Foreign cars pass Big 3

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Foreign cars pass Big 3

For the 1st time, U.S. drivers buy more import brands

Josee Valcourt / The Detroit News

For the first time, U.S. consumers are buying more cars and trucks built by
foreign automakers than vehicles made by Detroit's traditional Big Three.

New statistics compiled by R.L. Polk and Co., which counts new car
registrations and excludes sales to rental car agencies and other fleet
customers, show foreign brands commanded 52.9 percent of the retail auto
market in the first five months of 2006, while domestic automakers fell to
47.1 percent.

Domestic brands led foreign makes 51 percent to 49 percent over the same
period last year.

While the power shift has been long in the making, it's nonetheless a
disheartening sign that Detroit's auto industry is losing the battle for the
hearts and wallets of American car buyers.

Domestic brands such as Chevrolet, Ford and Dodge still control more than
half the U.S. market when fleet sales are included, but more profitable
retail sales are considered the best indicator of which auto brands are most
popular with customers.

"I'm not surprised," said Christian Wardlaw, senior analyst with
Autobytel.com, a car shopping Web site. "The proof is sitting there in black
and white on paper. People can't refute it anymore."

About 2.55 million new domestic-brand cars and trucks were registered in the
first five months of this year versus 2.86 million foreign nameplates in the
same period, Polk reported. The foreign nameplates figure includes some
brands such as Ford-owned Land Rover and Jaguar that are controlled by the
Big Three.

Chrysler Group spokesman Kevin McCormick said the Auburn Hills-based company
doesn't get caught up in the industry scorekeeping, saying the automaker is
"focusing on things we can control in our business. Our strategy at a high
level is to put out the best cars and trucks that we can at prices that are
attractive to consumers."

But industry experts say the numbers illustrate that Asian automakers such
as Toyota Motor Corp., Honda Motor Co and Nissan Motor Co. are doing a
better job meeting the needs of U.S. car buyers.

Domestic brands have been hurt by lower quality scores, and more recently, a
heavy reliance on large trucks and SUVs at a time of a high gas prices.

"People have been swapping SUVs for fuel-efficient cars, and the domestics'
car lineup hasn't been as compelling as the Asians'," Wardlaw said.

Amenities factor in

Import brands are leveraging strong profits to turn out cars packed with
safety features, creature comforts and the latest technology, said Phil
Reed, consumer advice editor of auto research site Edmunds.com.

"With American cars, you say 'This is nice and this is nice but why couldn't
they have done this?' " he said.

The Ford Escape Hybrid, for example, has an optional navigation system, but
the screen that displays maps and approaching roads is too small, Reed said.
In addition, a disc has to be inserted to operate the system, but there is
no additional slot to play music CDs meaning the driver has to choose
between listening to tunes and navigating streets.

With the availability of the Internet, buyers have become savvy about how to
compare the optional versus standard features they can get for their money
and can more easily calculate a vehicle's resale value.

Vehicles made by Toyota, Honda and other top foreign makes generally hold
their value better than American brand cars and trucks, which are often
heavily discounted.

"Toyota has a 10- to 15-year outlook on where the industry is heading," said
James Bryant, automotive industry editor for Hoover's Inc., an online
business resource site. "GM and Ford tend to play along with whatever
happens to be the flavor of the week.

"Everybody knew that $3 gas was going to come eventually," he added. "We
just didn't want to admit it."

And foreign automakers have done a better job capturing the emerging
crossover SUV segment with vehicles like the Nissan Murano and U.S.
automakers are racing to catch up with offerings like the upcoming Ford
Edge.

Toyota registrations rise

Toyota's U.S. brands posted a 12.5 percent increase in retail sales in the
first five months of the year. By contrast, GM's retail sales slipped 7.7
percent. Excluding fleet sales, Toyota brands now outsell Ford and Chrysler
nameplates in the United States, Polk reported.

Wardlaw said competing carmakers aren't only leading in important segments
but getting new products to the market at a faster pace.

The product life cycle for an Asian nameplate is about four to six years
compared to six to eight years for a new domestic car or truck.

Wardlaw points out, for example, that the Ford Focus was merely refreshed
for the U.S. market while the Focus sold in Europe was completely
redesigned.

"What Americans got was a rehashed version of the old Focus and as a result,
Ford isn't in a position to compete" against popular small vehicles such as
the Honda Civic in the U.S. market at a time when gas prices are pushing
consumers to cars.

In a separate study conducted by Autobytel.com Monday, online purchase
requests for large trucks such the Ford F-150 pickup fell 34 percent, and 43
percent for the Toyota Tundra and Chevrolet Silverado for the second
quarter. In comparison, more fuel-efficient cars like the Toyota Camry and
Yaris, and the Honda Civic posted gains.

