executive talent seeks, and you’ll see the conduct of these companies improve. Of course, the boards have to be fixed too. They’re as much of a problem as the onsite management.
Rather than GE building a car, they should just concentrate on an electric motor specifically desinged for an electric car. A team approach between GM and GE would make sense.
That’s the traditional way to think about it, but it misses Andy Grove’s point. Apple took a computing, design and software-driven / UI-intensive approach to its rethink of personal music players. Sony, Matsushita, Toshiba, et al missed the integrated play completely. And as gadget makers they couldn’t imagine the contribution of software and i-Tunes. A rethink of how to innovate the automobile for dramatic change and keep the wealth accumulation in the US is more likely to come from a hugely-resourced company like General Electric that has many of the requisite skills and assets pertinent to the problem.
That said, alone among our companies, General Motors rethought the car in a GE manner with the Hy-Wire concept that puts all the electric running gear in a skateboard platform, on which a variety of bodies can be mounted with control and service connections through a standard interface. The Volt is cool and I hope they make 2010, but HyWire would be a much bigger reset that would put GM’s foes back on their heels. They just have to segregate it from its fuel cell dream.
The new Chevy Malibu tv ads are silly. All they say is “a car you can’t ignore” without showing anything about it or why we should buy. Because chevy might have built a car that doesn’t suck, we’re supposed to be excited by it?
Yup, Malibu’s messaging is more evidence that the real crisis in Detroit isn’t product. It’s marketing. They pretty much suck at it, and that’s a looooooooong fall from 1965.
Phil
You’re all in for a treat – I was able to observe the kool-aid set first-hand at the local auto show today.
At the Nissan stand, a typical 40-something-trying-to-be-20-something (donning a rugby shirt with the collar popped and distressed jeans no self-respecting middle-aged man should don) was looking over a Nissan Altima. His disinterested wife, sporting what appeared to be a seriously botoxed visage, kept looking at her watch and gave longing glances to the GM displays. I observed their conversation regarding the new Altima they perused.
Mr. Kool-Aid: “You know, honey, I think I could actually see myself driving a sedan like this…”
Mrs. Kool-Aid: “Like this” she said in an incredulous tone.
Mr. Kool-Aid: “Well, I know…it isn’t what I’d typically be interested in”
Mrs. Kool-Aid: “I should think not! You do realize this is a…a…” lowing her voice to a near whisper, “…Japanese car, honey.”
Mr. Kool-Aid: “Well, it isn’t entirely Japanese, you know, this one was built in Smyrna, Tennessee…”
Mrs. Kool-Aid: “That’s not the point. Surely you realize there’s still less economic leverage in a transplanted import than a truly American car.”
Mr. Kool-Aid: “Honey – I don’t mean to insult your intelligence, but where did you read that? Just 2 hours ago I could barely drag you to this car show and now suddenly you’re almost too interested.”
Mrs. Kool-Aid: “Never mind that…perhaps I like my automotive blogs a little too much. Either way, how are you going to face your coworkers when they see you driving this?”
Mr. Kool-Aid: “True, true. I might have to change jobs. We might have to move, in fact. I’m not even sure I could look my father in the face anymore.”
Mrs. Kool-Aid: “Think about the kids, honey. They’d have to change schools and probably couldn’t make any new friends when the kids see you pull up and drop them off in some Nissan. Let’s go look at the GM lineups…the new Aura received all sorts of awards only to become yet another lot-queen, and it’s cousin [the G6] has had much the same disappointing fate. I just do wish you’d come to your senses…”
“…and then there’s the new Malibu. Sure, it lacks a lot of features on this Altima, including Xenon headlamps, satellite radio, navigation, dual zone climate control, rear seat arm-rest, has less horsepower, has a smaller interior, and gets worse gas mileage – but HONEY, I’m imploring you, get a hold of your self and check it out – it’s the car you can’t ignore.”
“…you said yourself that despite all the issues you had with your first-gen Malibu that you didn’t believe all the reliability reports…and it really is our duty to ensure the turnaround that is Chevy’s American Revolution occurs…”
Mr. Kool-Aid then slumps out of the Altima and begrudgingly heads to the Chevy display – trying to muster some enthusiasm about a car that he’s truly less interested in now that he’s seen the stiff competition.
Funny enough, they didn’t find it a bit strange that I was in the backseat of the Altima during the entire 5 minute conversation – with a pen and pad, no less – recording every word verbatim. But such an encounter with the Kool-Aid set could not go unrecorded.
lol.
ShermanLin + PCH101 “Believe it or not people who buy Camrys actually like them”
They also drink some of Macca’s Kool-Aid—only this time the Kool-Aid is served by Toyota.
Camry stood for one thing and one thing only—-reliability. They no longer own the reliability space on a “real” basis and importantly dents are being made on a “perceptual” basis. Think the latest and greatest Tundra recall doesn’t hurt the Camry ? Think again.
Simply—the market will speak—and the inferior, boring, ugly, plastic ridden, grandpa like travesty on wheels called the Camry will suffer.
There are too many other “reliable” alternatives out there….both foreign and domestic !
Not saying there should be a Camry Deathwatch or anything—but I do predict they see a RETAIL sales slide in 2008 and a big increase in fleet.
umterp85: while I agree the Camry is setting itself up for the automotive equivalent of a mudslide, the decrease in retail sales isn’t gonna happen in 2008. It took the Taurus 5-ish years to go from #1 to the fleet queen fallacy…and the Camry is no different.
And if Toyota is smart enough to notice the drop in residuals, angry faces at Consumer Reports, GM-grade plastics, etc plaguing the current model, it won’t be long before they scale back (just a little) and pull a Honda Accord out of their hat.
But if Toyota is as greedy as Detroit, its still gonna take a few years before the you-know-what hits the fan.
Sajeev: You may be correct—but I would argue times are different now than when the Taurus slide began….thus my 2008 prediction on the Camry.
First—there are many more able competitors now than there were in the early 90’s when the Taurus began to slide. The result is a much more fickle consumer. More choices combined with much more informarmation via the internet will accelerate the slide.
Camry stood for one thing and one thing only—-reliability.
That’s a highly simplistic view of the marketplace. Buyers have multiple reasons for purchasing products, and there’s no reason to believe that reliability is the sole determinant of Camry sales, when market research data indicates otherwise. Although reliability is high on the list, consumers who buy them seem to like them for many reasons, and to believe otherwise is just wishful thinking.
Reliability is extremely important for Toyota, no doubt. If reliability missteps continue, then yes, Toyota will have something to worry about as the market considers other alternatives more closely. But so far, the missteps have been relatively few, and there is plenty of room for redemption. The consumer is smart enough to know that the reliability of Toyota vehicles still soars above that of GM products.
The marketplace can also discern that issues affecting the six-cylinder Camry’s don’t impact the reliability of the four-cylinder versions. November 2007 Camry sales are up 3.6% from last November, hinting that there has been no sharp pullback resulting from the Consumer Reports headlines.
In any case, if the Camry tumbles, it will simply help the Accord and the Altima. It might help the Malibu eventually, but I would guess that many domestic avoiders will sit on the sidelines waiting to see whether the improvements are more than skin deep. That will take years, and the domestics will have to be patient and ditch this instant gratification ethic that demands immediate sales gains after decades of abusing the customer.
With many solid years behind the Camry, a few missteps have not cost Toyota TRUST. How are the failures handled? I don’t know anyone with a Toyota problem but, from reading posts, it looks like dealers work to satisfy the customer. No delay and deny. That counts for a lot.
As for Phil’s well-reasoned posts, Phil’s built a house on a foundation of sand. If it’s anectdote vs anectdote, I’m watching people bail on Detroit every day and it’s for fully rational reasons. Their cars didn’t hold up as well as their neighbor’s Toyotas and Hondas, they got disgusted and left.
