Hammer of God hangs over US auto makers
Posted by Bill Thomas at 5:30PM on Monday 08 January, 2007 19 Comments
As I stood watching a presentation by Chrysler boss Tom LaSorda about mini-vans at the Detroit motor show - some rubbish about recipes with a celebrity chef, LaSorda dressed in an apron - a few figures were running through my head.
Figures I'd taken a couple of moments to research in the hotel before arriving at the show. Chrysler announced in October that it had lost $1.5 billion (£774m) in the third quarter of 2006, thanks to an inventory of 647,000 unsold cars. GM lost $10.6 billion in 2005, but restricted its losses in the third quarter of 2006 to only $115 million, while Ford lost $7.24 billion in the same period.
So, GM is doing badly but billions better than last year, Chrysler is doing very badly, and Ford is in dire trouble. In total the big three American car makers have racked up a loss of $8,855,000,000 in the past three months. Eight thousand, eight hundred and fifty-five MILLION bucks, in three months.
It was impossible not to think about that $8.855 billion hanging over the Detroit motor show like some mighty Hammer of God. As the little players strutted around the stage, showing off their latest products and plans for the future, I couldn't help thinking that the Hammer was about to fall and smash the lot of them.
No wonder GM boss Rick Wagoner, Ford boss Alan Mulally and Chrysler boss Tom LaSorda went to see President Bush last November. I'm surprised they didn't have caps in their hands.
The American car business for American companies is a total mess. You could feel the atmosphere of failure at this year's Detroit motor show when you were exposed to the US Big Three. Sorry, Detroit, but that's how it felt - I was squirming under the sickening, frightening weight of that Hammer.
The Japanese firms, by contrast, are thriving, and good luck to them - they are simply delivering better products to the market. More stylish, more reliable, better built, and now absolutely reeking of brand strength. Maybe - just maybe - the Japanese have done enough to destroy at least one of the US giants completely.
A straw poll among journos at the show gave me a firm favourite. The Blue Oval.
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19 Comments for "Hammer of God hangs over US auto makers"
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The American car industry has long lounged about expecting their cars to sell well regardless of how overbearing, unreliable or ridiculous they are. People are no longer looking for that V10 that weights two-and-a-half tonnes and produces enough smoke to blackout Los Angeles for a week. Times are changing and have been doing for years, and the American industry has been slow on the uptake, assuming that poor workmanship and big and brash will sell regardless, just because they are American. Well not any more. And the Japanese companies are raking it in.
It's a shame really, because they have a strong line-up of cars. Ford in particular are delivering some beautifully engineered vehicles... Especially if you include the companies they own. I still find a lot of Japenese stuff boring, not all find you. But I would far rather have a new Ford Mondeo than a Honda, say Accord.
Indeed, Ford is looking pretty bleak, however both GM and Ford have one market doing well for them, China. Whether or not that is enough to sustain them until US operations start to turnaround is questionable. However, with GM coming out with strong products that are getting noticed, I believe they are through the worst part. Fact is, most Americans care less where their car comes from, we simply want good product, and the "Big 3" have taken too long to figure that out.
Call it the Hammer of Inevitability, because they've certainly brought it on themselves. I live in the States and owned a GM product for two years, and experienced more problems with that one car than I have with all the other cars I've owned combined. I was so eager to unload this automotive abomination that I "traded" it in almost six months before I was done paying it off.
I'm a huge fan of american cars but, the americans abolutly refuse to open out their market to the rest of the world and as a result they are losing ground against the Europian and Japanese makes. If America wants their cars to survive out in the market place they have to stop and listen to the customers and fix what we have been complaining about.
I am reminded of a humorous virtual commercial featured in a little game from Leeds called Grand Theft Auto: Vice City Stories, called "Mallet to a Maibatsu." It features an inflammatory patriotic rant against Japanese automobiles, complimented wonderfully by sob stories from laid-off assembly-line drones and Japanese businessmen stereotypes ripped right off of a WW2 propaganda commercial. What a cynical commentary it is on the state of the American auto industry today, whose "legendary" muscle cars and Hummers are the only reasons for them to have any hope and exploit it for patriotic purposes. But at least GM is trying to recover... so there is hope.
Personally I've always used Japanese cars and never ever sat in an American made. I simply don't know the difference. But what I do see happening, is American companies partnering themselves with their Japanese counterparts. We have already heard of GM/Nissan/Renault possibility, who knows maybe Ford and Toyota or Chrysler and Honda join hands.
I agree whole heartedly. American cars are suitable for one place... America, they are too big, to shoddily made and to unreliable to take anywhere but America. The sooner American car companies realise the money is in exporting cars the better. That way perhaps they will make cars suitable for the rest of the world... come to think of it, that will never happen. Americans think they are the only people in the world!!!