"The trick for the domestic automakers is going to be that they need to
spread development dollars across every development segment in which they
want to compete, and that includes cars and trucks," Wardlaw said.

You can reach Josee Valcourt at (313) 222-2300 or .

 

Well none of that surprises me.

Heres one of the problems... Fords Vision...

"Our goal is to build on our traditional strengths and redefine them for
the 21st century. We're going to apply fresh thinking and innovative
technology to everything we do, from our basic business processes to the
products that define who we are as a company," Ford says. "Our vision
moving forward is to build great products, a strong business and a
better world."


Nothing about the people at all....

building on traditional strengths... hrm, sounds old fasion. I like it,
but 200 million other people probally think its boring.

to build great products, a strong business and a better world...

Now if that isn';t cheesy

You may think I dislike ford, but the opposite is true, I just don't
think they are sufficiently competing with other companies.

 

snip

Does anybody know how much it costs Toyota and Honda to build a car compared
to
the Big 3?
What are the benefits and salaries paid to the employees?
If there's a difference, the day may come when the Big 3 are going to demand
concessions
from them to save the companies and their jobs.

snip

Sorry, Chrysler. Count me out as a customer. For good. I've had too many
problems with my
minivan's transmission, peeling paint, etc. I'll remember.

2 years ago, my 93 Camry with 234,000 kms at the time, felt more solid and
gave a better ride
than a brand new rental Alero.

Aren't Impalas fuel efficient cars? Here in Canada, they are rated at around
40MPG.
BTW, if you think it's too optimistic, remember that Canadian and US gallons
are different.

snip

In Europe and Asia, they have been building ecenomical cars for the longest
time. In North
America, oil was cheap and we didn't care much.

snip

The trick is also to hire less people with accounting and business degrees
and more "car people".

 

I disagree. I propose that the trick is to hire finance and business
managers who are skilled and experienced in business that is customer
centric. I know it's a buzz word, but it does have a value. There are
industry segments out there that have been fighting the competitive battle
on the low margin commodity battle ground for quite a while now and they
have been the ones who have defined the notion of satisfying the customer -
on the terms of the customer, not by the terms of the manufacturer. They
have built successful and profitable businesses. Bring in executives from
the High Tech sector, for example. They understand the notion of leading
edge designs that actually bring new value to a product and create a
competitive position for that product. They understand how to cut
manufacturing costs without cutting reliability. They understand the
pitfalls of claiming quality, nifty program names (Quality is job 1) that
serve nothing but to put out a new slogan, and they understand the nature of
a rapidly advancing environment. It would be a radical change, but just
like the phone companies needed radical change after divestiture, the motor
companies of today need the same. What they don't need is another
"alliance" as has been suggested for GM.

 

Even including cars & trucks huh? Observations like that one from an
"expert" might give some insight into why they are losing ground.

 

Big 3 = GM, Ford, Toyota.

Toyota and Honda probably average 3-6 hours less in final assembly time
per car, and Toyota does it with less automation than

Same pay, worse medical and pension than GM, Ford, and
Damlier-Chrysler.

Don't promote people to managerial positions unless they've worked on
building cars. I believe a major reason the US chip business remains
so competitive is because almost all its CEOs have built chips.

 

Al gore talks a little on that subject in his movie Politics aside, it's a
good movie.

john

 

It's already here. The companies are demanding concessions involved health
care. Soon they will involve pensions. The Big 2 and the American part of
the Dialmer-Chrysler and many of their suppliers have pension obligations
that have not yet been met. IN most of Europe, the government takes care of
the pensions.

I would still consider them later. Their quality is improving, thanks to Dr.
Z and others from Germany. And from competition in the US.

My Contour is the same way. It only has 131,000 mi, which is about 220,000
km.

The domestics were expecting SUVs and low gas prices to rule. Oops.

That is why they needed more diversity.

Oil wasn't really cheap. How much are we paying for the Iraq war?

Incorrect. You also need accountants and other business types. Both car
types and bean counters are important.

Jeff

 

Jeff said: "You also need accountants and other business types. Both car
types and bean counters are important."......

I would agree with that assessment overall. But one of Detroit's HUGE
problems is that the bean counters always got the final word.

This was especially true at GM. Going back to the days in the 1980's when
the ultimate bean counter, Roger Smith, was head of GM, you could see that
mentality. It could be said that GM still has not gotten out of the shadow
of the Smith era, no matter how much money he made the company back then,
and in fact, are now paying a heavy price for going down that road.