As for the consumer’s putative obligation to look at the big picture, Phil’s argument is based on several highly speculative premises.
First, that the Detroiters are equivalent in terms of performance, comfort, etc. That’s certainly open to discussion but Toyota and Honda win the MPG sweepstakes part of that handily. That makes the rest of it an uphill climb.
And I believe there are still gaps in Detroit’s battle line. Is the 4-cylinder Malibu something that can go up against the 4-cylinder Toyota or Honda, in terms of performance and fuel economy? I doubt it. It might have the same hp rating but my experience is that Toyota and Honda deliver remarkable performance with their 4-bangers and this is rarely the experience with Detroit’s engines. Bear in mind that the thing that got me into a Toyota in the first place, years ago, was the remarkable performance of the Sienna’s smallest-in-class engine. Everything else I’d driven was a dog in comparison.
Second, that Detroit’s cars are reliable, durable and deliver the lasting value that people want. For a start, Detroit has no history of this. Certain models have done well at the three-year mark but, overall, Detroiters are trouble down the road. Consumers are looking for these historical trends and claims in advance of this are nothing but fantasy.
The one car that looks remarkably well done at this point is the Fusion but history is only now approaching two years. Will the transmissions self-destruct, as numerous Ford transmissions did over the last two decades, at the five-year mark? Phil’s expects me to bet on this with MY money. R-i-i-g-h-t.
Bear in mind that Phil can’t name the “competitive” Detroit cars and the list that one of his fellow Kool-Aiders provided included two cars that didn’t yet exist! One now does (Malibu) but ships in such small numbers as to be a non-event.
Third, Detroit is still saddled with their dealer network. I’ve been to both Detroit and Japanese dealers in the recent past and there’s a world of difference between. Several friends have remarked on this – unsolicited.
The last time I was looking for a used car and it was clear my Toyota dealer didn’t have anything in my value range, rather than push me out the door, the salesman wrote down a few notes on places he thought I should shop, with phone numbers and suggestions for cars that might suit (I found a private sale Toyota I liked). How many sales are blown by Detroit’s front-line?
Fourth, what’s the payoff to me for supporting Detroit? Phil says it’s in my own best interest to sacrifice, in my estimate, $5K to support Detroit as a strategic investment (what I figure in extra costs to me if I go with an unreliable, low-resale Detroit product).
What does my $5K return to me? Better golden parachutes for Wagoner and Lutz? More SUV investment? Sure, they might go under, but what will that cost me? Is it as much as $5K? If just one Detroit mfr fails, is that a $5K hit to me, personally? I don’t think so. And, if they survive anyway, then there’s no hit, I’d be risking $5K for nothing (true enough, I can’t tell the future).
From where I stand, the collapse of Chrysler, Ford or GM has nowhere near the impact of bad financial decisions already made by the Bush Administration.
I’ll keep my $5K, thanks, I think I’m going to need it.
Another issue we might reasonably raise here is, if I go to GM, what am I going to get from GM?
A casual observer would look at my local Chevy dealer and conclude that he is a TRUCK dealer. There are no cars visible from the street.
Sure, GM offers cars but the bulk of their product line is trucks. For some, that alone is a real turn-off.
Brands are about providing not just vehicles that appeal to the target but also a purchase experience and an image that appeals. For a long time, GM built up the truck aspect of the GM brand, partly to get car-intenders to switch to larger and more profitable trucks and SUVs. That has a downside which they are now “enjoying.”
GM’s first real implementation of hybrids is going into their Tahoe. Does this have any appeal to me? Hardly. In fact, I think it’s a major marketing mistake on their part. What SUV buyer comes into the dealership and asks about fuel economy? Everybody knows that SUV fuel economy sucks. Everybody expects it. The market for SUVs is made up of consumers who don’t care about fuel economy.
To go back to my previous post, I could ante up $5K to help Detroit survive but they can still make stupid decisions and then I might just as well have burned $5K (which would at least impress my friends). Or I could go on two cruises… Or just put it in the bank.
PCH101: “If reliability missteps continue, then yes, Toyota will have something to worry about as the market considers other alternatives more closely. But so far, the missteps have been relatively few”
Relatively few ? Come on. Every single one of Toyota’s recent launches have been plagued with multiple recalls and TSB’s. The Tundra launch has been a PR disaster quality wise—-the Avalon and Camry have not been much better. I’ve forwarded the US DOT link to you in past posts to prove my point—-obviously you did not read it, did not want to see it, or are drinking too much Toyota kool-aid
Defend the Camry all you like. I may be a simplistic guy—-but my view is that a brand has to stand for one or two things—no more—in order to differentiate. If reliability isn’t what the Camry brand stands for—-what is it (and don’t tell me performance)? I’ll be very interested in your response.
Last. I do not have any friend under the age of 45 who would consider a Camry over an Accord. I have 5 such cases where that determination has been made over the past 2 years.
As competition increases from Honda—not to mention Hyundai, Nissan, Chevy, and Ford–the trend will continue where the young shun the Camry—remember the avg age of the Camry buyer is 55+.
Net, The Camry will increasingly become the Buick of mid-size choice—only driven by the Grandpa set….where is the future in that ? This trend will start in 2008—-mark my words.
As for Phil’s well-reasoned posts, Phil’s built a house on a foundation of sand. If it’s anectdote vs anectdote, I’m watching people bail on Detroit every day and it’s for fully rational reasons. Their cars didn’t hold up as well as their neighbor’s Toyotas and Hondas, they got disgusted and left.
As long as you only consider the cars — and in your case it seems you only consider Detroit’s bad cars against the importers’ good ones — then you miss the bigger picture of conscious consumer leverage over their total social and economic environment. I bought American cars most of the time since 1982, drove them into six figures of mileage, and they held up better than imports. Your blanket statement is both wrong and a non-sequitur to the argument. A more qualified claim might be defensible.
First, that the Detroiters are equivalent in terms of performance, comfort, etc. That’s certainly open to discussion but Toyota and Honda win the MPG sweepstakes part of that handily. That makes the rest of it an uphill climb.
In the model for model equivalents, I don’t see this claimed mpg advantage in real world driving. In some categories such as larger vehicles, the Americans do better.
Second, that Detroit’s cars are reliable, durable and deliver the lasting value that people want. For a start, Detroit has no history of this.
Your last sentence is completely contrary to my experience and others who shopped, evaluated, chose, bought and drove competitive American cars.
Bear in mind that Phil can’t name the “competitive” Detroit cars and the list that one of his fellow Kool-Aiders provided included two cars that didn’t yet exist! One now does (Malibu) but ships in such small numbers as to be a non-event.
I *can* name them, I have named some. I see no point in making a comprehensive list. Everyone has their own criteria and can come to their own conclusions. You want my list, come to California and meet me over dinner and drinks.
What does my $5K return to me? Better golden parachutes for Wagoner and Lutz? More SUV investment? Sure, they might go under, but what will that cost me? Is it as much as $5K? If just one Detroit mfr fails, is that a $5K hit to me, personally? I don’t think so. And, if they survive anyway, then there’s no hit, I’d be risking $5K for nothing (true enough, I can’t tell the future).
In the grand scheme of things, whether Wagner and Lutz get golden parachutes is small potatoes. Your reaction to that is understandably emotional. But if it undermines your ability to act, that emotion is obstructing your self interest. Get over it.
A casual observer would look at my local Chevy dealer and conclude that he is a TRUCK dealer. There are no cars visible from the street.
GM doesn’t have direct control over its dealers. However, it does need to create more influence over their behavior.
Sure, GM offers cars but the bulk of their product line is trucks. For some, that alone is a real turn-off.
It’s an overstatement to say that the “bulk of their product line is trucks.” GM has a huge array of cars and a wide array of trucks. It is a full-spectrum manufacturer. Why is a car buyer repelled by a company offering trucks too? Toyota sells trucks and wants to sell more. Nissan too. Audi, BMW, Mercedes and Land Rover sell trucks disguised as SUVs. Who isn’t compromised by truck offerings in North America? Oh…Lotus.
