
SUVs "may prove to be the industry’s undoing" - ksvs
http://www.nytimes.com/2008/10/26/business/26jane.html?_r=1&em&oref=slogin
======
asmithmd1
For the past decade whenever anyone in Congress would talk about raising CAFE
standards or requiring SUV's to meet the safety standards of passenger cars
instead of trucks we would get the response from auto executives that they
have to listen to the market. People won't pay for safety or fuel economy they
would say. We are only building what people want.

Well listen to the market now - go die. No one wants the crap you are building
and you were too short-sited to hedge your bet by making anything else. Why
should we prop-up this aging dinosaur? There are plenty of profitable car
manufactures making cars in the US people want - the Honda Accord for one.

~~~
Prrometheus
One might think their business decisions had something to do with a world
where gas was under $2/gallon less than 4 years ago, and not stupidity or
other negative qualities often ascribed to them. Japanese and European car
makers, in contrast, always needed to make tiny fuel-efficient cars for their
domestic markets, and then happened to be in a great position in a suddenly
fuel-scarce world.

We have a habit of ascribing causality to human virtue and vice too much when
the world is actually much more random. Had the executives of Ford or GE known
what fuel prices would do from 2005-2007, of course they would have made
different decisions.

~~~
delackner
Let's see, state of the "stability" of oil in the world in 2005:

Russia is run by a former KGB head who extra-legally destroyed their private
oil producers. Venezuela, one of the world's largest producers, has a
president who thinks america is evil. Continuing war in Iraq. Gas prices at
the pump have been rising on average for years. I just rechecked this and
indeed, since before 2003 even prices have been on a long average upward
trend. Even after our current plunge, prices are much higher than the LOWEST
price in 2006.

Outside the US (where even US automakers should have known the bulk of their
growth was going to come from) small efficient cars continued to outsell SUVs.

And yet instead of fixing their money-losing operations, they went all-in on
their highest risk area: expensive inefficient trucks.

~~~
Prrometheus
The geopolitical situation of the oil producing nations has been problematic
for a long time. You might be right about gas price trends, but I seem to
remember gas staying below $2 until Hurricane Katrina (at least in the
Southeast), and then the price undergoing a few discontinuous rapid increases.
A long upward trend in prices doesn't disrupt their business plans, as long as
the slope or the change in the slope remains roughly constant.

Do you really think foresight in the auto-industry is that easy? Do you really
think the executives of the American companies were that stupid? Is every
company failure due to the stupidity of its executives? Can every failure be
avoided?

It often seems that way in hindsight. But personally I find it striking that
the automakers in trouble were all catering to the American domestic market,
and the ones doing well were all catering to small-car oriented foreign
markets.

------
lhorn
Another thing about american auto makers I could never understand is that they
have always believed in selling 2nd grade crap to general public, splitting
their products into two very distinct niches. Ford and GM can innovate, they
have brilliant engines and great designers, but all that stuff is generally
reserved for european models or for "luxury" divisions. Two examples:

1\. GE has always had two different lines of V6 and V8 engines: low-tech, gas-
guzzling one (for cheap Chevy/Pontiac models) and high-tech modern ones for
Cadillac and European Opel and Saab.

2\. Ford is even worse. They make cheapened-down version of Focus specifically
for US, while selling a _great_ little car in Europe. I just got back from
vacation and I truly enjoyed one. Just compare these two photos from european
and american versions of Focus, see all that cheap hard plastic painted fake
aluminum in US version? Jeee....

American:
[http://www.fordvehicles.com/assets/images/vehicle/pg/fcs09_p...](http://www.fordvehicles.com/assets/images/vehicle/pg/fcs09_pg_901_int_lg.jpg)

European:
[http://img.worldcarfans.com/US/2007/12/4/9071204.006/9071204...](http://img.worldcarfans.com/US/2007/12/4/9071204.006/9071204.006.Mini9L.jpg)

~~~
Prrometheus
I would imagine the "low-tech, gas-guzzling" ones are cheaper to produce, and
so go in their cheaper product lines. Not everybody can afford a Saab.

------
rsheridan6
This article didn't mention that a 25% tariff on importedntrucks, but not
cars, was a major factor in getting US automakers to focus on trucks and SUVs,
where they could have fatter margins. Paradoxically, the legislation that was
meant to protect them may end up killing them instead.

~~~
netcan
I didn't know that. Down here in Australia that's upside down. SUV/Commercials
get a lower tariff rate. It's not much now, but it used to be higher.

------
vaksel
GMs problem is that they put all their eggs in that basket. They became an SUV
company first, then followed by sporty cars. They completely ignored the
compact, midsize segments and let those deteriorate until they produced
nothing but crap. Which is how the japanese cars took over.

I mean honestly for me, GM can come out with an Ferrari looking honda accord
competitor, that is more reliable, has more features and costs 40% less...and
I STILL will go and buy a accord.

Why? Because the last and only GM vehicle my family owned was a piece of crap
that fell apart with only 70K miles on the clock and cost us 4K in repairs
before we sold it.

While the 7 Hondas we owned combined only cost us a total of $600 in repairs.
And that $600 was our own fault because we missed replacing the timing belt on
time per maintenance schedule.

You only get once to make a good impression.

~~~
natrius
"They completely ignored the compact, midsize segments and let those
deteriorate until they produced nothing but crap."

Every time I see a Chevy Aveo hatchback on the road, I throw up a little in my
mouth.

~~~
noonespecial
Actually I recall that Aveo is really a Daewoo Kalos, made in Mexico, brought
to the US and then stickered with a chevy badge.

I think maybe I heard that GM bought all or part of Deawoo but its still a
stretch to call this car a chevy.

~~~
delackner
Would you put your company's logo on a third-party piece of junk? No. That
they did doesn't really help any argument that they have their head's on
straight.

------
dgordon
"And with that, the era of the big S.U.V. was as good as dead, done in by
soaring gasoline prices and consumers fleeing to smaller, more fuel-efficient
cars."

And nothing of value was lost.

------
logjam
Agreed. I have had three Honda and Toyota vehicles. My last one had 350,000
miles on it - all handled well, were gas misers, always looked good, never
gave me any problems, and were easy to maintain myself.

GM/Ford make, frankly, excrement. I really cannot believe people buy their
goods. They are uneconomical, break down constantly, reflect zero
innovation....and the companies themselves have had to be dragged kicking and
screaming into the 21st century.

And then there is the Jeep I once owned. I spent all my free time fixing every
conceivable part on it - they all seemed to break as soon as it was out of the
driveway. The body started rusting out immediately, the engine began consuming
great quantities of oil at 25,000 miles....even the SPARE TIRE carrier on it
was so flimsy it broke off, not offroad, but driving through my neighborhood
streets.

The Toyota 4WD pickup I still have will probably outlast me and any
grandchildren I ever have.

~~~
mynameishere
I've never had any trouble with my ford, and it was the cheapest car available
when I bought it. I don't follow the auto industry, but it's my understanding
that the statistics generally confirm that US and Japanese cars are of
comparable quality (unlike in the 1980s).

GM deserves its coming bankruptcy. They made obscene money on light trucks and
SUVs (trivially engineered vehicles--unlike cars, which are expected to handle
properly). They could have come up with the next Mustang, or the next K
platform, but...eh.

