Getting back to our discussion of the auto industry bailout from earlier, why is it that the automakers have such profitable businesses overseas? When I was stationed in Germany in 1990-1992, I rode in a ton of Opels (I remember the Opel Vectra my buddy owned was a pretty sweet sedan). If I remember correctly, at one point in time, Ford had the best selling engine in Europe (I want to say it was the Escort engine).
What happened. Why has this changed? Why can they not make things work here?
If I had to guess on anything, I would say health care costs are one issue, and part of the reason I think single-payer is inevitable in my lifetime- because big business wants it. But really, what has happened?
zmulls
No comment on the post specifically.
But when I look at the blog I am seeing a "Cars Direct" ad immediately above the post, with a drop down box saying "Need a new car?"
I thought for a minute you had done that deliberately.
Incertus
If big business wants single-payer, they’ve got a funny way of showing it. I mean, it would be in their best interests to have it, unless you’re in the insurance industry, but they haven’t exactly been lobbying the shit out of Congress to make it happen.
Jeff
Healthcare costs add about $2000 per vehicle made by GM.
emptywheel
You are correct: healthcare is one of those things.
Also, comparative advantage. In Europe (or developing countries), Ford and GM are paying the same wages as everyone else is. Here–as much because of seniority as because of the union, but because of the union, too–they’re getting paid more. It also took a long time for the US manufacturers to upgrade factories, while the foreign manufacturers were working in brand-new factories.
Another problem in the US–exacerbated with declining market share–is that there are too many dealers in the US. For a long time, every US dealer was competing against another dealer just down the street. That meant the dealers were much more likely to have to give price breaks, which the manufacturers supported with dealer incentives. This problem has evened out a lot with the internet, but still, each Honda or Toyota dealer is likely to be farther away from its nearest competitor except in places like CA.
Then there are other problems that are true internationally (for example, the American car companies are just now catching up with the Japanese time-to-market for a model, but it used to be a difference of about 2 years, I think. That meant the Japanese companies were spending less time and money on development, and were responding more quickly to market conditions. This was still true internationally until just a few years ago–but you can imagine how this piles up on top of the other unfavorable conditions in the US>
The Other Steve
Interesting question. I don’t understand why they can make money overseas, but not at home.
It ain’t unions… because the German automakers have stronger unions than we have.
Frankly, I just think it’s bad management. A culture here in the US that is impossible to change. Bad dealerships, bad service, bad cars.
and a public who long ago had enough and refuses to even look at their cars.
I know myself, I will never ever again buy a car from the Big Three. Right there, they’ve got a big problem.
It’s not insurmountable. Volkswagen turned their image around when they introduced the New Beetle and the New Jetta back in 1999. Prior to that, nobody would buy their cars either.
Nylund
I forget where, but I once read the number of the amount of people that Ford or GM covered with their health insurance policy. It included current workers, their spouses and kids, and I think they also had to pay health insurance for retired workers (and possibly their families as well). Point being, it was an astronomically large number.
I assume this is part of the reason why GM has so many plants in Canada.
In this country of corporations and their lobbyists, I never understood why more corporations weren’t pushing the Gov’t to take over the health insurance responsibilities.
The Other Steve
Around here they’re all on the same street.
And something else that has changed. For the last 3-4 years Honda and Toyota have had to discount substantially as well.
Pastafarian
I toured GM’s main assembly plant in Shanghai a couple of years ago. GM workers are among the highest paid in China. They make IIRC about $7/hr ($14,000/yr), with health care provided by the government. Average UAW wage+benefits are approx. $70/hr.
At the time, GM was selling cars in China for about a 10% premium on what they were getting in the US, and they weren’t keeping up with demand. That’s your very unpretty picture. They just can’t survive domestically without a revolutionary change in their business model.
hmd
I’m not an expert, but I guess the health care burden or retirees (and to a lesser extent the inflated wages and benefits of current workers) plays a very large role. With these high costs, the companies are forced to choose current cash flow in the market segments they can compete in (trucks and SUV’s). This short term focus is necessary for financial viability, but it skimps on R&D in the market segments of the future. So they came late to the party on hybrids and still can’t make up the gap in the sedan market.
