U.S. automakers suffer image problem of old

[Globalist]

http://yahoo.reuters.com/financeQuot...8318808_newsml
Reuters
U.S. automakers suffer image problem of old
Sun Jan 8, 2006 11:28 AM ET



By Nick Carey
CHICAGO, Jan 8 (Reuters) - Iain Robertson opted to buy his 1999 Honda Civic for three reasons; reliability, fuel efficiency and a little family history.

"My mother has owned several Hondas over the years, and she swears by them," said the self-employed 26-year-old from Bloomington, Indiana. "My impression of this and other Asian brands is that they are well made, efficient and don't break down much."

He said he was unable to make the same assumptions about American auto brands.

Among the myriad challenges facing U.S. automakers, including skyrocketing health-care and production costs, is the perception that U.S. vehicles are not as well built as Asian ones. Quality is a variable that has not received much attention lately, but still affects Detroit's prospects.

Analysts say beliefs like Robertson's are grounded in problems Detroit car makers had 20 to 30 years ago with reliability and efficiency, but do not reflect the significant progress made since then.

"This drives Detroit nuts," said David Healy, an auto industry analyst at Burnham Securities. "They have come a long way, but public perceptions don't reflect that."

Jokes surrounding General Motors Corp. (GM.N: Quote, Profile, Research) , Ford Motor Co. (F.N: Quote, Profile, Research) and the American brands of DaimlerChrysler AG (DCXGn.DE: Quote, Profile, Research) -- such as Ford standing for "Fix Or Repair Daily" -- are still told, and laughed at.

The perception has also helped erode the market share of the Big Three and lowers the resale price of used American cars. And while they have narrowed the gap with Asian car makers, Burnham Securities' Healy said their cars are still "spotty in places."

"Detroit (car makers have) high pension costs that put them at a disadvantage compared with the Asian car makers," he said. "They can't invest as much so they are constantly playing catch-up."

An October survey of more than 1 million car owners by nonprofit publication Consumer Reports reported that 29 of the 31 most reliable cars named by respondents were Japanese. The other two were the Chevrolet Monte Carlo and the Mercury Mariner.

Of the 48 least reliable, 22 were American, 20 European and four were Japanese, according to the survey.



Brian Moody, road test editor at automotive information Web site Edmunds.com, said the quality nadir for the American automobile industry lasted from the late 1970s to mid-1980s, when they lagged behind Asian car makers and produced cars famous for persistent problems.

"This is where the perception comes from," Moody said, adding it's possible children growing up in those years may have been influenced by seeing their parents deal with balky Big Three vehicles.

"Many people are subconsciously influenced by what their fathers may have said about different brands, even if those statements are no longer necessarily true," he said.

"It is an emotional issue," Moody added, saying some Big Three cars match their Asian counterparts, but "thanks to this emotional baggage some people don't give them a second look."

Moody and other analysts say the worst is now behind the Big Three, with some brands regaining some U.S. market share and earning recognition for advances.



From 2000 to 2005 J.D. Power and Associates' study of APEAL -- Automotive, Performance, Execution and Layout -- measuring "owners' delight" with their cars, has seen Asian cars in the lead with 47 awards. American brands have taken 35 and European brands 24.

Overall, the Big Three saw their U.S. market share decline to 56.9 percent in 2005 from 65.6 percent in 2000, according to J.D. Power data, although the Chrysler brand rose to 3.8 percent from 2.8 percent in the same period.

Toyota Motor Corp.'s (7203.T: Quote, Profile, Research) market share rose to 10.6 percent in 2005 from 8.1 percent in 2000, while Honda Motor Co. Ltd.'s (7267.T: Quote, Profile, Research) went to 7.4 percent from 5.9 percent.

Analysts said part of the problem can be resolved through improved communication.

"The challenge is to get people back into the showrooms," Edmunds' Moody said. "The key to that challenge is to reach people on an emotional level rather than just claiming they are making good vehicles."

Susan Jacobs, president of automotive consulting company Jacobs & Associates, said that rather than constantly pushing incentives and discounts "that give the impression these cars are on sale because no one is buying them," the Big Three need to "communicate the advances they are making in technology and comfort."

Jacobs said that when asked, she advises people to choose based on cars' attributes, as "there is very little between the brands nowadays."

"Many people don't know that," she added.

[Globalist]

...
Analysts said part of the problem can be resolved through improved communication.

"The challenge is to get people back into the showrooms," Edmunds' Moody said. "The key to that challenge is to reach people on an emotional level rather than just claiming they are making good vehicles."

Emotional connection with customers through design and technology.

[DuSpinnst]

Originally Posted by Globalist

Jacobs said that when asked, she advises people to choose based on cars' attributes, as "there is very little between the brands nowadays."

"Many people don't know that," she added.

THIS IS KEY!

[Mr. Burns]

Originally Posted by DuSpinnst

THIS IS KEY!

but there's also very little difference between car's attributes nowdays.

[DuSpinnst]

Originally Posted by Mr. Burns

but there's also very little difference between car's attributes nowdays.

Who are you? Seriously, ELABORATE.

[Mr. Burns]

Originally Posted by DuSpinnst

Who are you? Seriously, ELABORATE.

well, for one, if you want a comfortable family sedan, the choice you have between all the brands comes down to the camcorder, sonata and malibu/impala. All are basically the same with different badges, so people will choose the camcorder, and guess what, people are choosing the camcorder.

Of course, when you want to get the avalon, then chrysler comes into play with the 300, there you can count the attributes, but chrysler has no relevance to GM, now does it?

and yes, im still mr. burns, no one hacked into my account if that's what your wondering.

[Ming]

Perception is GM's next big battle, one hopefully they are winning on a few fronts.

[Buickman]

Perfect time for Return to Greatness.

[Bravada]

Yup, GM barely tries to catch up with the Japanese - Malibu or Impala have nothing that really BETTERS the Camry, as well as Lucerne and the Avalon. They don't even stand out in terms of styling, and that wouldn't cost much, contrary to new engines/transmissions. Nissan went bold with styling and it worked - nobody thought they are ever going to catch up!

People won't try American cars just because "they might be reliable this time". They need a reason to buy them, and then they might find they are reliable, and buy another time, not to mention they would spread the word.

What also strikes me is that most American car commercials I've seen are terribly stupid. And also the webpages and promos that highlight "chrome grille" or something - like you wouldn't notice! I remember a very good ad for the Peugeot 505 Break for the American market. It read "Apparently the best kept secret of the automotive secret began to leak out", plus some quotes for car magazines likening the Pug to Mercedes, BMW and other premium makes, as well as general praise for handling and spaciousness. If only somebody at GM could feel this kind of understatement...

[kenmi]

The leadership elites in the U.S. have mocked American automakers for 20 years. How could the public think otherwise? They are into "free trade" (the utopia of all things foreign). They are wrong. They are ruining our country. (The Middle Class.)