The US Auto Crisis
by: Gino Lattarulo
American auto manufacturers are in a world of hurt. I am talking about a beating of epic proportions. Is this the result of a sluggish economy and awful fuel prices? Well, yes of course it is; but only to a point. Let's face it, American manufacturers have been in a free fall since May of 2000, long before our current fuel crisis. Although Chrysler has been at the forefront of design (how can you not love the '09 Challenger?) it just hasn't been able to keep one foot out of the grave. Having worked for Chrysler and GM (GM) during last 15 years I can tell you that Chrysler in particular is probably a walking corpse.
American companies are their own worst enemy and just plain guilty of "too little too late" tactics to rejuvenate their bottom lines. Yes, they have made great strides in initial design quality over the last 10 years but the area in which they continue to fail is long term mechanical reliability (oh the horror stories I could tell you) which is the most important criteria to their most important customer base; women, women, and women.
Women make up somewhere in the area of 65% of all car buying decisions. Reliability is everything to this category of buyer. Everything. Any husband who has gotten the call from his wife that her car has broken down on the highway while driving the kids to school will tell you: Hell will follow like a plague of ravenous locusts. In this day and age, public perception is that Toyota (TM) and Honda (HMC) are the most reliable vehicles. Even if it isn't true. That is correct. Not true.
Please do not mis-understand me here. There really is no particular manufacturer that has a superior product. Toyotas and Hondas break down with every bit as much frequency as Fords (F), GMs, and Chryslers. Every manufacturer from the elite down to the sub-compact tin box has its own quality issues. After all, how many parts manufacturers do you really think there are in the world? Ask any Honda technician about Accord transmission failure rates. Or a Toyota technician about truck ball joint issues or your beloved Camry's steering knock and engine stalling issue. It is all built with parts manufactured by the lowest bidder so we can buy our tin coffins for less money.
The difference in the stock price is what the public perceives is quality and what is does not. There is a reason why you will never see a new Mercedes behind a tow truck and it is not because they are God's gift to quality. It is because Mercedes mandates that all vehicles are to be towed to the dealer under a covered transport to avoid the unsavory sight of such a high class vehicle being dragged behind a tow truck. Which, by the way, is usually a GM or Ford. Oh the irony of politics. Perception my friends, it is all about perception over reality.
I am sure there will be many scathing comments from my readers about how their Hondas are the greatest cars in the world and that they have never had a problem in the one million miles they have been driven. They have had nothing but problems with their former American cars which is why they switched, and blah blah blah.
You are wrong wrong wrong. You are simply one of the lucky car owners that has had little issues. There are equal amounts of American car owners who have had nothing but trouble from their previous foreign cars and are thankful for their GMs or Fords. I have heard the same story form both foreign and domestic owners so please spare me any comments about this issue. They will fall on deaf ears.
Though, I will say that Chrysler takes the cake with poor quality during the last 20 years. The mini-van 604 transmission was a catastrophic failure, costing an average of $1500 to $2000 to repair, right around the time the warranty expired. If it failed after 50k miles you were out of luck with any factory assistance. The Intrepid / Concord 2.7L engines sludged up after 40k miles at a cost of $5000 with zero factory assistance of any kind. Was there a recall? No way. The other problem was that the re-sale value of a one year old Intrepid or Concord was 50% of the retail price. Now you have a repair bill that is 50% of the value of the car. The Dodge Neon head gasket blew if you breathed on it and truck differentials simply grew noisier with each mile.
With Ford, GM, and Chrysler, the reality has been mostly about poor decisions. They have always been the Johnny come lately in doing what is necessary to thrive in a current market. During the fuel crisis of the 1970's they kept churning out land yachts when the public was turning to more economical compacts from Toyota and Datsun. By the time they realized their mistake they were so far behind the curve that they made twice as much work for themselves. In the 80's and 90's when the foreign market really exploded because people started to realize that a car could go more than 100k miles without the transmission blowing up, American manufacturers thought it might be prudent to follow along. Again, they scrambled too late and lost.
But I digress.
So now we are in another fuel crisis. Replace the 70s land yachts with today's SUVs and we are still dancing under the same disco ball. Of course it is not all bad. The program that gave the Chevy Malibu new life was brilliant. Perform a part by part comparison to the Toyota Camry and manufacture it at a considerable cost savings to the consumer. I love it.
Unfortunately there are not enough good ideas to outweigh the bad. GM's lame attempt to make a Hybrid SUV is just tragic. I would love to meet the people responsible for designing a Hybrid vehicle that gets 20 MPG fuel economy so I could punch them in the mouth. The fact that it was ever allowed to be released is so ludicrous that I thought I was dreaming at first. They are scrambling and losing once again... and again.. and again. To GM's credit, it has really started to take care of its current customers with any issues they may have. It is to be congratulated for that. But it still is not enough to stabilize a dark and uncertain future that is currently ruled by Exxon (XOM) and BP (BP).
American manufacturers need to produce more cars like the up-coming Chevy Volt concept very soon because the likes of Nissan will be cranking out its own versions within the next two years. They need to drop this E-85 flex fuel nonsense and concentrate on electric now, but more importantly the potential of compressed air and solar power for the future because the next crisis after oil will be electric energy shortages. When that happens, how will we be expected to charge our electric vehicles cheaply? By Natural Gas generators? Are you starting to understand the proverbial urinating into the wind concept? It won't matter what the energy source will be because as long as we dictate that automobiles be fueled with energy reliant on natural resources, there will always be another fuel crisis down the road.
Final fact: With or without American auto makers, alternative energy vehicles will be here in a 100 foot tidal wave in five to seven years. Do not doubt it for a second.
American manufactures have this one rare opportunity to emerge the heroes of a new energy revolution as long as they can get out of their own way and give the masses what they want, when they want it. Which is right now.
More here:
http://seekingalpha.com/article/8591...s?source=yahoo