I’m sure that the U.S. auto makers realized the problems they were making for themselves. They really aren’t that dumb. (Maybe there was some denial going on, but on balance…) But what could they do? Wall Street demands profits now, so R&D suffers, and the future of the company slowly circles the drain.
The only hope is to roll the dice on something like the Volt, and hope it is enough to save the company. But the economic downturn may drag GM down before that even has a chance to pan out.
comrade rawshark
GM and Ford build awesome cars everywhere but here. We get the crap. GM and Ford are premiums brands overseas also. Mercedes and BMW are cabs in europe. You want a quality small car from Ford by a Mazda, it’s based off the same frame Ford uses for the award winning euro Focus. For GM buy a Saturn, it’s really an Opel imported and rebadged.
We get crap because we will buy crap as long as it’s made by a company based in Ourrrrrr countryyyyyyyy.
Michael D.
The reason they are so profitable overseas is two-fold:
1. They make small cars that people want. High gas prices are the norm over there.
2. Governments provide health insurance. Therefore, that doesn’t need to be added into the cost of a vehicle.
I said two-fold, but there are probably other reasons as well.
Sarcastro
We don’t get Opel Vectras here, we get shitbox Monte Carlos trying to put 300 horses on the ground through the front wheels and Impalas built to fleet spec.
Ford builds one* of the best selling cars in Europe, the Focus. It’s NOT the same car as the Focus we get. Oh we get that car, it’s just called either a Volvo S40 or a Mazda3 and costs 5 grand more than that antiquated piece of eel shit Ford America calls a Focus.
And don’t even get me started on Chrysler.
* Ford actually builds two of the best selling cars in Europe, we don’t get any version of the Fiesta though.
Carnacki
Very cat centric. I’m just saying. Not just because I emailed a photo of the best dog ever either.
TheHatOnMyCat
No healthcare costs, cheap labor, cheap operations, cars that don’t have to meet US standards.
Cars being made and sold overseas are more like 1988 cars that we’d recognize, than like 2008 cars sold here now.
Josh Hueco
@Carnacki:
Yes. I’m dismayed at the underrepresentation of canines on Balloon Juice. We need change we can believe in.
Calouste
@comrade rawshark:
I wouldn’t say Opel and Ford are premium brands in Europe that can be compared to BMW and Mercedes, but they have good brand names and sales in the mass market. Opel is considered somewhat boring, although solid German quality and Ford is seen as slightly more innovative (but have a bad rep for quality in some places).
El Cruzado
It should be noted that the same car in Europe is 20%+ more than here (probably not so much now with the weak Euro, but still) most of it is VAT being much higher than sales tax, but there’s also a bunch of other taxes and fees and just things that are more expensive.
That is actually a problem as, to make a profit, it means that you have to sell cheaper cars. Added to the apparent lack of discernment by the US customers (Big Numbers Good! Low Numbers Bad!) means that most of what gets sold here is cars with engines simple and big. A V6 engine is cheaper than a good turbo-4 yet the latter gets better mileage and the same power (makes for lousy mileage). Big penalties and taxes based on mileage and displacement also mean Euro-spec cars trend toward the small engines with lots of widgets attached to them (an extreme example would be the latest diesels, where they basically start adding stuff to a 70hp engine to end up all the way at 200 or so).
That said, agreed 100%. At least Ford has already (too late?) seen the light and basically said they’ll bring most of their European lineup within the next 3-4 years.
Mr Furious
Rather than putting a $25B patch on the auto companies I’d rather see universal healthcare implemented. Shaving healthcare costs would narrow the U.S. vs Japan worker costs, and getting the retirees off the books would help immensely too.
Otherwise we’re just shoveling cash into the furnace of a train headed off the tracks.
Chuck Butcher
The domestic makers face around a 10% premium with health care costs on moderate priced cars. That is a real significant cost vs your completition. Some of your questions regarding gas guzzling behomeths (expensive) answer themselves.
Why didn’t they back Univeral Single Payer Health Care? Um, the Republican Party demonizes it as socialized medicine, you know, the Party of Business…
GM did not "buy" Saturn, that was an entirely in house effort.
The foreign based US manufacturers ducked around some of the labor costs by moving into the South. There are a lot more factors in operation than just mismanagement. There are also some factors in those foreign based US manufacturers’ advantages that are real hard to prove, but parent subsidization may be a really large one.