GM’s first real implementation of hybrids is going into their Tahoe. Does this have any appeal to me? Hardly. In fact, I think it’s a major marketing mistake on their part. What SUV buyer comes into the dealership and asks about fuel economy? Everybody knows that SUV fuel economy sucks. Everybody expects it. The market for SUVs is made up of consumers who don’t care about fuel economy.
The SUV market is increasingly including people who may not care about fuel economy, but nevertheless have other reasons to care about how much fuel they use. The 2Mode hybrid is perfect to improve fuel efficiency in larger vehicles and that’s the right platform to gain real-world experience. It will move into cars.
Phil
Phil, actually, if you go at it by weight, the “bulk” of their product line IS trucks. Or honkin’ SUVs, which are about the same thing. If you go at it by “perspective from the street,” the “bulk” of their product line, again, is trucks and that “bulk” shields the cars from view.
And you wrote, “I bought American cars most of the time since 1982,” and if your experience was typical, we wouldn’t be having this conversation. Reliabiity – and fuel economy – was a wedge that Toyota and Honda successfully exploited to establish a market presence and, ultimately, so sell large quantities of cars at very good prices. Toyota and Honda don’t have slash-and-burn prices to move their vehicles. If Detroit had delivered satisfaction and long-term value to all comers, Toyota and Honda would still be niche importers. They fought uphill against stronger biases than those that you allege favor them today. No one could do that with products that were worse than those Detroit produced.
And you wrote, “As long as you only consider the cars — and in your case it seems you only consider Detroit’s bad cars against the importers’ good ones…”
“Importers” or “Toyota and Honda?” You should take a step back, again, from your narrow view of “import bias.” The market appears to me to be acting quite rationally. Toyota and Honda have done the best job, for the last decade or so, in providing reliability. The market rewards them with good prices, good resale value and a good reputation. The Germans don’t enjoy this, nor do the other Japanese manufacturers (except, maybe, Subaru and Nissan is, finally, getting there). The Koreans don’t have that, yet, people still go Korean on pricing. There’s no “import” bias, there’s loyalty to vendors that have done a superior job.
In response to the challenge of naming the “competitive” Detroiters, you again sidestepped the issue with “I *can* name them, I have named some. I see no point in making a comprehensive list. Everyone has their own criteria and can come to their own conclusions.”
Exactly, and the market has looked into the situation and drawn their own conclusions, which is why Impalas go begging and why there’s probably still an ’06 Malibu or two on the local Chevy lot.
And you added “You want my list, come to California and meet me over dinner and drinks.”
It is to laugh.
And, Umterp85, you miss the point. Toyota and Honda aren’t afraid to publish TSBs, bring the cars in and make them right. There was a recent bit of noise over floor mats, for God’s sake. There’s nothing wrong with the floor mats that were recalled, this was driver error, pure and simple. Wake up, people, don’t let the floor mats bunch up under the pedals!
Go read the last few years’ worth of posts on Edmunds concerning GM and Ford products (I omit Chrysler because I’ve had no reason to read anything at all about their cars). You can’t get very far down any list for just about any car without reading about brake rotors that need replacing by 25K miles. The dealer often gives the customer grief because it’s a “wear and tear” issue and, even if they fix it, those rotors will need replacing again in 25K miles or less. This has gone on for years. Does Detroit put a better grade of rotor in there after the first year or two of bad reports? Hell, no!
The various gasket and manifold issues lasted for a decade or more. And they replaced bad gaskets with brand-new bad gaskets.
Detroit uses plastic parts where plastic will be OK through the warranty period but metal would be a better choice for 250K miles.
Who do you want building your car?
KixStart: “Toyota and Honda don’t have slash-and-burn prices to move their vehicles.”
Historically—-you may be correct—but today and moving forward you will be less correct. Toyota incentives are much closer to the domestics and Hyundai than 3 years ago. BTW—don’t let facts get in the way of good anti-domestic hyperbole.
Lets start with the Tundra—$3K cash sitting on the hood.
http://www.edmunds.com/new/2007/toyota/tundra/100840268/incentives.html?vdp=off&setzip=15232&state=PA
2008 Corolla—-$1K on the hood
http://www.edmunds.com/new/2008/toyota/corolla/100884950/incentives.html?vdp=off&setzip=15232&state=PA
2008 Cobalt—-$1K on the hood
http://www.edmunds.com/new/2008/chevrolet/cobalt/100919274/incentives.html?vdp=off&setzip=15232&state=PA
2008 Silverado—$2.5K on the hood for non-diesel
http://www.edmunds.com/new/2007/chevrolet/silverado2500hd/100822230/incentives.html?vdp=off&setzip=15232&state=PA
Finally Kixstart says “Toyota aren’t afraid to publish TSBs, bring the cars in and make them right. There was a recent bit of noise over floor mats, for God’s sake.”
Well—Toyota did have a TSB for floor mats—-but bad floor mats are not the reason Consumer Reports dropped Toyota as an “automatic” recommend. Shoddy build quality and engineering on things like transmissions (Avalon and Camry) and driveshafts (Tundra) are the reason Toyota no longer gets a free pass.
To wit—-check out this 37 page string on Edmunds regarding Avalon transmission issues…btw this string is for 2005+ model years. There is also a lengthy string for years before 2005. Why has Toyota not addressed the transmission hesitation issue over the last 5-10 years ? If there dealers are so wonderful—why do they rank in the lower half of JD POWER satisfaction rankings ? Again—I’ll take facts over hyperbole.
http://townhall-talk.edmunds.com/direct/view/.f0e97fb/0
Kixstart…my point is not a tit-for-tat of “who’s better” but rather a facts and data discussion regarding the state of Toyota TODAY…not when Clinton (Bill) was president. Toyota’s status as a quality leader has changed and so must your kool-aid driven cheerleading of this company. Toyota’s s–t does stink—-if you care not to admit this—-continue sipping the kool-aid.
“Weather is only a minority factor but it’s significant. When the auto industry started in the US, the Michigan location was set by the proximity to raw materials, installed transportation (including the great lakes) and proximity to the bulk of the market population. Culturally, the country was northeast and upper-midwest oriented and conservative. Business talent tended to stay close to where it grew up and was trained.”
I think the main advantage Detroit had was it’s work force. It was already a center for metal working before the auto was invented, and metal working was the primary skill needed – and different kinds; casting, machining, stamping, forging. It wasn’t particularly well located vis-a-vis markets, as NYC was the single biggest market in the early days.
“Today, we have a national transportation and distribution system, and the west coast is woven into the Pacific economic sphere. The country is no longer dominated by trends and life in the northeast and upper midwest. California is a major world economic and talent engine all by itself. I grew up in a four-seasons state and know Michigan’s weather. Detroit is off the grid. You can have a nice life in Bloomfield Hills or Grosse Point, and many other areas of Michigan, but the best executive talent has many more options now. Michigan isn’t a competitive magnet. In fact, the Michigan location of the auto business deters some people from even considering the industry, even if it interests them. They think about how career progress leads to Detroit and some say “no.” I’ll do something else.”
Yeah, I used to live in HI, and I remember hearing all the time about the pac-rim economy. But CA is much more intertwined with OH than with any Asian country. Proximity to the east is important though, and that’s why many Asian companies set up shop in CA. CA (and HI) were also the first American market for many Asian companies.
“Hawaii only has weather as an advantage, nothing else, and hence its economy is always a little worse than the mainland’s. But HQing the Detroit 3 in California, New York metro, Boston — hell, even Chicago — or decentralizing operations so CEO and the business side are in an area with a more global outlook, roads that require steering and, and the cultural attributes top executive talent seeks, and you’ll see the conduct of these companies improve. Of course, the boards have to be fixed too. They’re as much of a problem as the onsite management.”
