I recently (say 4 months ago) bought a brand new Chrysler vehicle. A week ago I got a customer satisfaction survey.
From the survey I got pretty strong impression that the important thing is not the value of the car, not it's quality, but the fact that the car is made in North America and it's made by "THE CHRYSLER". I bought a piece of American Automotive industry's history and I should be happy with that.
As a person that only buys American made cars. The "Made in America" reliance had allowed the industry to escape improving the quality of their products for some time. Fortunately for the automakers the NASCAR viewership will always buy American as most drive American trucks which are superior over the competition.
The issue is now even though the quality has improved, it is hard to get the higher paid individual and foreign born consumers (which their are lots) to buy a US cars.
Not even sure where my clothes are made. Probably not in America.
There are several reasons for buying American:
1.) For the price point I buy at (low to middle < 30k) the American cars have the same quality as I can get in a foreign car.
2.) Given equal price and quality, keeping the money in the US keeps more Americans working.
There are lots of foreign products and services where the price to value ratio isn't even and for those purchases I am more than happy to buy from anywhere.
It is kind of why I typically support local businesses in my town rather than go with large franchises if the price/value relationship is equal.
Lots of ancesotes, tired cliches, and no insight or inside info. I felt the article was a waste of your time so don't bother.
I'll counter with this ancedote: my 1997 Ford Exbition has 175,000 miles including over 20,000 towing a double axle steel car trailer with a car on it and I haven't had a major repair yet - only the cd player and regular maitrnance. If they can build trucksso well why did the gov force them to make the cars they were bad at making via cafe laws?
Every time the failure of US car makers come up, somebody blames the CAFE Act, environmental laws, having to deal with government regulation, etc. It turns into a veritable blamestorm.
The problem is that consumer preferences lead to lots of small (and fuel efficient) cars being bought every year; most of them just happen to be made by non-US companies. The profit margin on smaller cars is smaller, as well (luxury cars have the largest profit margin), but I don't believe that Toyota or Honda are losing money on every Corolla or Civic sold. They also seem to be doing OK in meeting fuel economy laws.
The real question is why US automakers don't make competitive small cars. One answer is the cost of labor in the US, but the other answer is that US automakers don't have a compelling process in place that continuously refines a small car until it does what the market wants. Look at the aforementioned Civic, for instance. Its original form came on the market in 1973, and its current larger form in 1996. Even the 70s version had a high build quality and was renowned for its reliability, but every subsequent iteration has, arguably, been refined and worked on to make it more and more palatable to the American market (the European Civics are different, FWIW).
Now look at US car makers. Which small US car has been marketed under the same name since the early 70s and refined every few years, meeting market demand and giving consumers what they want? US auto makers seem obsessed with re-badging and re-marketing their cars every few years, often to cover up memories of unsuccessful or embarrassing prior launches. The worst example is perhaps the Ford Taurus, which sold bucketloads in the full-size sedan segment in the 80s and 90s. So of course Ford took the Taurus out of their segment in '04 and replaced it with a smaller AND a larger sedan (the Fusion and the 500). Imagine Honda discontinuing the Accord next year and replacing it with a larger AND a smaller sedan (rather than making the Accord a bit larger, which they did last year... and five years ago). To nobody's surprise, the 500 flopped and was hastily renamed back to 'Taurus' for the '09/'10 year (there were some technical reasons, too).
Similarly, there are car production plants on US soil that make perfectly good cars, using non-unionized American workers. If you've ever been to, say, Louisville, KY, everybody seems to be driving a Camry.
No the real question is not "Why US automakers don't make competitive small cars". The real question is "Why is the government forcing a business into making products it is bad at making?"
The US automakers turn a profit on the manufacture of trucks. They make great trucks and sell them at decent prices and competitive MPG ratings. It is a viable business on its own if they were just allowed to do that.
Why can't the government just say an X # of pound vehicle must get over Y miles per gallon to be sold?
