What’s the Real Reason Detroit is in Trouble?

27 Nov

You’d think that they’d have learned their lessons by now.

The Buffalo News writes and blogs about the declining fortunes of the big three domestic automakers – note the word “domestic”.

While European automakers are habitually laden with quality issues that range from niggling to infuriating, they put out well-designed, well-engineered cars that, for the most part, give drivers some fun. Volvo, BMW, Mercedes, and Volkswagen are the big European automakers selling in the US, and they’re doing just fine. BMW owns Mini. Mercedes is introducing the Smart to the US market (the local dealership’s add-on structure is about 50% done). Volvo is known for safety, and it just introduced the C30 and the new V70 to showrooms. BMW? Driving perfection. Mercedes? Luxury. Volkswagen? Fun. Mini? Fun & frugal. Smart? Frugal & small. Volvo? Safety, safety, safety.

The Japanese carmakers have hits and misses, but the new Honda Accord is head and shoulders above the last one in terms of interior and exterior design, and it’s supplementing its hybrid offerings with an ultra-clean and super-frugal diesel engine in the 2009 Accord, with mileage that will match or best most hybrids. The Civic is like something out of Futurama. Nissan has hits with the Murano and Altima, but the Maxima is a bit on the fringe, the Quest is a sea of plastic, and the excellent Pathfinder is now joined by its smaller sibling, the Rogue. Toyota is now in the top three, and while everyone else laughed at Toyota for selling its first-generation Prius at a loss, Toyota’s now laughing all the way to the bank, offering its Hybrid Synergy Drive engine on not only the strange, slow Prius, but also on the Camry and Highlander.

Korea? Hyundai came to market the same year as the Yugo. Nuff said. What was once a budget joke is now competing quite handily, thank you, with the Japanese carmakers, producing good-looking, economical vehicles with 100,000 mile powertrain warranties. Kia is a part of the Hyundai conglomerate, and acts as a cheaper younger sibling.

So, we turn to the US.

Before Iraq, before Katrina, the domestics were making boatloads of money on SUVs and pickup trucks – the vehicles they make the biggest profits on. People snapped them up for the roominess and perceived safety. But it’s a different world now, and just as has happened for just about every decade since the 70s, Detroit got caught napping. In the past, domestic cars also had the sort of identity that imports have. I already listed the Euro-marques’. Toyota and Honda are known for quality cars that don’t break and are so reliable and sure-footed that they’re often quite boring to drive. Nissan has a sportier reputation. US automakers are only now beginning to eschew excessive badge engineering and giving cars their identities back.

It’s not union deals and outsourcing that’s killing Detroit. Not by a longshot. It’s vehicles that people don’t want to buy. By my own personal, subjective scorecard in terms of playing catch-up, GM and Ford get a B. Chrysler gets a D.

GM quickly refocused on cars, started development of a hybrid program, and finally turned Saturn around from an 80s flashback to a domestic Opel dealer. The upcoming Astra is going to be groundbreaking for GM – it will compete quite well with any other economical hatchback on the market – especially the VW GOlf/GTI, which is the Astra’s main competitor in Europe’s biggest class of vehicle. The new Malibu is a huge improvement over the last version. Pontiac is developing a Grand Prix replacement called the G8, which is being done in conjunction with a rear-engine muscle car line done by Australia’s Holden. We tend to forget that GM has excellent foreign resources in Holden and Opel, and they’re taking advantage of them. Cadillac’s new CTS can easily compete with the best that Lexus and Infiniti have to offer. The functionality and design of the interiors of Saturn’s Outlook and Buick’s Enclave are world-class. GM is getting it, and it’s on the right track. Hint: more engine choices, including turbos and diesels, and more transmission options would be swell.

Ford has refocused on quality, and the Fusion just earned a “recommended” from Consumer Reports. No small feat. Needing work is the Taurus / Taurus X, which are nice and big but sort of clunky and anachronistic. Ford makes wonderful small cars and small MPV / minivans in Europe, but has completely lost the plot with its latest, disgusting Focus retread. Hint to Ford: bring the Focus Mk. II to the US, and start importing the C-Max to compete with the Mazda5. You won’t be sorry. And let’s de-rentalify the interiors on the Edge and Fusion, while we’re at it. Hint: if I’m looking to drop $30k on a Ford Taurus, how about popping a 6-speed shiftable automatic transmission in there?