A sad fact this. but lets face it, the products that Ford of America and the likes are rolling out are, well, out of date. Why do the Yanks (and i don't have a problem with them) still think that push rod v8's and Ben Hurr charriot style suspension is the hight of technology. I love the v8 burble i will admit but that does not make them any good for going down the supermarket. The problem is that more Americans get the fact that the products made by the good 'ol boy brands are out date. Flimsy plastic and horse and cart rear end set up won't cut it in the soft touch and multilink 21 century. There products are not all bad. I love the Mustang. The Camaro concept looks stunning. But why can't they modernise. get with the times. I was passed by a Ford lightning pick-up a few days ago and it sounded awsome but it was the size of a small semi detatched house. In the land of the rising sun however they do things so, so differently. Yes, they can make a balisticly fast, rather large saloon but it feels so much more advanced. This is only a comparrison of product. If we went for a comparrison of managment style i think we could find the same thing is happening. Uncle Sams boys stuck in the past while Our friends in the East are raking in the profits of the Americans misfortune. If they continue to run their companies like they build the home market cars i think we could see the same thing happen to the US car industry as happened to our own.
The interesting thing is what Daimler will do with Chrysler, Surely even a company as big as Daimler can't keep taking the hits. I think they will sell of Jeep and let the rest die.
I don't think it's only the Big Three who have to change their ideas about what a good car should be. It's seems that the average American customer really wants shoddy, gas-guzzling, hard-assed, technologically outdated cars simply because these cars are American and that's how it should be. It seems to me that they are not really ready to change their ways and opt for a modern station wagon (and I am not talking about that monstrosity that Chrysler produces, based on the 300C) instead of a SUV. They seem to back-up the makers' researches of what the buying public really wants. I am certainly not a fan of American cars, and also I hate the "polluted" design of their cars, but apparently Americans are not ready to change that. The Big Three are really trying to get together with more "sane" manufacturers as an attempt to make good cars. Shame about their design ideas, though.
Even us Americans have stopped buying American cars. No, we don't think that pushrods and solid rear axels are the "height of technology" and the sales number prove my point. Europeans seem to deliberately miss the fact that we buy more BMWs, Mercedes, Porsche etc than the rest of you combined. Japanese brands absolutely dominate the passenger car market. Ford and GM have only stuck around as long as they have because of the hugely profitable SUV and pick-up markets. In recent years, with the rise in gas prices and the anti-SUV backlash, even those heroin-like profits have started to dry up and blow away. Belatedly, the Big Three have started to invest R+D dollars in passenger cars in the past 2-3 years and there is some evidence of things getting better. To cite three examples, the Ford Fusion (based on the Mazda6), Chrysler 300 (based on the old E-Series Merc) and Buick Lucerne are not exactly the standard of the world but they are vastly better than any car these manufacturers have made in decades. Detroit might be able to build on this (very limited) traction but they'd better do it quickly..
American car manufacturers are coming around...particularly GM. The new products they are rolling out including the new Cadillac CTS, Saturn Aura and the x-over threesome (Outlook / Acadia / Enclave) are products that meet and insome cases exceed the competition. What I would find sad is if it is too late to change perceptions as our economy and manufacturing base will be much better off with a healthier GM and Ford. I aslo find it sad that some Americans would be happy for their demise. Some may say...they deserve what they get...I say we should give them a second chance if they EARN it.
I'm not sure who to respond to, such general statements about the domestic manufactures. None of you have provided any tangible experience. One says "People are no longer looking for that V10 that weights two-and-a-half tonnes and produces enough smoke to blackout Los Angeles for a week" In what decade are you living in. First of all, vehicles sold in the U.S have to pass emission standards and secondly if you don't like a V10 then don't buy a BMW or a Chrysler or a Mercedes. Bill's review, if you want to call it that is strictly a subjective opinion and an irresponsible one at that. He provides no real data to support his claim other that the quoted sales numbers. Just because he claims that 'he could feel the atmosphere of failure' doesn't make it true nor does it imply others feel that way as well. Columns like Bill report the past not the future. Reality always lags perception. The perception is that domestic aren't as good and at one time that was true'but 15 years later, I don't think so. For every domestic bashing story I can find a comparable import bashing story. I have had both domestic and foreign and I have not been impressed with the either the Honda or the Toyota, they were ok. There are only 2 reasons to buy one car over another any more, styling and price.
In reality, U.S. cars are now of comparable quality or better than many Europian cars within a similar price range. Cadillac is now second to Lexus and is ahead of Mercedes in terms of build quality and warranty claims. Unfortunatley, the U.S. has put too much junk over the years that it may be too little & too late. Styling and performance also need some serious attention.