THE PROBLEM WITH CAFE IS NOT THE ENVIRONMENTAL. The problem with CAFE is that it forces them into making cars they do not want to and are not good at making because the law is for some asinine reason based on the average MPG of all the things you sell totaled.
My father was the CEO at a chemical company for a long time. He had to deal with the EPA everyday. They would constantly give them new regulations to follow and the company would go and reformulate everything and make it work. Never though did the EPA come in and say hey, we don't like the pesticides you guys are making can you start selling bird seed too? Just to even it out you know?
That is what CAFE does. They are telling the businesses what products to make - not what constraints for a certain kind of products are.
The issue of them making bad cars is totally moot because if they didn't have to make those cars then they would have just been killed as failing product lines are in any rational business. But faced with irrational legislation the companies had to continue making seemingly irrational decisions.
And I always question this "US automakers don't make competitive small cars". Go drive an Altima, a Corolla, an Accord and a Mazda 6. The Mazda beats the pants off the other three easily and costs less. It is faster, shifts better, accelerates more smoothly, gets great gas mileage and has has better handling. Open the hood and read the nameplate on the motor, transmission, and most of the parts - Ford Motor Company.
This stuff is such FUD. Have you driven a 2009 or 2010 US car - Dodge Charger, Dodge Nitro, Chrylser 300, Chevy Camaro, Chevy Mailbu (underrated by a LOT - go drive one) Ford Fusion, or Ford Mustang - they are great.
Isn't it a bit deceptive to talk about Toyota etc. being made by American workers? The parts are designed and largely made overseas. The American workers are putting prefab parts together. Fact is, the US industrial base is largely gutted and Asia is where it moved.
p.s. there is some good design done in the US but I'm talking high level here.
Don't US companies source a lot of parts from overseas? Ford even has plants in Mexico. US and Japanese companies often share designs. The boundary between foreign and domestic is a lot blurrier than it used to be. This point here is mostly about the management of these various companies, not so much their location or operations.
Also, the article mentions specifically that Toyota and Honda use a lot of American-made parts, which are of higher quality than whatever Ford/GM/Chrysler are using (doesn't say where they are getting parts from) and that is a major contributor to the difference.
I think that moving the parts factories here is a political decision. The core operations are still essentially Japanese and most of the hardcore expertise for Toyota, say, is in Toyota City, Japan. Its not because we Americans are less capable or something - its just a typical industry cluster.
Anyway if I had my say, I wish the car industry was less Madison Avenue, and more Silicon Valley. Why aren't car prices decreasing? Why can't I easily swap out parts myself? There needs to be a rethink and it can't occur as long as .gov is propping up the existing edifice.
this sentence struck me as particularly shocking:
"Most of the profits generated by the Big Three in North America came not from manufacturing vehicles but from financing the sale of those vehicles."
how could anyone think that was responsible business?
What's irresponsible about it? Loans are how banks make money, late fees are how video stores make money, maintenance fees are how software companies make money, why should selling cars just be about the selling price?
Learn to be creative in your business models if you want to be successful in business!
19 comments
[ 4.0 ms ] story [ 58.8 ms ] threadFrom the survey I got pretty strong impression that the important thing is not the value of the car, not it's quality, but the fact that the car is made in North America and it's made by "THE CHRYSLER". I bought a piece of American Automotive industry's history and I should be happy with that.
The issue is now even though the quality has improved, it is hard to get the higher paid individual and foreign born consumers (which their are lots) to buy a US cars.
There are several reasons for buying American:
1.) For the price point I buy at (low to middle < 30k) the American cars have the same quality as I can get in a foreign car.
2.) Given equal price and quality, keeping the money in the US keeps more Americans working.
There are lots of foreign products and services where the price to value ratio isn't even and for those purchases I am more than happy to buy from anywhere.
It is kind of why I typically support local businesses in my town rather than go with large franchises if the price/value relationship is equal.