TheHatOnMyCat
Uhh, the largest selling cars in this country now are Toyotas, Nissans and Hondas.
Corolla, Camry, Accord, Altima and Civic.
I’d be surprised if those five models didn’t outsell all American car models combined, or close to it.
(Talking cars, not trucks here).
What country are you talking about?
Vince
Pensions and the poor planning that went into keeping the pension account viable. IMO, that, combined with health care costs, have killed GM.
TheHatOnMyCat
Uhh, the largest selling cars in this country now are Toyotas, Nissans and Hondas.
Corolla, Camry, Accord, Altima and Civic.
— duplicate comment breakerizer —
I’d be surprised if those five models didn’t outsell all American car models combined, or close to it.
(Talking cars, not trucks here).
What country are you talking about?
Florida Cynic
On the pension and retiree health care front, I recall reading that a large chunk of the Detroit 3’s problem is unfunded obligations to current and former executives. I’ll have to see if I can find that again.
ElBlot
American car companies are doing badly because they make bad cars. It’s really not that complicated. Single-payer health insurance, less dealerships, and a pink pony won’t make their cars less crappy.
MoXmas
Any biography of Walter Reuther could give you most of the back and forth, but essentially:
– None of the car manufacturers want to build anything but big engined cars (some soft-riding), because it ties into their vision of freedom.
You can debate if that’s for real or not, but if you read the history of, say, the dismantlement of the Los Angeles street cars, it’s because many of the senior management of car companies who bought those systems thought public transit led to socialism, and eveyone having their own car was more democratic. Efficiency was not the point, just as efficiency was not the point of Levittown. The point was a house for every American, with a car in the attached garage. And the car should either be a Mustang or a Cadillac.
– UAW leaders like Reuther in the 50s were advocating for universal healthcare, along with more say in how companies got managed. Many of those demands got traded off for company healthcare, "guaranteed" pensions (which of course are now in the process of getting stolen by execs, just as happened with steel companies), and little voice in compnay direction. Oh, and the biggest tradeoff was for higher, and growing wages.
The reason to support the car commpanies, in theory, is because they’re some of the few big manufacturing concerns the US has left, here in the continental. The other big employers might hire a high school graduate as a dock manager, but he won’t ever make much money — certainly not what a qualified UAW worker in Detroit makes.
Mr Furious
Can anyone give me a good reason why any of these companies cannot just sell their Euro models here?
Better still—MAKE them here to sell here?
stickler
It’s been a story in Europe for the last twenty or more years that GM and Ford management is continually being dicked with by Detroit. That said, both GM and Ford Europe are actually doing pretty well of late (until this last month or so, anyway).
Still and all, though, the Detroit makers were late getting good diesels to the European market and paid for it earlier this decade. Now that the momentum is with Europe, those arms are carrying the companies. And, as was pointed out upthread, you can drive an Opel right now — just go down to your Saturn dealer and get in an Astra. The Vue was designed by Opel, too, though I think it’s built in Mexico. Ford is, indeed, bringing over its European Focus and Festiva for 2010 and 2011 (provided Ford still exists by then).
But the management here at home has been a litany of disaster. Jac Nasser’s Ford was minting money in the ’90s; Nasser pissed it all away buying Jaguar and Aston Martin and Volvo, and mostly mismanaging them. All those profits from the Explorer could have gone into the domestic passenger-car fleet. Instead, the Taurus doddered on for ten years without an update and died a rent-a-car death.
Why? Who knows.
stickler
Mr. Furious:
Well, again, go to the Saturn dealer and sit in an Astra. It’s made by Opel in Europe, and it’s … well, kind of weird. The controls are a little awkward; Consumer Reports hates ’em. It comes with a clunky 5-speed or a 4-speed automatic (!). Why? Europeans don’t buy slushboxes, so there’s no good off-the-shelf GM automatic transmission that will fit. The engine is the cheapest of the options available in Europe, so GM can maximize economies of scale (and they’re still losing money on every one they sell here). Europeans DO buy diesels, but so far Americans won’t (memories of those awful ’80s GM diesels that scrapped themselves at 30,000 miles, perhaps?).