I notice there are still top execs working at industries in the midwest, northeast, central plains, and the hot and humid south. I also notice Nissan relocated to TN, and Hyndai built a tech center in MI. I just don’t buy the weather theory.
But it doesn’t really matter because the idea that Detroit needs top management is questionable. They are already getting people from top business schools. What they need is people who can stay focused and build the companies back up.
“That’s the traditional way to think about it, but it misses Andy Grove’s point. Apple took a computing, design and software-driven / UI-intensive approach to its rethink of personal music players. Sony, Matsushita, Toshiba, et al missed the integrated play completely. And as gadget makers they couldn’t imagine the contribution of software and i-Tunes. A rethink of how to innovate the automobile for dramatic change and keep the wealth accumulation in the US is more likely to come from a hugely-resourced company like General Electric that has many of the requisite skills and assets pertinent to the problem.”
I didn’t miss the point so much as I gave it a pass – because it’s not very valid, as a comparisson to the GE making a car idea.
Apple was already into both computer hardware and software – e.g. already trying to run two businesses at once. I give them credit for being clever, but they already had everything they needed once they got the idea to do music players.
GE by contrast has little or nothing in the way of auto making experience. They have a lot of electric motor experience. Instead of trying to figure out how to build transmissions, and transaxles, and seats, and steering columns…………….. they’d be better off concentrating on building an electric motor specifically for cars.
Umterp85, well, I’ll look at the other links later, maybe, but the way I read it, it’s $2K on the Cobalt… $1K in Cobalt incentives and $1K in Red Tag Sales Event givebacks. And Edmunds pricing reports that, when all is said and done, the Corolla commands $2700 more than the Cobalt.
And, last I knew, you could still get “conquest” cash on top of other things at GM. It used to be another $1K.
… No harm in looking NOW, I suppose… I’ll take another minute… Well, whaddya know? Not many of those posts on the “Avalon transmission issues…” actually have anything to do with actual Avalon transmission problems but things like whether or not to put the transmission in neutral when slowing, fuel economy of an auto vs a manual and a lot of other blather but not real problem reports. In the few pages of posts I read, there were very few actual problem reports (and of these few at least one was addressed and reported “fixed” by a happy Toyota customer).
And, after rebates and all, the Tundra still goes for thousands more than the Silverado.
And I know what I can see… there’s dozens and dozens of Chevy trucks at the nearbly dealer lot. I have no doubt that I could drive quite the bargain on a Chevy truck. What do you suppose they’d do to get rid of the older stock? Yeah, there’s old-model-year grilles smiling out at me. And never mind slow-moving Chevy trucks, there’s a couple examples of the “red hot” Saturn Sky loitering on another nearby dealer lot for the last two months.
Unfortunately for the Detroit Fanboys, Toyota has, somehow, in spite of all their miserable treatment of the customers and wretched failulre-prone product (I’m being sarcastic), built up a reputation for service and value that will take some years to erode.
Instead of jeering Toyota towards failure (an endeavor unlikey to offer any ultimate sucess whatever), I recommend you start pushing Detroit towards manufacturing better cars (ditto).
Look, if it makes you feel any better, the next time I go to buy a car, I am NOT just going to go down to Toyota and write a big check; I will go look at the Hondas, first. My friends’ Hondas are really nice cars and they are really happy with them.
Those who are awaiting the demise of Toyota or a great shift away from Camry sales in my opinion will be waiting for something that may never happen.
Virtually every consumer no matter what car they purchase be it a Toyota, a Chevy or a Ford, does so because they feel it best meets their needs and because they actually like the vehicle. For people on this forum to assume that other people are deliberately buying an inferior vehicle because the vehicle does not meet the standards of anyone on this forum is ridiculous.
Here is the basic problem facing GM and Ford. It doesn’t matter how good the Fusion or the Malibu is and no its not because of import bigotry. Toyota also faces the same problem with the Tundra. It doesn’t matter how good it is or isn’t.
If someone is satisfied with their purchase because the car or truck was a good vehicle then the average consumer will generally either buy another one or at the very least will give the same brand another look.
The basic problem is that GM and Ford let the small and midsize car market get away by producing sub par vehicles in those segments for too long. Unless Toyota totally screws up, those buyers are never going back. Oh and recalls won’t do it. Its when a customer feels cheated because the car didn’t last as long as the consumer felt it should that counts not recalls.
The flip side is that GM and Ford have pretty consistently built good trucks so Toyota will also probably never dominate that segment.
I am not jeering Toyota towards failure—I’ll leave jeering toward failure to you and others as it relates to your anti-domestic bias.
To the contrary—I give Toyota (and Honda) full credit for raising the competitive bar—-without them—I am afraid the greedy unions and management of Ford and GM would have continued pumping out the same mediocre crap. I am not afraid to give credit where it is due—nor ignore the obvious facts associated with Detroit’s past failures.
However—Some—including you Kixstart—cannot own up to the reality of TODAYS TOYOTA. To ignore, make excuses, and use hyperbole to discount Toyota’s current failures make you no better than those that do not acknowledge GM or Ford failures.
Phil, actually, if you go at it by weight, the “bulk” of their product line IS trucks. Or honkin’ SUVs, which are about the same thing. If you go at it by “perspective from the street,” the “bulk” of their product line, again, is trucks and that “bulk” shields the cars from view.
By weight, sure. Street perception — depends where you live and how dealers elect to merchandise. By web site, where people tend to start? No.
Toyota and Honda don’t have slash-and-burn prices to move their vehicles. If Detroit had delivered satisfaction and long-term value to all comers, Toyota and Honda would still be niche importers. They fought uphill against stronger biases than those that you allege favor them today. No one could do that with products that were worse than those Detroit produced.
Well they did, and they were helped along by a prominent idea among urban boomers in the ’70s and ’80s that American cars were somehow uncool. Detroit has delivered satisfaction to a big portion of the market but it’s a smaller portion than they need. Toyota, Honda, et al hired American marketing talent to shape perceptions and build their business practices here. They were not merely gaining market share on product.
“Importers” or “Toyota and Honda?” You should take a step back, again, from your narrow view of “import bias.” The market appears to me to be acting quite rationally. Toyota and Honda have done the best job, for the last decade or so, in providing reliability. The market rewards them with good prices, good resale value and a good reputation. The Germans don’t enjoy this, nor do the other Japanese manufacturers (except, maybe, Subaru and Nissan is, finally, getting there). The Koreans don’t have that, yet, people still go Korean on pricing. There’s no “import” bias, there’s loyalty to vendors that have done a superior job.
It’s imports, not just Toyota and Honda. Given the caricature the Camry and to a lesser degree the Accord have become, a rational market isn’t proved. The German carmakers trade on some kind of increasingly laughable idea of prestige, given how common a 3 series or C-class Mercedes is in urban areas. The Koreans are offering value and making strides in quality. Import bias is a strong social driver in the car business that is an overlay to some of the rational and irrational brand loyalties. I know you have trouble seeing this.
I think the main advantage Detroit had was it’s work force. It was already a center for metal working before the auto was invented, and metal working was the primary skill needed – and different kinds; casting, machining, stamping, forging. It wasn’t particularly well located vis-a-vis markets, as NYC was the single biggest market in the early days.
That metalworking labor pool was widely distributed throughout the upper midwest and northeast. Without considering the transportation network abetted by the Great Lakes for volume shipping of raw materials, and the convergence of rail, the auto industry could have found a home in Pennsylvania, New York State, Illinois, upper Indiana or Michigan. Labor wasn’t the first driver for Detroit’s advantage circa 1900.
I notice there are still top execs working at industries in the midwest, northeast, central plains, and the hot and humid south. I also notice Nissan relocated to TN, and Hyndai built a tech center in MI. I just don’t buy the weather theory.