I'll counter with this ancedote: my 1997 Ford Exbition has 175,000 miles including over 20,000 towing a double axle steel car trailer with a car on it and I haven't had a major repair yet - only the cd player and regular maitrnance. If they can build trucksso well why did the gov force them to make the cars they were bad at making via cafe laws?
The problem is that consumer preferences lead to lots of small (and fuel efficient) cars being bought every year; most of them just happen to be made by non-US companies. The profit margin on smaller cars is smaller, as well (luxury cars have the largest profit margin), but I don't believe that Toyota or Honda are losing money on every Corolla or Civic sold. They also seem to be doing OK in meeting fuel economy laws.
The real question is why US automakers don't make competitive small cars. One answer is the cost of labor in the US, but the other answer is that US automakers don't have a compelling process in place that continuously refines a small car until it does what the market wants. Look at the aforementioned Civic, for instance. Its original form came on the market in 1973, and its current larger form in 1996. Even the 70s version had a high build quality and was renowned for its reliability, but every subsequent iteration has, arguably, been refined and worked on to make it more and more palatable to the American market (the European Civics are different, FWIW).
Now look at US car makers. Which small US car has been marketed under the same name since the early 70s and refined every few years, meeting market demand and giving consumers what they want? US auto makers seem obsessed with re-badging and re-marketing their cars every few years, often to cover up memories of unsuccessful or embarrassing prior launches. The worst example is perhaps the Ford Taurus, which sold bucketloads in the full-size sedan segment in the 80s and 90s. So of course Ford took the Taurus out of their segment in '04 and replaced it with a smaller AND a larger sedan (the Fusion and the 500). Imagine Honda discontinuing the Accord next year and replacing it with a larger AND a smaller sedan (rather than making the Accord a bit larger, which they did last year... and five years ago). To nobody's surprise, the 500 flopped and was hastily renamed back to 'Taurus' for the '09/'10 year (there were some technical reasons, too).
Similarly, there are car production plants on US soil that make perfectly good cars, using non-unionized American workers. If you've ever been to, say, Louisville, KY, everybody seems to be driving a Camry.
The US automakers turn a profit on the manufacture of trucks. They make great trucks and sell them at decent prices and competitive MPG ratings. It is a viable business on its own if they were just allowed to do that.
Why can't the government just say an X # of pound vehicle must get over Y miles per gallon to be sold?
THE PROBLEM WITH CAFE IS NOT THE ENVIRONMENTAL. The problem with CAFE is that it forces them into making cars they do not want to and are not good at making because the law is for some asinine reason based on the average MPG of all the things you sell totaled.
My father was the CEO at a chemical company for a long time. He had to deal with the EPA everyday. They would constantly give them new regulations to follow and the company would go and reformulate everything and make it work. Never though did the EPA come in and say hey, we don't like the pesticides you guys are making can you start selling bird seed too? Just to even it out you know?
That is what CAFE does. They are telling the businesses what products to make - not what constraints for a certain kind of products are.
The issue of them making bad cars is totally moot because if they didn't have to make those cars then they would have just been killed as failing product lines are in any rational business. But faced with irrational legislation the companies had to continue making seemingly irrational decisions.
This stuff is such FUD. Have you driven a 2009 or 2010 US car - Dodge Charger, Dodge Nitro, Chrylser 300, Chevy Camaro, Chevy Mailbu (underrated by a LOT - go drive one) Ford Fusion, or Ford Mustang - they are great.
p.s. there is some good design done in the US but I'm talking high level here.
Also, the article mentions specifically that Toyota and Honda use a lot of American-made parts, which are of higher quality than whatever Ford/GM/Chrysler are using (doesn't say where they are getting parts from) and that is a major contributor to the difference.
Anyway if I had my say, I wish the car industry was less Madison Avenue, and more Silicon Valley. Why aren't car prices decreasing? Why can't I easily swap out parts myself? There needs to be a rethink and it can't occur as long as .gov is propping up the existing edifice.
Learn to be creative in your business models if you want to be successful in business!