For a long time, our auto industry was run by men who were called the “car guys”.They were men like De Lorean, Iacocca and others who were engineers and people who loved cars.They were supplanted in the 80’s onward by men like John Smith and Rick Waggoner who were accountants or finance men who were interested in money and not the products.They were essentially money managers and not men interested in creating wealth through manufacturing.As they kept raping the corporations to pile on wealth for themselves,the product became secondary to the corporation and the high ground in quality and technology was ceded to the Japanese and Germans.Once the battle of perceptions was lost,the ending was inevitable.
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The auto industry has been selling about 15 million vehicles per year for the past several years. That hardly seems like extinction.
Even Ford and GM have only seem a slight fall off in their sales volume. It’s just that the Japanese and other foreign companies have been increasing their sales. If there wasn’t such an emphasis on “market share” then nothing would be seen as too amiss.
The issues with the profits of Ford and GM have to do with old plants vs new plants for the foreign companies, as well as unionized vs non-unionized workforces. Big companies always like to blame the workers for their problems. Car companies in Germany are doing OK with even stronger union contracts than those in the US. However, the workers social costs are spread over the entire society through nationalized health care and similar plans. Thus there is no incentive to punish specific workers in a given industry.
I look at it this way.If you make 5 million vehicles like GM does and loses almost 5 billion dollars, you might think that you would be better off doing something else. The same holds true to a lesser extent for Ford. Meantime, Toyota is making runaway profits on lower sales than GM because the market considers their products superior in quality.
Your dismissal of market share as a quaint notion is also inappropriate.The entire GM business model is predicated on meeting a minimum number of vehicles per model sold at a price that yields a robust profit. When both the market share and the price per unit continue to erode as it has done for GM, extinction is not too far off.
I can’t agree. Quality was ceded long before the current crop of managers. But besides quality, American manufacturers also ceded entire segments of the industry. The thrust as of late (the past decade) has been on trucks/SUVs and cars are only now getting attention from Ford and to a lesser degree, GM. But the upcoming Ford Fusion is a really a made-over Mazda 6, Ford owning a controlling interest in Mazda, or Toyo Kyogo (the manufacturer’s actual name). Likewise the new small Lincoln and Mercury Milan arise from the same roots. Not exactly an innovative formula but it may buy Ford some time. GM can’t even boast this level of effort. The vehicles are not distinctive and even Saab’s 9/3 is suffering from problems associated with the GM corporate platform upon which it is based. I believe that it is based upon the epsilon platform, the same underlying the Chevy Malibu and other vehicles. Other manufacturers use the same strategy (most notably VW, with 8 or so vehicles based upon the Golf platform) but to better effect. But yes, there is no passion to compete, the way the German big 3 compete against each other. Now it is just about survival.
One of the reasons our car industry started deemphasizing quality was to respond to pressures from the money men to meet the quarter’s profit goals. You may be right in saying when this started.I can go back to the days of Roger Smith, who, to his credit, saw the need to hold on to the small car segment as a must have segment.When the Saturn plant was built it was supposed to turn back the tide of the foreign car invasion.Events since then have proved that the Saturn experiment could not withstand the onslaught but at least Roger Smith tried.
The Saturn debacle is probably the saddest episode of mismanagment on GM’s part in recent times. While the cars were never really competitive, they were quite reliable and this, taken together with fixed prices and the friendly dealer network provided a measure of success. The owners were, for the most part, people looking for a stress-free experience. But GM never did much after the initial success. This too was ceded to Scion, which now sells reliable and inexpensive cars at fixed prices.
What is amazing to me is that at the time the Saturn plant was being built for an investment exceeding 5 billion dollars and was being touted as the Import Fighter, Honda quietly bought up the defunct assembly line of VW at Marysville for something less than $500 million and started making Civics and Accords.The difference in mindsets needed to achieve one’s goals was shown by this episode alone. We know now that Accord and Civic are the best in their class and with the addition of the hybrids are going to take away market share some more.All in all, a sad story.
Even though I live is S.E. Michigan, I have no experience in the Auto Business. However I have heard that the heads of the Japanese Corporations are promoted Auto Engineers, while the Big Three(?) promotes, as you say, money men. That plus newer factories and the quality gap, whether perceived or real, has created what we are strapped with today.
A long range goal at GM or Ford was the next quarter’s profit. Meanwhile, Toyota and Honda were studying our market,and competing with each other to make better cars. People will pay more for a car that holds up, and is easy to re-sell. I don’t think Detroit has figured that out to this day. What is sad is that the rank and file take the blame for what I see as decades of management failure, and an non-supportive government.