I already wrote that weather is the least of Michigan’s liabilities. The cultural factors loom larger against attracting talent.
But it doesn’t really matter because the idea that Detroit needs top management is questionable. They are already getting people from top business schools. What they need is people who can stay focused and build the companies back up.
My view of business talent is not restricted to the top tier business school MBAs. It’s not managers that are lacking but leaders. The leadership mentality and emotional composition is not produced by an MBA education. The incidence of dynamic personalities with outsized business aptitude who are able to take both risk and accept responsibility while driving responsiveness in companies that also have a 3 – 5 year product development cycle is just too low. The best business executive talent in America is not leading automotive manufacturers. The industry is not perceived by new talent as among the top creative and wealth-building opportunity in our economy, as it was in, say, 1950.
Apple was already into both computer hardware and software – e.g. already trying to run two businesses at once. I give them credit for being clever, but they already had everything they needed once they got the idea to do music players.
Apple had very little experience in truly miniaturized electronics, and none of their software was ever simplified to the level required by a hand-held music player.
GE by contrast has little or nothing in the way of auto making experience. They have a lot of electric motor experience. Instead of trying to figure out how to build transmissions, and transaxles, and seats, and steering columns…………….. they’d be better off concentrating on building an electric motor specifically for cars.
A transmission doesn’t have the same role in an electric car. The idea of a central engine can be thrown out. Seats and associated interior components are already largely outsourced to companies like Lear. If the car is rethought as an electrically-powered product from the ground up, with no embedded history that is has to be packaged as an analog to an ICE car, then someone other than a car company, that also has vast manufacturing, engineering, design and distribution experience has a chance to deeply change an existing market. This was Andy Grove’s point. If Jeff Immelt lacks that imagination, then it’s more likely to play a role in the traditional partnering way. Which really won’t capture anyone’s imagination inside GE. Audacity is its own change agent and can move mountains when married to expertise and discipline not otherwise being fully engaged. People need to be involved in something big.
Phil
Phil, you wrote, “Well they did, and they were helped along by a prominent idea among urban boomers in the ’70s and ’80s that American cars were somehow uncool.”
What? And people decided to switch to what was widely regarded as “crap?” Bzzt. The Japanese were in there with value and fuel economy in a small package when Detroit was building giant, difficult to park, gas-guzzling dinosaurs and we got hit with big fuel price increases. It was smart marketing (hit ’em where they ain’t) or maybe it was just dumb luck that helped the Japanese. Successive oil shocks caught Detroit flat-footed again. And again. And again. And today… Detroit isn’t winning any fuel economy competitions, that’s for sure. Last weekend, gas sank back to $2.74 but today it’s back up to $2.85. The long-term prognosis is not good.
“It’s imports, not just Toyota and Honda. Given the caricature the Camry and to a lesser degree the Accord have become, a rational market isn’t proved. The German carmakers trade on some kind of increasingly laughable idea of prestige, given how common a 3 series or C-class Mercedes is in urban areas. The Koreans are offering value and making strides in quality. Import bias is a strong social driver in the car business that is an overlay to some of the rational and irrational brand loyalties.”
And the Germans are fast losing loyalty. Sure, there’s a certain amount of lingering prestige associated with German cars. They were the coold cars and for a reason. They used to be, generally, far superior in terms of handling and performance. They took a different approach to auto design. Volvo looked at safety. Saab and Audi pioneered (sort of) front-wheel drive. BMWs were lean driving machines. By the mid-80’s, I had driven various big Fords, GMs, a Camaro, a Chevelle, a Monza and, finally bought a Cavalier. I thought the Cavalier was a superb-handling car with excellent road feel. For an American car. I’d also driven Fiats (darned good) and Audi 5000’s (very good but my first experience with FWD, which seemed a little odd). I had the opportunity to drive an Audi Coupe in the early-ish 80’s back and forth with my Cavalier and was reminded just how good a car can be. And I have no doubt that the Audi is outclassed by other things.
This cachet lingers on and it takes time to erode this prestige. But it surely is eroding. Loyalty data has been posted elsewhere on this site and the Germans no longer have it like they used to.
And you concluded with, “I know you have trouble seeing this.”
Yeah. I have trouble seeing little green men from Mars, too. For the same reason.
To prove your point, you need DATA that points unambiguously to import bigotry. You don’t have it. Your anectdotes are insufficient. I’ve got plenty of good ones of my own. Macca’s are even better.
Umterp85, I am not jeering Detroit towards failure. You want a Chevy? Have at it. Enjoy. May it serve you well.
I’m waiting for a solid history before I’ll put my money on a car that does not have a good record for reliability and durability.
I’m simply not taking any guff about giving Detroit inadequate consideration. I’m under no obligation to even look at their product; it’s their problem to give me incentives that appeal to me to do so. Neither I nor any other consumer created their problems and it’s not up to us to contribute to the resolution of them.
—
It has been remarked on TTAC that the Malibu isn’t “the car you can’t ignore,” so much as it’s “the car you can’t find.” In that vein, I still haven’t seen an ad for the Malibu that featured an actual Malibu – they’ve all been, as far as I can tell, CG animations. Just how unobtainable is this thing? Is it entirely imaginary?
What? And people decided to switch to what was widely regarded as “crap?” Bzzt.
Your memory is short. Except for Mercedes, imports were largely small cars in the 1970s and they were no longer widely regarded as “crap,” other than perhaps Fiats, Peugots and Renaults.
The Japanese were in there with value and fuel economy in a small package when Detroit was building giant, difficult to park, gas-guzzling dinosaurs and we got hit with big fuel price increases.
The Detroit cars got less giant in a hurry. It wasn’t the difficult-to-park aspect. And as for fuel cost, that was only a secondary driver. The first burst in price from 29 cents per gallon to 55 cents, and the later 1979 – 1981 rise from 55 cents to 1 dollar gasoline were quickly absorbed by consumers. The bigger psychological driver that caused people to uneconomically move out of larger cars sooner than replacement time was the fear of persistent fuel shortage. In both of those fuel crises, the experience of gas station lines, right to buy only on alternate days, etc., convinced many people that such was their future. Of course this was wrong, but then we had administrations that sold the idea of scarcity.
It was smart marketing (hit ‘em where they ain’t) or maybe it was just dumb luck that helped the Japanese.
To the extent that they succeeded, the imports were smart to leverage a market opening created by a change of circumstances amplified by mass psychology. But then they were already making small cars for their home markets so these companies were able to drive existing products through a market opening.
Successive oil shocks caught Detroit flat-footed again. And again. And again.
This is true.
Detroit isn’t winning any fuel economy competitions, that’s for sure. Last weekend, gas sank back to $2.74 but today it’s back up to $2.85. The long-term prognosis is not good.
For the vehicles people actually buy in volume, Detroit is fuel economy competitive. Ignoring the Prius, a moderate volume car anyway, a big Detroit 3 pickup or SUV will meet or exceed import equivalents today. Same is true for large and intermediate sedans. Consistently, I am able when I rent cars during travel, to get better mileage from an Impala than a Camry. The advantage is small but it’s there. A 5.7L Toyota pickup or large SUV has no fuel economy advantage of an equivalent Ford or GM vehicle. A Corvette is more fuel efficient than a comparable Porsche. I don’t spend enough time in small cars to be able to verify whether a Cobalt, Focus, Civic and Corolla in standard ICE form are better or worse, but people whom I know share experience with these cars don’t see much difference. Outside of Prius, which often performs below its claims, and the small number of hybrids Honda has sold, in mainstream ICE cars, I don’t see a difference in real world conditions. Moreover, without being light-footed, I’ve been able to drive every American car I’ve owned over the past 25 years to exceed its EPA fuel economy ratings. Compared with comparable temporally-relevant imports, I’ve never been at a disadvantage in the cars I’ve owned. If Toyota manages to crack the pickup market open and people go for the same powertrain mix as with Detroit’s trucks, it won’t look like a fuel economy performer in the aggregate. Fuel economy in standard technology drivetrains isn’t a Detroit disadvantage anymore. And with hybrid powertrains, coming to car lines across multiple brands, this will even out too. In the technologies beyond, we’ll see. I’m not a fan of Diesel particulates, even in the tighter standards.