So there are a bunch of Euro-spec GM and Ford cars that Detroit thinks we won’t buy, so they weren’t designed to be sold here. That’s changing, but probably not fast enough to save the companies without help. Ford, at least, promises that the next Focus will be designed so it can be sold in the USA as well as Europe (safety, specifications, mileage, etc). We’ll see.
Another problem: Europeans will pay $30,000 for an Astra. Most American’s won’t even pay $20,000 if they think it’s just a sexier Cavalier. So the price point is lower in the USA.
Again — we will know more about "what Americans will and won’t buy" in a couple years. BMW is minting money right now selling Minis; perhaps Ford and GM can discover the same thing.
If they’re still around by 2011, that is.
justcorbly
Medical costs have a lot to do with it, but I’m not willing to argue that automaker labor costs are greater in the U.S. compared with Europe.
If you ask the Big 3 why they sell different models in Europe, I’m sure they’ll say the European market is different: Shorter travel distances, better mass transit, very costly gas, crowded urban areas, and narrows roads that are centuries old.
There’s truth in that. Some. Judging by the evidence, Americans are more than willing to spend their money on SUV’s and vans so they can barrel down the interstate.
However, a number of Detroit’s smaller vehicles have often been rebadged imports of their European cars. For example, if you’re driving a Saturn Aura, you’re driving an Opel.
The confluence of the driving public being scared by high gas prices and the Big 3’s looming collapse seems the right time for Americans to change their driving habits and for Detroit to be finessed into marketing the right kind of cars.
alyosha
Others have stated the two obvious reasons, 1) health care costs and 2) failing to anticipate the obvious-to-anybody turn toward fuel efficient, well-built cars. That management could be so oblivious to these glaring factors is a symptom of an ossified management culture, which deserves to die. In short, the dinosaurs could not adapt, and so they died.
Consider Toyota, which began development on the Prius at least ten years ago, when SUVs were hugely popular in the USA. Now the Prius – in its fourth generation, and hundreds of thousands of units on the road, and way ahead of the American offerings – exemplifies what everyone now wants (highly economical, well built cars). The Americans instead settled for the short term, high profit margins of the typical SUV. This is stupid and stupid deserves to die.
Notorious P.A.T.
A lot of auto executives are just plain terrible businessmen. Take William Ford (please, haha). He inerited a company from his dad, who inherited it from his dad. So he had no incentive to become a good businessman. Or a good football team owner, but that’s another thread.
Dyna
Only Mercedes really jumps out as a cab-car in Europe and that is mostly because the car was traditionally far more reliable and durable than the other brands while at the same time giving good deals to cab companies. BMW’s, Audi’s and other quality german cars aren’t seen as a cab any more than most other brands are.
Ford is a so-so brand in Europe. The Focus, of all flavours, is an amazing car that’s extremely popular and won various rewards. However, most of Ford’s other cars aren’t really in demand.
Like some have mentioned, GM owns Opel but there is a far more tangled web there than most people know about (Look up GM/Holden, Opel and Vauxhaull). However, they’ve recently also bought the car-branch of the Asian megacorp Daewoo and started marketing them under their Chevrolet brand. They began by sticking chevvy logos on the old Daewoo designs and we all laughed that such completely impotent cars (Daewoo’s were terrible, terrible cars that looked…terrible) were actually rebranded as chevies. However, they have been doing better lately and the cars they produce are of a more average European design and quality now. I’m not sure how well they’re actually doing with that now, but I personally still consider that brand something that isn’t cool or classy enough for myself.
LiberalTarian
I was reading about Machievelli today, and it said he would be horrified by how the republic has been allowed to atrophy while the oligarchy suck the wealth from the world. I hadn’t realized that he was a humanist republican–how interesting that the Rove coterie managed to mangle that philosophy and run it into the ground, too. The Prince doesn’t stand alone, it should be read with Discourses on the First Decade of Titus Livius.
Anyway, it is amazing to me how poorly "they" have governed. Didn’t they see the revolution coming?? Having the same corporations making good products in other countries while they sucker us (and get out of paying taxes and suckle at the bailout teat) seems par for the course.