Wow, listen to the erroneous, misinformed rubbish spewing from the mouths of the rabid Eurasian fans!
I'm gonna burst the bubble of the "I Hate America" Club. Face it, you limeys lost the War of Independence, and it's a good thing, too, cause if you hadn't, who would have saved out your collective asses during WWII? :)
Sure the American auto industry is in difficulty - Ford and Cherypar especially. Coincidentally, or maybe ironically, they're also building the best products in their history.
Vehicles like the Ford Mustang, which looks tremendous and offers terrific bang for the buck performance. One out of every two sports/GT cars sold in America right now is the new Mustang. Can't argue with that. You also can't argue with the fact that it's so impressive Guigario chose to honor the current Mustang with a tribute car of their own.
Then there's the Fusion, which took top honors against the Honda Accord and Toyota Camry. Toyota, by the way, are the recall king this year. Looking at the numbers, Toyota's total number of recalls for last year was 1,828,659, whereas GM's total recalls were 1,492,861.
And speaking of GM, maybe you ought to take a look at their new products. Overall, their turnaround is happening VERY fast, which should tell you something about just how much power and influence this company still wields. I don't think any other automaker in the world could institute this broad of a turnaround this quickly. Not even Toyota. I give them props for the blitzkrieg.
And as proof of that, take a look at the new Chevy Malibu. It won't light the world on fire, but as a Camry/Accord fighter, it's a stunning achievement, with terrific attention to detail - again in a very short span of time.
Then there's the new Cadillac CTS. The CTS has been GAINING sales since its introduction a few years ago. Very few automobiles from any manufacturer can make that claim. And the NEW CTS is simply stunning, with a bold, American exterior, a direct injection V6, lots of cutting edge technology, and an interior that matches or puts to shame the competition.
So enough with the pedantic rants, OK?
Dear Commenters (if that's a word),
Thanks very much for your feedback, whether you agreed or disagreed. I especially liked this last line from Mark:
"I also find it sad that some Americans would be happy for their demise. Some may say...they deserve what they get...I say we should give them a second chance if they EARN it."
Mark, I couldn't agree more. I would love to see the American brands reassert their dominance in their home market, because that would mean they'd launched some exciting products.
I also agree with many of the points made by bc_Shelby and yes, I think the Malibu, Fusion and Mustang are pretty good products. Let's see more, please! As Mark says, they should earn it - and they can, because there are plenty of world-class people working in companies like Ford. Witness the incredible Ford GT, American born and bred and absolutely without question the greatest car I've ever driven.
Thanks again, will post some other rantings soon.
The Fusion does indeed look like the first halfway decent Ford in decades... because it's a Mazda that looks like an Honda Prelude.
The Fusion is basically a Mazda 6 that has had its dynamics Americanised i.e. made bigger, softer and less able to go round corners.
It may sell well to fleets in the USA, but will it sell in Japan, China, India, Germany, France, the UK, Spain, Italy... to the same extent that the Accord and Camry do?
Probably not. As usual, Ford designed the Fusion with Americans in mind, and hope the rest of the world will like it too. Toyota, Honda and Nissan design their cars for the world market. Big difference.
The thing that bothers me the most is knowing that the U.S. manufacturers have the capability to do something inspiring but then when it comes down to the wire they sort of rest on their laurels and produce another mediocre car. We get interior design by Playskool and ergonomics that I can only imagine came from some hunchback guy in Notre Dame.
Now, I am an American and a true car fanatic at that. I would love to get inspired by U.S. cars but that just isn't the case. I've looked at and driven many cars from around the world and for me, I end up gravitating towards the German cars such as Audi and Porsche. Then again, I am more of an enthusiast than the average driver.
For a vast majority in the U.S. a car/truck/suv is just a tool they use to drive to and from work etc. Oh sure, it may be painted in a pretty color but it doesn't really matter so much as long as it functions as intended. We can build bland forgettable cars in droves and hey, that is ok because not everyone wants or needs Pininfarina styling. The trouble is that the like of Toyota have been able to provide the same bland forgettable cars that get better fuel economy with better reliability.
If you're going to be just another link in the chain you should at least strive not to be the weakest link. Our U.S. auto manufactures keep telling us they are planning for the future yet all their ideas seem deeply rooted in the past. (Wow, look... the 2025 Hummer H27! It's got cup holders and has an optional NASCrApR design package including the optional 12 liter carbureted push rod SOHC boat anchor, err... V16) My life is complete *sigh* Pass the barf bag if you please, I wish to make a deposit ;-)