And the Germans are fast losing loyalty. Sure, there’s a certain amount of lingering prestige associated with German cars.
It’s not a lingering prestige. It remains rampant in metro areas.
To prove your point, you need DATA that points unambiguously to import bigotry. You don’t have it. Your anectdotes are insufficient. I’ve got plenty of good ones of my own. Macca’s are even better.
No, *you* need data to disprove import bigotry. Anecdotes aren’t offered by me as proof, they are used to illustrate in human terms a pattern. You repeatedly make the mistake of thinking anecdotes are offered as anything more. However, mine are real and transcribed verbatim. That third parties haven’t explicitly measured import bigotry in a statistically significant way is not rebuttal of a phenomenon I can determine normatively. Whether you believe it or not isn’t significant.
But that’s not the theme here. The point of my original rejoinder to Robert’s editorial was to point out it’s unreasonable to be looking for a dramatic rebound by GM due to a recent succession of new car model debuts. Only now is the strongly positive press on the Malibu and CTS rolling through consumer consciousness. Ford found that an offering like Fusion could build strength after a slow start. This also happened with the 500 originally taking time to find its traction market. And with the import bigots staying out of their showrooms, a substantial portion of the market isn’t available to them. There isn’t going to be a “V” in GM’s or Ford’s trajectory unless Americans decide it’s in their self-interest to put aside the past and act on the present. Otherwise, if a resurgence comes, its defining point of turn-around will be identified in retrospect.
Phil
The flaw in your reasoning Phil is the same flaw in most people caught up in politics. Rabid Democrats and Republicans almost always talk of their love of the country and how the other side of the political spectrum is trying to destroy the country. Both Democrats and Republicans usually agree that the tax system is flawed and unfair and yet their solutions are totally at odds with the other side. To say if you care about the country you’ll consider a domestic car is as much a leap as to say if you love the country you will vote either democratic or republican.
As to import bigots yes they exist but its my belief that they would tend to exist more at the higher end and not at the lower and even more important mid size car market. By definition if one is looking at Audis, Caddilacs, BMWs, Mercedes or a Lexus you are not making a rational decision and yet virtually everyone who makes such a purchase is a rational person. The problem is my definition of a rational purchase is different from those that make such purchases.
I can’t rationalize making such a purchase but the buyers have a different set of priorities needs etc. Its the same with Camry buyers, just because it is not rationale to you doe not mean that it is not rationale to buy a Camry.
There are those that are caught up in buying name brand items from Gucci or Versace. These are the type of people who who in my opinion are the types that seem to care about what the neighbors or others think. Trying to equate Camry buyers with people who have an attitude of “Ewww I wouldn’t want to be seen in an Impala” is a stretch. At the high end maybe but not in Camry, Impala, Corrola Cobalt end of the market. At that end of the market people will avoid a particular make for reasons other than a lack of cachet. You may not agree with their reasoning but they are not stupid and yes they love america.
The flaw in your reasoning Phil is the same flaw in most people caught up in politics. Rabid Democrats and Republicans almost always talk of their love of the country and how the other side of the political spectrum is trying to destroy the country. Both Democrats and Republicans usually agree that the tax system is flawed and unfair and yet their solutions are totally at odds with the other side. To say if you care about the country you’ll consider a domestic car is as much a leap as to say if you love the country you will vote either democratic or republican.
It’s not a flaw, Sherman, and it has nothing to do with politics. I haven’t once mentioned “love of country”, patriotism or any other such thing. It’s a matter of self-interest, economically and socially. People cannot lament what’s happened or happening to the world around them and disconnect their behavior from the reasons.
As to import bigots yes they exist but its my belief that they would tend to exist more at the higher end and not at the lower and even more important mid size car market. By definition if one is looking at Audis, Caddilacs, BMWs, Mercedes or a Lexus you are not making a rational decision and yet virtually everyone who makes such a purchase is a rational person. The problem is my definition of a rational purchase is different from those that make such purchases.
Perhaps import bigotry started at the high end. It is a factor in all the vehicle classes now, to varying degrees. It is not the *only* thing distorting the market, but it is among the influences of consequence. I seriously disagree with your assertion that “virtually everyone” who buys a luxury car is a rational person. Well-to-do people are among the most irrational people I know, which is a quality quite apart from their intelligence. There’s no correlation between intrinsic intelligence and rational thinking.
There are those that are caught up in buying name brand items from Gucci or Versace. These are the type of people who who in my opinion are the types that seem to care about what the neighbors or others think. Trying to equate Camry buyers with people who have an attitude of “Ewww I wouldn’t want to be seen in an Impala” is a stretch. At the high end maybe but not in middle america.
“Ewww I wouldn’t want to be seen in an Impala” is observable in middle American every day. You’re just not paying attention if you think that behavior doesn’t exist in the mainstream vehicle market. In some respects, it’s there that the snobbery is most visible, somewhat like the observation that academic politics are so intense and personal because the stakes are so meager. From flat panel TVs to consumer audio to BBQ grills to cars, the great middle is full of people who perceive their purchases as proof they’re a little smarter than people who bought beneath them. GM made a killing in the middle third of the 20th century exploiting this psychology and cutting the differences ever finer. “Middle America” isn’t just in Kansas.
Phil
Personally I think all purchasers of higher end cars are irrational, but who am I to judge and project my sensibilities versus someone else. The fact that I think that anyone who would buy a higher end car is irrational would be the same mistake you make about Camry buyers being irrational. I am not you and you are not me. We have different needs, values and motivations.
And yes you are projecting your definition of self interest etc. I used politics as an example of why you can’t win this argument. Your definition of self interest is that GM, Ford and Chrysler surviving outweighs my demand for a car that I believe will be in my self interest. Thats not my definition of self interest. I actually like GM cars but I will not buy a car that I believe will cost me more in repairs. My personal experience and the experiences of my friends relatives and neighbors has not been the same experience that you have had. I don’t buy high end end cars. I don’t want a truck, if i wanted a truck then i would consider a GM or Ford because in that market segment, my friends and neighbors experiences has been good but not in cars from detroit.
The fact that I think that anyone who would buy a higher end car is irrational would be the same mistake you make about Camry buyers being irrational. I am not you and you are not me. We have different needs, values and motivations.
I haven’t ever said that all Camry buyers are irrational. Just some of them. Though given the car it has become as of 2007, I might think all Camry buyers are irrational this year and going forward…
And yes you are projecting your definition of self interest etc. I used politics as an example of why you can’t win this argument.
I’ve qualified my definition of self-interest in economic and social terms. By the way, I don’t care about “winning” the argument. I’m interested in getting people thinking and changing some behaviors in the process. Opposition is inconsequential to me.
Your definition of self interest is that GM, Ford and Chrysler surviving outweighs my demand for a car that I believe will be in my self interest. Thats not my definition of self interest.
Maybe not, but I’ve clearly taken the position that if you live in the United States and take that view, then your definition of your own self interest is far too narrow.
My personal experience and the experiences of my friends relatives and neighbors has not been the same experience that you have had. I don’t buy high end end cars.
All but two of my Detroit 3 cars have *not* been high-end cars.
Phil
“That metalworking labor pool was widely distributed throughout the upper midwest and northeast. Without considering the transportation network abetted by the Great Lakes for volume shipping of raw materials, and the convergence of rail, the auto industry could have found a home in Pennsylvania, New York State, Illinois, upper Indiana or Michigan. Labor wasn’t the first driver for Detroit’s advantage circa 1900.”
