Why Has the U.S.-Owned Auto Industry Failed in North America?
oftwominds.com
oftwominds.com
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.
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.
Learn to be creative in your business models if you want to be successful in business!
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.