Contour Enthusiasts Group Archives Forums General Common Interests Things not looking good for US car industry....

As far as the hybrid thing goes, don't get too excited over the Honda's. They don't have as good a system as Toyota and Ford. They're hybrids are only a partial hybrid meaning all they do is put a electric motor in tandom with the gasoline engine and is used to get more power output from a smaller gasoline engine.
The Ford and Toyota systems are full hybrids in that they can run on either just the gas engine, just the battery(electric motor), or both.
Secondly the Escape Hybrid is putting the technology where it's needed most...the gas guzzling SUV market.
Also you should consider the numbers your paying for that hybrid system. The added cost of the hybrid technology is between $3000 to $5000 over the regular model. For sake of argument lets say the hybrid model cost $4000 more than that of the regular gasoline model. $4000 is a much bigger percentage on at $15,000 vehicle (Pirus, Civic, Focus etc) than it is on a $25,000 vehicle.
Also consider that if your looking at a Pirus or similar sized car as a vehicle, it doesn't get that much better mileage than it's none hybrid version, and because of that you'd have to drive it for a long time before you recouped that cost of that hybrid powertrain.
The Escape on the other hand, is in a market dominated by gas guzzleing vehicle. Again it doesn't get that much better fuel economy above the gas-only version to make it payoff the hybrid technology faster. But someone considering a larger SUV say Explorer sized, may look at the Escape hybrid as an alternative, where the fuel savings will add up fast.(When it comes time for me to replace my Explorer I'll be seriously considering the hybrid over another Explorer) Someone looking for cargo/passenger room will look at an Escape hybrid long before a Civic/Pirus.

While on the green topic.
Ford and GM have delivered fuel cell powered(hydrogen) cars to fleets in Vancouver this past year for field testing of their powertrains.

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This is sad. Look import buyers, you are putting AMERICANS out of business because of your ignorance towards AMERICAN-built vehicles.

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Import buyers don't have ignorance towards AMERICAN-built vehicles. Those who choose to buy imports buy them because we don't want cars with crappy resale values. We don't want our cars spending more time with the service tech than with us. We want interiors that don't look like they were thrown together from across the room. Do you know how we came to the conclusion that we don't want these things. WE DROVE AMERICAN CARS, MANY of US DROVE THEM FOR A LONG TIME, WE GAVE FORD, CHRYSLER, and GM SEVERAL CHANCES AND ALL THEY GAVE US WAS A SUBSTANDARD PRODUCT.

Secondly, those American car companies wouldn't have so much to complain about if they would just pull their head out of their ass and figure out what people want and start building. it. They are putting themselves out of business, us import buyers aren't.

i think the damage to ford chrysler and gm has all ready been done and may be hard to go back. even if starting on thursday ford chrysler and gm started makeing top qwality cars and trucks people would not trust them for about 10 or 15 years from now when it would be proved. after all it would be hard for ford to drop its nicknames like "found on road dead" and "fix or repair daly" and more and more people would continue to stwich to imports. 10 years ago my dad would of never boughten any import. but now he has a likeing for the accord coope and the corolla xrs

Another idea that has not been discussed:

The amount of immigrants in America is up, way up. Look at the cars they buy!

I think the biggest problem is that the U.S. automakers are in business for the wrong reason. They've spent too many years playing it safe and playing the game not to lose. Too many years pushing good enough designs and antiquated technology.

They need to start taking some real risks and some real chances and start playing this game to win. Strive for excellence with cutting edge designs, state-of-the-art technologies and quality second to none.

American automakers need to give people a better reason to buy their product than "it's American" or "support our workers, buy American."

Make people want to buy the car, not make them feel like they are obligated to buy the car.

I'm proud of you guys! A lot of good issues raised here and no one's started any personal attacks!

I think this is a real love triangle of failures for the US car industry, taking D-C out because they are really a German company and no longer led by Americans. The "merger of equals" was really a buy-out by Daimler of Chrysler, anyways. And the market reacted that way when it happened. The interesting thing is that Chrysler has seen all of the benefits of the deal in terms of profits, market share, product, and customers (reflected in a turn to a more youthful customer compared to GM and Ford). Mercedes on the other hand has seen a drop in market share and a series of product lines with very low or negative profitability. In addition, their US manufacturing plants have taken twice as long to manage and monitor than anyone thought. It took Mercedes 3 years (1998-2001) to fix major gremlins on the ML SUV, when critics say those gremlins would have never appeared in a German plant. And as for producing "gas guzzling HEMI's" the technology used to shut down 4 cylinders on the Chrysler HEMI engine is a step in the right direction, and it works far better than the Cadillac variant from the late 80's.

In terms of controlling costs across the board, GM and Ford are suffering from many angles. Foreign companies are building plants here because our labor is cheaper than labor in Western Europe and Japan. and even with unions, it is much harder to fire employees in EU or Japan than it is here. So, even with an employee lifetime cost, i'm not sure the US is much more expensive, comparatively, than EU or Japanese companies. I think the real problem with costs is GM and Ford cutting costs at the expense of the product. When the product suffers, no amount of goodwill or marketing will make people buy the product. I also think that GM and Ford lack a certain amount of loyalty with their suppliers, something inherent in the Japanese Keiretsu system. In this system, the conglomerate takes care of every company in the value chain, from raw materials to financing. Vertical integration and loyalty, combined with a favorable government and banking structure, give Japanese companies a lower cost of capital than US companies. This allows them to take more risks in the long run.

Some have theorized that the Keiretsu would stall competition and reduce efficiencies, but this is only when the system is taken for granted or taken out of context. In Japan it is a way of life and a serious way of doing business. transaction costs are lower for every decision because the "red tape" and negotiations are far shorter and more efficient than in the US. Are you a product manager at Toyota and you want Y100 million for a new product? just call Toyota's bank and they'll hook you up. they know the structure of the company and won't waste your time with due diligence processes that suck up money that could be used to create opportunities. In the US we'd call them oligarchs and encourage regulatory agencies to watch over these companies. In Japan Keiretsu is the building block of their commercial society from cars to copying machines.

I personally think that US car makers are in a serious bind. The "Mediocre 2" (GM and Ford) have been on a slippery slope with only small portions of their sales portfolios or financing operations keeping them afloat. But what happens when automotive losses outweigh gains from financing? What happens when the NPV from 5+ years of 0-3% consumer financing deals is negative and can't support these companies' expensive operations? I think one of three things will happen:

1) The government will intervene and pump billions of dollars into the industry, something which we criticize France for with regards to Airbus. Ford and GM will either wake up and produce things people want or the money will disappear and they'll need another infusion of taxpayer capital in 10 more years.

2) One or both of these companies will be bought by a foreign investor. Could be a global holding company, could be a rival, could be a supplier. But someone will see the underutilized potential in these 2 companies, trim the fat, renegotiate union contracts, install new management, and get on with profitability. This path will surely be painful and lengthy, but might be the jolt these companies need to get on the right track. Who could pull this off? A large financial services syndicate would be my guess. One with a global reach and less sensitivity to the US union system.

3) One or both of these companies will consolidate some of their operations, sell off non-strategic business units, or scale down production in favor of a corporate restructure that focuses on quality and product development over cost control. This one will take the most guts from these companies and would require leadership to admit defeat. But it would probably be the fastest path to a sustainable business strategy for both companies.

One of the things that was brought up on Autoline Detroit a few weeks back was GM filing bankruptcy to get out from it's retiree costs. Let the Fed pick up the burden. They hypothesized that if GM did it then FoMoCo would have no choice but to follow suit. That'd be one way of pumping billions into the system.