That’s true, metal working was somewhat dispersed, which is why car production also was dispersed. For the first several years of the 20th centruy, NYC produced more cars than Detroit. Buffalo, Toledo, Kenosha, and other places also built cars. But your point was that Detroit had some sort of geographic advantage, and it didn’t. It’s poorly located with respect to rail lines – compare to Chicago- and other Michigan cities such as Flint and Lansing are even more poorly located. It wasn’t close to it’s markets. There are plenty of cities on the great lakes, and many don’t have the disadvantage of having to bring ships down a narrow river. Labor really was the driver, not exclusively in Detroit, but cars had to be built where there was a pool of talent, and sufficient numbers of manufacturers to take on contracted work.
“I already wrote that weather is the least of Michigan’s liabilities. The cultural factors loom larger against attracting talent.”
OK, but again, there are successful companies being run in all parts of the country. It’s hard to believe top management at top firms in Indiana, or Ohio, or Alabama are there for the culture that is lacking in Michigan.
The D3 don’t have a problem with location of corporate headquaters. They have a problem with product, production, and marketing.
“A transmission doesn’t have the same role in an electric car. The idea of a central engine can be thrown out. Seats and associated interior components are already largely outsourced to companies like Lear. If the car is rethought as an electrically-powered product from the ground up, with no embedded history that is has to be packaged as an analog to an ICE car, then someone other than a car company, that also has vast manufacturing, engineering, design and distribution experience has a chance to deeply change an existing market. This was Andy Grove’s point. If Jeff Immelt lacks that imagination, then it’s more likely to play a role in the traditional partnering way. Which really won’t capture anyone’s imagination inside GE. Audacity is its own change agent and can move mountains when married to expertise and discipline not otherwise being fully engaged. People need to be involved in something big.”
That’s just it – immagination needs to be married to expertise. Apple already had the necessary expertise in every aspect needed to produce an ipod. GE has no expertise in auto making. Sure they have manufacturing expertise, but then, so does Sony, or Boeing, or 3M.
Paul Hawken made the same mistake years before when he wrote that buggy whip makers went out of business because they didn’t see themselves as being in “vehicle acceleration”. But vehicle acceleration became a matter of carburators and throtle linkage – which would have been very difficult for a leatherworking firm to make. GE does have manufacturing capability, but reinventing the car, albeit with an electric motor, isn’t likley to be proftiable for GE, (the car business is a difficlut one) GE’s expertise is with elecrical components. That’s where it’s efforts should be.
Myabe the problem at GM is that they don’t pay their executives enough. We know that good managerial talent is in short supply (just think of the MBAs we produce in the US). So if they raised the pay scales maybe they could actually attract some quality managers. For a company the size of GM the difference between paying 150 million a year and 300 million a year isn’t any more than 150 million.
I just got lost in all the point-counterpoint posts here. I’m sure they’re all good and valid points, but… 800-word responses to several earlier 800-word responses (made in response to several other 800-word responses), all quote-for-quote-for-quote ad infinitum just got to be too much to follow for this simple guy on his limited lunchbreak.
So I’ll just say my piece as simply as I can so that I can get back to work…
I think the article was very good. I think RF is right on the money about GM’s financial straits (pun intended). RF is one of the best writers, and the play on language is poignant and funny (in a wry and ironic sort of way).
RF’s reference to the Business Week article was interesting too; I hadn’t known of that article. Very foresighted indeed.
Some of you know that I have sworn off all GM products. Four years from having owned a Corvette (after a long line of GM cars), I still stand by that sentiment. Every time I ride in a friend’s Caddy, Saturn, Chevy, or Buick, My confidence in that decision increases.
About 15 years ago, one of my friends recounted his experience in a GM Service Department, and I remember that to this day. He had been standing in line at the payment counter for a part that he had ordered. A lady was in line before him, and she had some complaints about the service on her car. The service manager was just as flustered with her as she was with the service department, and he just blurted it out that they weren’t in the business of fixing cars, they were in the business of SELLING cars.
Everybody in the line dropped their jaws. My friend and a couple of other customers just turned around and left the line.
Things really haven’t changed since then.
Facts, figures, and this report vs. that report; none of that matters when I’m standing in line at the service counter for the twenty-seventh try to get some PITA problem fixed like the remote locks or the power window actuators; if they don’t try to dismiss my problem and claim that it’s “working as designed,” I’ve only made it past the first phase. I still have to hope that they actually fix the PROBLEM and not something else. And all this without BREAKING something that was working fine before my visit!
Even if the service visit is a “success” (less broke after the visit than was broke before the visit), I know I’ll still have to use my own tools to re-assemble the damned dashboard or various un-connected engine or electrical parts after I get my car back!
I’ll let you folks argue your fine points with each other. But for me, GM still doesn’t “get it.” There are plenty of other choices available, however, and for that I am thankful.
I’ll let y’all get back to your picking of each other’s nits now. ;)
And I said my piece in 509 words (and two emoticons). :D
Did GM ever learn from its marketing disaster at Oldsmobile?
“This is not your father’s Oldsmobile” offended fathers who owned Oldsmobile as they felt it insulted them.
Recently, we had “Rethink Saturn.” Hmmmm…
Old Saturn: rebadged US GM cars
New Saturn: rebadged European GM cars
Recently, we had as part of Malibu’s The Car You Can’t Ignore, a jogger running into the first generation Malibu (or is it the not-your-father’s-Olds-Cutlass?). Couldn’t you find an Accord or Camry to place in the ad? Are owners of the old Malibu offended by the fact that their car can be ignored enough that joggers will run into it and bank robbers will not be spotted by the cops?
Can we consider Goodwrench as GM’s 9th division? I hear so many ads on the radio reminding us that Goodwrench is available when we need our GM cars serviced. Um, just how often does a GM car need to be serviced?
Isn’t the fact that Goodwrench is desperate for business that it needs to advertise a sign that your GM cars have good enough quality that they don’t need to be serviced that much? If you keep reminding me that I need my GM car serviced, I’m going to think that if I buy a GM car, that it will be in the show a lot.
Get some new marketing going!
Oh, and if we can say the same for Ford – I have to laugh at the full page print ads in Newsweek a few months back that stated that in a comparison test of Fusion vs Camry vs Accord in one of the major car mags, it won on… STYLING! No punchline needed.
I agree with a previous post by ZoomZoom saying that there is a lot of back-and-forth quoting and arguments in this discussion.
Having read it all (over 2 days) I’m not sure I’ve learned a lot.
It reminds of the numerous other similar discussions on import vs. domestic issues, be that in online forums such as this, or interviews with industry experts appearing on national radio. We all have our good and bad experiences and that’s what it really comes down to.
I’m a believer into the product quality though, and I think that’s mainly what drives any business up or down. That, and the product support.
I have to say I’ve never had a pleasure of owning a GM product, but I wanted to add a couple of points to the import vs. domestic bias based on my limited experience with Ford and other cars.
I’m not your average car shopper. My father is a mechanic, and I grew up helping him work on all kinds of cars, from European to Japanese to American ones. Having seen all these cars in intimate detail, while taken apart and being repaired, he has a very firm position in terms of his preferences: 1. Japanese, 2. German, 3. American
In the past 15 or so years that I can remember, we’ve owned about 8 cars, 5 of which were Japanese, and 3 American.
We may not have owned enough of various non-Japanese cars to know about their reliability first-hand, but we’ve surely fixed many of them. And when one is exposed to the quality of components that go into in a car, and is able to compare this quality between several major car-makers, it’s easy to notice that Japanese and German cars are just made better. Everything is smaller, neater, smoother and more efficient or economical. Notably the Japanese ones.
