

Why Has the U.S.-Owned Auto Industry Failed in North America? - winanga
http://www.oftwominds.com/blogmay09/bigthree05-09.html

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Stasyan
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.

~~~
bbuffone
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.

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dbul
Why do you only buy American cars? Do you only buy clothes made in America,
too?

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bbuffone
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.

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wglb
One thing missed here is [http://www.fivethirtyeight.com/2009/03/gms-problems-
are-50-y...](http://www.fivethirtyeight.com/2009/03/gms-problems-are-50-years-
in-making.html) which is pretty convincing. A very good book on the auto
industry is Halbestram's "The Reckoning".

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krschultz
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?

~~~
ATB
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.

~~~
chancho
So is blamestorm a noun or a verb?

~~~
cmars232
A joke metal band. Well, it should be one, anyway.

~~~
chancho
File under: blamecore.

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adatta02
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?

~~~
HeyLaughingBoy
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!

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chadmalik
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.

~~~
chancho
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.

~~~
chadmalik
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.