This brings us to Chrysler/Dodge/Jeep. With the exception of the new minivans, which are being snapped up, and the Chrysler 300, which is probably due for a re-design soon, it’s no small wonder why Daimler dropped the Chrysler from its name given the chance. If you love hard plastic in a shade of gray that makes you think of Soviet apartment blocks, you’ll love the Jeep Compass / Dodge Caliber. If you want to drive a car that screams “rental”, you’ll love the new Chrysler Sebring / Dodge Avenger. Chrysler needs to start getting its act together, but fast. It could start by ignoring the fact that it’s the only carmaker without a hybrid program and maybe start rolling out 50-state legal turbo diesel engines.

In a globalized economy, Detroit has to learn how to innovate and compete. That means designing cars that are not only well-built, but well-designed. No one wants to buy a rental. Yes, it’s important that a car look cool from the outside. The Caliber is not at all offensive at the curb. The Ford Edge is quite nice indeed. But when you get inside the car – the place where you actually spend your time whilst driving – you want something that’s ergonomic and attractive. Plastic with a soft-touch. Electroluminescent gauges that give you a wow factor. Stereo systems that are SAT-ready and feature RDS displays. Offer some manual transmissions. Maybe a dual-clutch gearbox like VW’s DSG. Innovate. Excite people.

The blame rests with the types who green-lighted the Pontiac Aztek and the latest Ford Focus abomination. The blame rests with the people who kept pushing 10 MPG pickups and SUVs as gas prices started soaring. (I unloaded my Honda Pilot SUV when gas hit $1.85. I couldn’t imagine filling that tank now). The opportunity is there. US automakers need to figure themselves out, but quick.

14 Responses to “What’s the Real Reason Detroit is in Trouble?”

  1. dougk November 27, 2007 at 10:26 am #

    bp, you’ve hit upon detroits ‘root cause’ problem – they got caught ‘napping’…the world changed, yet they continued producing the same designs and vehicles, never realizing consumer preferences had shifted; i just purchased a 2008 toyota highlander (non-hybrid); after looking at the 2008 ford explorer, i concluded it was my 2001 explorer with a new paint job

  2. hank November 27, 2007 at 11:13 am #

    Great post Alan.
    Remember that Volvo is owned by FORD–and is one of its most profitable divisions. WHY? Because they’ve “let Volvo be Volvo” and do what it has been doing best for 60 odd years.

    Also keep in mind that Ford and Mazda have a Partnership that has no equal in the auto world. The Ranger and the B series pickups were identical platforms, with just enough differences to keep them different.
    A customer once ordered Ranger Tailight lenses for his Mazda B pickup, and found out the lense colors were upside down from his Mazda on the Ranger.
    (He got to keep them too as I knew what he was trying to do, and told him NO REFUND OR EXCHANGE when he bought them.)

    Enough sticking up for the Detroit 3.

    These Union Concessions weren’t made because Unions aren’t a big part of the problem, they know they are and Union officials have decided to wake up and concede before there are no jobs for THEM. (Sorry John, but it’s the truth)

    But, JUST AS BIG A PROBLEM IS what you said.
    For too long, domestic Automaker’s marketing attitude is
    WE MAKE THIS—YOU BUY IT. Not a great strategy.

    Cars like Citation (Piece of Shit), Aztek (UGLY), “new” Malibu circa 2003–(a car designed for Seniors marketed to thirty-somethings), Turning the Impala into a Front wheel drive, Ford Focus (most uncomfortable car I’ve ever sat in), boring econoboxes like Plymouth Sundance, Dodge Neons, etc.

    GM is STILL trying to find a replacement for the Corvair (not because I’ve owned and driven one for 21 years, because history proves they’ve tried over and over without success)
    They’ve YET to provide a compact car that is also sporty looking and handling–Vega, Chevette, Spectrum, Metro, Aveo, and they continue to try without success.

    Instead of making a retrocar like a 62 Impala “bubbletop” (which they could have sold tens of thousands of units),they make the HHR–small, ugly and doesn’t ride well, and the SSR, which is Trailblazer platformed and not worth the price.

    Simply put, they’ve not listened to the buyers since the 60’s.
    And they deserve to be OUT OF BUSINESS.

    Makes me feel bad for the workers, but they can only build what is designed for them to build.

  3. Mike Miller November 27, 2007 at 12:45 pm #

    I think it’s a really complicated issue. One that’s all about unions, pensions, pandering to bland designs for fleet sales, and not seeing what the public is buying. That’s different than listening to the public though. Alan, Hank and I, as car lovers, may want something that’s retro, European inspired, or just plain fast, but probably 90% of car owners I see are perfectly happy with their bland Camrys, Accords and Malibus. All they want is a car that doesn’t break down. Style and performance are secondary. At least, that’s what I see parked at the Galleria.