And here’s a subtle but important example I like to use that a mechanic have to deal with everyday: there is almost no anti-seize and anti-rust treatment on any fasteners in American cars, whereas there is in Japanese ones. This means that when some part on the car needs maintenance on a Japanese car, the bolts can be undone, and the part can be taken apart and repaired. On an American car, the bolts will probably be rusted to the point that they will have to be cut off or will otherwise break off, requiring a lot more unnecessary work (and money) to go into maintenance.
This is but one small side of things, but it shows the attitude that goes into building these cars.
Do you think this affects my father’s preferences when he chooses a car?
You bet! He’s the one that has to work on them!
Do you think it affects other people he knows?
Of course, because they go to him for advice, and he bases his advice on his experience.
In my family and my circle of friends I’m the only one who has an open mind towards all manufacturers.
I’m the kind of person who likes to go to auto shows every year and to various dealerships every couple of months, to sit in cars, feel them, read about them and drive them, even if I’m not actually interested in them. I like to see where things are going in the automotive industry because I love cars.
And I can’t help but find myself disappointed in the general quality of the domestic products, even if was initially very inspired by the ads.
The fit and finish, the materials, the styling, or the features – it’s just not quite there.
In addition, there’s also the annual reliability data.
The personal experiences differ widely from one owner to another though.
Some people swear by their Ford Taurus (for example), and some can’t stand it.
I’ve had three Ford cars – an 89 Probe, a 92 Taurus and a 2004 Mustang.
The Taurus was probably a good car on paper, but it required an inordinate amount of maintenance. Granted that between my father and I we always do all the work ourselves. I can’t imagine what a burden it is for people who need to rely on others to fix their “problem” cars.
A colleague of mine owns a 97 Taurus, and that car is in constant need of replacement parts and unscheduled maintenance.
Even if the new Taurus is worlds apart from the old one, this particular person will never buy Ford again. And he is not alone.
Another friend of mine has a Pontiac Sunfire and it’s been very good to him. I know people who love their Impalas, and people who hate their Oldsmobile Aleros. There are clearly good and not so good products out there.
But because each average person can only have so many cars in their lifetime, people tend to jump ships after one bad experience, and I don’t think you can blame them because cars can be large financial burdens.
I used to own a brand new Mustang which was an emotional purchase. After the initial ‘honeymoon’ period wore off two years later, I was disappointed to find it not only impractical (which I knew from the get go) but also technologically obsolete. In 2004 it had an ancient engine and ancient suspension, both dating to ’79, and it lacked many things that became obvious later on.
Other Ford products had better engines and suspensions at the same time. Why didn’t they use those in the Mustang? It beats me. But I wasn’t going to continue paying for a car that was sub-par by my standards and didn’t fit my needs.
And then when I decided to part ways with it, I was slapped with a ridiculously low resale value and the fact that nobody wanted to buy it.
I haven’t considered resale values until then, but I surely will from now on!
That’s just one experience, but in general I think that many products can be “good on paper” and not good in reality.
How does one know if the new Aura/Malibu/Taurus/Mustang/etc. is going to actually perform 5 years down the road?
It would take an owning experience to find out, and not everyone is willing to risk it.
The Camry had earned a reputation of a very reliable car over the years, so many frustrated people buy it in spite of the plain interior and boring driving characteristics. This may not continue indefinitely, and the Accord may become the new Camry. To date, the Accord is probably the best car I’ve driven yet, and sets a whole new standard to measure everything against. That counts for something, even with my limited experience.
If Ford’s or GM’s cars really improve in quality, just like they say they would, it will still take time for all the factual evidence to accumulate before those who have once switched to import brands consider switching back.
And statistics shows that many are switching away from the domestics rather than in favor of them. They can’t all be wrong.
In fact, I don’t personally know anyone except one person who would even consider buying American now. When I bought the Mustang, it downright surprised all of my friends. Two years later I came to a realization that I was wrong and they were right, only to confirm their beliefs. At the place where I work the majority of people drive either a Civic or Accord or a Camry, with very few others. I think people are just going with the safe bets, despite that there’s already a million Civics in every town :)
I’m all for the US auto industry to recover, and I hope that they do. But it can’t happen without them improving their products first. And that includes improving the appeal and the features as well as the reliability. I have yet to see a Detroit product that would match my experience with the Accord, in the same price range. The new Taurus is not even close.
I’ve heard in several interviews with high-ranking industry representatives complain about their inability to sell the Detroit products in foreign markets, and using that as an excuse for the entire industry’s demise.
What foreign markets are they referring to? Japan?
Japan is but one small country. There’s still Europe and Middle East and basically the rest of the World where American cars are widely available.
But somehow people don’t buy them as much as the competing brands. Why is that?
I think people choose one brand over another based on either a personal experience or the experience of other people that they know. How many times does one person need to make a bad choice before they decide to look elsewhere?
Probably only once!
A car is a very expensive luxury that people in many parts of the world can’t even afford, let alone experimenting with the same brand for years until one is convinced it was a bad idea.
The maintenance is expensive and then the resale value is generally low. People are careful about how to spend their money.
And picking the brand isn’t the only part to choosing a car.
First of all it needs to meet one’s needs, and be the type of vehicle you need in terms of versatility, utility and safety.
I love station wagons and hatch-backs for their practicality, so the whole chunk of the auto market is simply not for me.
I also love all-wheel-drive because it snows a lot where I am and I’m an adventurous type of person. So that leaves me with very few choices, almost none of them domestic.
Then, it needs to be affordable (both up front and later in terms of maintenance). No car is an investment.
And then it needs to be pleasant and attractive, because people spend lots of time in their cars today. (some may consider this #1)
That’s how I think people should approach their car searches.
Appearance is a big part. In general I find American cars less attractive than the import ones. What can I do, I just don’t like their bold styling. The Caliber and Jeep vs. the Outback or the Volvo for example. The latter two are much easier on the eyes.
In the end I’ll have to come up with a compromise of course, because no car is perfect. But I’m strongly leaning towards a Subaru, because I already have one and it’s very good so far. Even if Dodge or Jeep come up with a similar product, what are the chances I will feel like taking the risk and switching to a different brand after my good experience with Subaru?
Very slim, considering that Subaru is at the top of reliability list, and Jeep is at the bottom.
Same with people who bought Camrys. They will probably try an Accord or a Sonata before they try a Detroit model.
The reason I still have an open mind towards Ford (and American products in general) is thanks to my great experience with the 89 Probe. I love that car. Almost nothing at all broke in that car considering it’s almost 20 years old, and it still drives today.
I credit that largely to the fact that it was developed by Ford and Mazda together.
It has a Mazda engine and many other parts, and that’s what sets it apart.
That’s what I think makes the Fusion and the Escape so successful – the partnership with Mazda in the design.
The new Taurus is made in partnership with Volvo, and than can be a very good thing. It also comes with AWD and has many features that sound great on paper. But it’s too soon to tell what will it actually be like. People who bought an earlier Five Hundred seem to like it, but overall the model didn’t sell very well. That’s why they’ve renamed it back into Taurus.
Am I willing to risk it and try it? Probably not, because I can’t afford to loose this much money, and also because it’s not the type of vehicle I want. If Ford (or GM) had a type of vehicle I want, I would give it fair consideration, but I can almost predict right now that I will not pick one of them, based on their current products.
Most people probably don’t do nearly as much research and comparison as I do.
I’m not sure what drives their decisions. But I go by technical data and actual experience, not by what others might think of me if I drove this or that brand.
Sorry for a very long post :)
Meanwhile, GM announces a recall of 275,936 vehicles, including the 2005-07 CTS, CTS-V, STS, STS-V, and SRX, as well as the 2006-07 Solstice and 2007 Sky. Apparently, the seal on the rear axle pinion can leak. I vaguely recall (pun intended) a discussion of how the rear diff issues reported by Soltice/Sky owners were overblown and a non-issue…for the life of me, I just can’t remember who was touting that line.