"We Can’t Make it Here"
Lyrics
Vietnam Vet with a cardboard sign
Sitting there by the left turn line
Flag on the wheelchair flapping in the breeze
One leg missing, both hands free
No one’s paying much mind to him
The V.A. budget’s stretched so thin
And there’s more comin’ home from the Mideast war
We can’t make it here anymore
That big ol’ building was the textile mill
It fed our kids and it paid our bills
But they turned us out and they closed the doors
We can’t make it here anymore
See all those pallets piled up on the loading dock
They’re just gonna set there till they rot
‘Cause there’s nothing to ship, nothing to pack
Just busted concrete and rusted tracks
Empty storefronts around the square
There’s a needle in the gutter and glass everywhere
You don’t come down here ‘less you’re looking to score
We can’t make it here anymore
The bar’s still open but man it’s slow
The tip jar’s light and the register’s low
The bartender don’t have much to say
The regular crowd gets thinner each day
Some have maxed out all their credit cards
Some are working two jobs and living in cars
Minimum wage won’t pay for a roof, won’t pay for a drink
If you gotta have proof just try it yourself Mr. CEO
See how far 5.15 an hour will go
Take a part time job at one of your stores
Bet you can’t make it here anymore
High school girl with a bourgeois dream
Just like the pictures in the magazine
She found on the floor of the laundromat
A woman with kids can forget all that
If she comes up pregnant what’ll she do
Forget the career, forget about school
Can she live on faith? live on hope?
High on Jesus or hooked on dope
When it’s way too late to just say no
You can’t make it here anymore
Now I’m stocking shirts in the Wal-Mart store
Just like the ones we made before
‘Cept this one came from Singapore
I guess we can’t make it here anymore
Should I hate a people for the shade of their skin
Or the shape of their eyes or the shape I’m in
Should I hate ’em for having our jobs today
No I hate the men sent the jobs away
I can see them all now, they haunt my dreams
All lily white and squeaky clean
They’ve never known want, they’ll never know need
Their sh@# don’t stink and their kids won’t bleed
Their kids won’t bleed in the da$% little war
And we can’t make it here anymore
Will work for food
Will die for oil
Will kill for power and to us the spoils
The billionaires get to pay less tax
The working poor get to fall through the cracks
Let ’em eat jellybeans let ’em eat cake
Let ’em eat sh$%, whatever it takes
They can join the Air Force, or join the Corps
If they can’t make it here anymore
And that’s how it is
That’s what we got
If the president wants to admit it or not
You can read it in the paper
Read it on the wall
Hear it on the wind
If you’re listening at all
Get out of that limo
Look us in the eye
Call us on the cell phone
Tell us all why
In Dayton, Ohio
Or Portland, Maine
Or a cotton gin out on the great high plains
That’s done closed down along with the school
And the hospital and the swimming pool
Dust devils dance in the noonday heat
There’s rats in the alley
And trash in the street
Gang graffiti on a boxcar door
We can’t make it here anymore
Music and lyrics © 2004 by James McMurtry
Barbara
Health care, including the health care of current employees but especially the health care of unionized retirees. I’ve seen estimates that health care costs add something like $2000 to the cost of every vehicle.
However, GM and the auto industry were singularly uninterested in promoting universal health care during the Clinton administration. (I think Clinton’s plan was not good, but that’s not the point — if powerful business interests had come to the table, it could have been improved on, if not then, then in the second term, when Hillary was unceremoniously shoved out of the policy making way.)
GM in particular has the reputation of being a very hierarchical organization such that GM execs seem to think that they have more in common with, say, Rupert Murdoch than their assembly line workers. It’s still not clear to me that GM would support universal health care.
nicethugbert
They’re losing because their cars suck! Who the hell can afford to own and operate a land yacht? That kind of suck.
Xenos
@Barbara: It has been observed that the typical Auto Exec. has far more class consciousness than your typical unionized worker. They would rather let GM die than be exposed as a leftie in front of their peers.
Add that to the unavoidable fact that for three generations of business leaders have no fucking appreciation for their fiduciary obligations, and you get an industry that deserves to die. Unfortunately, and unjustly, the rest of us do not deserve to have the industry die.
This is pretty much what happened to the steel industry, if I remember the history right.
machine
What emptywheel said, plus lack of innovation.
jmbl
I agree with manyof previous comments. I think there are many factors explaining such a complicated mess.