Regardless of what you think of President Bush, he may have nailed it.
Within the last year, when there was talk of possible subsidies to the
failing domestic car industries, his answer to the Big Three was short,
to-the-point, and right on the money: "BUILD RELEVANT CARS!" Why haven't
they? When you check what the Detroit bean counters have been doing, you
have your answer.

As has been pointed out, Detroit has now been reduced to mere marketing
slogans. For example, Ford may say, "Quality is Job 1," but a look at their
quality numbers, whether compiled by J.D. Powers, Consumer Reports, or
whomever, tell a very different story. Why? When you check what their
Detroit bean counters have been doing, you have your answer.

And when I am looking to find an economical family sedan, not too big, and
not too small, I look out in the car world, and the choices are impressive.
Beginning with the wonderful re-design of the Hyundai Sonata, I can look at
Camrys, Accords, Passats, Optimas, Legacys, the list goes on and on.

Then you have the Chrysler entry, the Stratus/Sebring. They were never good
cars when they first came out, and to say they are horribly outclassed now
is an understatement. Why are they still being sold? When you check what
their Detroit bean counters have been doing, you have your answer.

As was also pointed out, Detroit banked on large SUV's, large pick-ups, and
oversized coupes and sports cars, while the country now needs (and wants)
good, small SUV's and reliable, roomy, well-handling sedans. Why has
Detroit's recent response been to put out even more new re-designs on their
big vehicles? When you check what their Detroit bean counters have been
doing, you have your answer.

I'm not against bean counters. As I said at the beginning of the post, they
more than have their place. And make no mistake, the bean counters still
carry enough wait at places like Honda and Toyota to make sure they are
making plenty of money.

But enough time has passed that, if Detroit was ever going to "get it" in
terms of how best to make money and stay a world force long-term, it would
have by now. Instead, we have the news story that prompted this and other
posts.

So back to driving my Hyundai and Kia, and having LOTS of people asking me
if I think they are worth buying? (they are).

Tom Wenndt

 

snip

I totally agree with you. Read again my sentence. I suggested having more
"car people" and "less" of the other kinds.

 

Whose fault is that? Not the bean counters.

Who was stupid enough to give the bean counters the final word?

Jeff

 

Actually, I would argue that the car people need more influence and the
accounts need to have less influence. It is not the fault of either group of
people. It is the fault of the management for their choice of to whom to
listen.

Jeff

 

And health care too. Of course, it has to be paid for by someone
either way. In Europe and Japan, health care costs are a fraction of
those in the US and everyone is covered.

 

Well, the CEO of GM came from the ranks of bean counters, not car guys.

 

The CEO of Ford made $22 million in 2004. the CEO of GM made $10
million. I don't think the CEOs of Honda or Toyota are anywhere near
that. You will excuse me if I question who is being overcompensated
at the domestic companies.

 

Don't get me wrong, I'm very much a capitalist, but I do believe you've hit
on something here Gordon that hasn't been hashed about much in this
discussion. It's not just an automotive industry issue either. It's a
cultural issue that is hurting the corporate world across industry segments.
Executive compensation has gotten out of hand and the plans are too focused
on factors that provide short sighted "good" for the shareholders. The long
term well being of the company, the well being of the employees, concern and
commitment to the employees, all have fallen out of favor. Customer
satisfaction, which ensures these things has become a point issue which is
addressed in response to problems instead of a goal which drives the
production process of the company. Cost is what drives the company. The
CEO of today is compelled to make cost cutting his number one objective and
his financial success is directly tied to that effort. While a valid
management concern, cost containment is only one part of a long term success
formula. For short term objectives, it is usually the driving element of a
formula.
But - the shareholders like their dividends, the CEO has his own ego driver
that wants to be recognized among his peers for having lead a successful
company, and the stock market has too much influence on business today. It
results in executive packages that encourage and reward short sighted
business practices. Good for the executive pay, not so good for every thing
else in the business.

 

The Board of Directors, which is hand picked by the CEO, which Board in
turn theoretically hires or fires the CEO.

It really is a mess. The last brilliant CEO GM had was Sloan. He
developed a system which balanced strict financial control from the top
with delegated control of most other things to the division presidents.
After he left, the replacement CEOs took that strict central finance
control and used it to gut the power of the divisions to the point where
they don't exist anymore.

John

 

Pretty much all of the employees from top to bottom are being overpaid
by competitive standards.

John

 

I agree. The circular way in which CEO's pick Boards of Directors who
then in turn compensate the CEO is a major problem. In theory the Board
represents shareholders, but in practice this isn't true.

John

 

They will get that on highway driving.
In urban driving their milage reflects their weight and engine size, the
same as similar competition.