    The perception that American cars are inferior in quality is no longer the whole truth, but the perception lingers.

    I agree Alan, that Ford and GM are basically on the right track and that track may take years to complete. Chrysler’s future though, being owned by an investment company instead of an automaker, worries me.

  4. Christopher Smith November 27, 2007 at 2:16 pm #

    While innovation can be the savior for established companies, I think you are underselling the burdensome cost structure and outdated manufacturing techniques that held back American manufacturers.

    A combination of innovation, bold marketing, lean manufacturing, and cost reductions are what is necessary for the big three domestic makers to regain dominance. It can be done. They have achieved significant reductions in salary and benefits from their workforce, now they need to reduce middle management bloat, outsource many of their corporate functions, revamp production methods, and focus all their resources towards growing top line revenue with innovative design. It’s a tall order but they all have the capability in house to do what is necessary.

  5. MIke November 27, 2007 at 3:51 pm #

    What year is this? 1973?

  6. hank November 27, 2007 at 4:53 pm #

    No Mike, it isn’t …But Detroit’s still acting like it IS.
    Now it’s not gas hogs eating 60 cent a gallon gas,

    It’s gas hogs eating THREE DOLLAR a gallon gas.

    Alan seems hot for diesels, which is dandy I suppose, but
    Diesel isn’t very cheap, and the mileage tradeoff isn’t THAT good. Maintenance costs on diesels are higher than gas engines. The newer ones are dependable, and they last longer than a gas engine, but I doubt that Detroit is going to try that again, they tried and failed MISERABLY in the 80’s.

  7. hank November 27, 2007 at 4:53 pm #

    No Mike, it isn’t …But Detroit’s still acting like it IS.
    Now it’s not gas hogs eating 60 cent a gallon gas,

    It’s gas hogs eating THREE DOLLAR a gallon gas.

    Alan seems hot for diesels, which is dandy I suppose, but
    Diesel isn’t very cheap, and the mileage tradeoff isn’t THAT good. Maintenance costs on diesels are higher than gas engines. The newer ones are dependable, and they last longer than a gas engine, but I doubt that Detroit is going to try that again, they tried and failed MISERABLY in the 80’s.

  8. Denizen November 27, 2007 at 11:36 pm #

    Toyota seems like the only automaker even trying to attack gas mileage issues.

    And to the commenter above who just bought a new SUV, what the hell planet are you living on?? Gas is going to keep getting more and more expensive.

  9. hank kaczmarek November 28, 2007 at 3:13 am #

    All depends on what you’re used to.
    Someone living in Riverside wouldn’t want to have to drive to Say, West Seneca to go to work. But I drive 23 miles from my rural home in western NC to work, and that’s the same distance.

    My wife’s job is in Charlotte, and since gas went over 2.50 a gallon she only has to make the 106 mile round trip twice a week. Wasn’t as bad when gas was .99/Gal like it was when we moved here 10 years ago. 53 miles is the distance from the Wilson Farms on Sheridan Drive and Elmwood Ave to the Silver Creek Exit on the Thruway. (per my truck’s trip odometer). How many WNY’ers made a trip like that 5 days a week.

    Even when I had a car I rode a Bike to Kenmore Mercy Hosp., and took a bus to a summer job in City Hall from Riverside.

    Around Here, if you want to make decent money, you need to work in Charlotte. Problem is, nobody wants to LIVE in Charlotte because it’s got more, but different problems than Buffalo.

    Buffalo has no jobs, Charlotte has MS-13.
    Buffalo is fighting over the Harbor, Charlotte is spending almost a BILLION dollars on a light rail line that the people don’t want and most won’t ride on, but the “Uptown Elite” who run the city feel like “THEN We’ll be a WORLD CLASS CITY, and People will Like Us!”.

    Given the choice between having to move into Charlotte or moving back to Buffalo with all sorts of unknowns, I’d be buying my first winter coat , hat, gloves and snow shovel in many years.

  10. Mike Walsh November 29, 2007 at 12:57 am #

    The real reason is they have been turning out crap products for the last ten years and boning people on repair costs after the fact.

    It’s taken me a long time to get to this point considering the fact that my father was an engineer at GM and I also worked for them at one time. BUT..the employee discount isn’t a good enough reason to buy any more products until they get their act together.

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