My penny: in addition to other causes, the problem has been exacerbated by crony capitalism. US firms have been able to carve out profitable niches for fancy affluent person passenger trucks, SUVs and "off-road" vehicles that have never been off the road and never will be. Much of the attractiveness of these lines is because of tax breaks. Some of the lines don’t seem to be very useful, or too tricked out for doing anything useful outside of affluent surbubia.
The above meant that producing quality passenger cars became a low profit sideline. Why go to the bother of developing good passenger cars when you can buy off Uncle Suger to make som tax breaks the jigger CAFE and emissions standards to grease the sale gimmicky high profit lines with lots of profitable extras.
The increase in gas prices wiped out the tax advantages, and killed off the big gas hog lines. Now the US automakers have to live off their junk lines that were not profitable and that they did not care about very much.
If we had more rational tax policies, emissions and mileage standards, the US automakers would not have placed all their bets on the luxury hog lines.
Perhaps need for quick and ever growing profits in the US equity market is another reason. Quicker to pay off the government to jigger regulations to profit from large vehicles than to do actual work of producing better, but lower price and lower profit cars. Less risky for corporate bottom line.
Until now. Too bad the credit crisis came with high oil prices.
forty2
Part of it is "Detroit" basically stopped paying attention as soon as high-margin SUV sales took off. They assumed nobody here wanted small, sporty, fun-to-drive cars and god forbid a manual transmission, so they did the least amount of work necessary to supply that niche e.g. the late, hated, agricultural Escort, Cavalier and Neon. Unfortunately most of the foreign brands kicked their asses in that department a long time ago.
Oh and if Americans won’t buy diesels, why does VW have about five buyers for every one of their new TDIs?
jmbl
They also lost the election. W would have bailed them out forever, because of the no rich white man left behind principle. And allowed them to do whatever they wanted to squeeze and cheat their workers and customers. W would have just allowed them to flush the money down the toilet and given them more of our future taxes payments.
Obama will probably exact some price for the bailout, which will be better than a Bush bailout, if we have to have a bailout.
stickler
Heh. Barbara:
GM and the auto industry were instrumental (along with the AMA) in killing f’in Truman’s universal health care plan back in ’48! They have a long-running love for employer-based health insurance. Too bad it’s been screwing them for the last twenty years. Whoops!
Forty2:
Good question. I suspect what’s going on is a combination of two things:
1) GM, Ford and Chrysler really don’t have good diesels that can meet the California standards, and now they don’t have the money to develop them.
2) Because of (1), the executives simply can’t believe that Americans will buy diesels in large enough numbers to make ’em profitable.
Well, that and the fact that diesel is still about 30-40% more expensive than gasoline.
Keep an eye on just how many TDIs, BlueTecs, etc., the Germans actually sell. The numbers may seem good anecdotally, but are they enough to really boost VW? And numbers that might boost VW won’t help GM at all.
Now, why the Big 3 didn’t bring out more small diesel engines for their FREAKING PICKUPS AND SUVs is a whole ‘nother question.
Jager
I bought my first American car in 35 years in January, (this is after a series of Porsches, BMW’s and a AMG Mercedes that my wife drives) I was dealing on a 911 and the dealer pissed me off! So, I walked down the street to the Chevy store, test drove and bought a new Corvette Z-51. I had been reading about how Chevrolet had improved the car in almost all areas and it is true. (the interior is still GM-tacky)
The car is tight, it handles like a dream and fast! It looks great and is satisfying to drive. I use it for work and I drive around 20k a year on business. The bonus is that I have yet to be under 20 MPG in town and I routinely average 28-29 MPG on the highway. One trip I was well above 30 MPG for over 400 miles. I haven’t had any problems and the service stops for oil and filters are 78.00 plus tax. (my last 911 cost over 300.00 for a routine service).
When I am driving with the cruise set at 85 and I’m getting 30 MPG, (in a car that does 0-100 mph in less than 10 secs and the manual warns you not to shift down into 4th gear at speeds of over 164 mph!) I often think; why the hell can’t GM make the rest of their cars as good as this one?
I’ve been told that the workers and the management at the Corvette plant take a huge amount of pride in their product and it shows!
Jager
I want to add this to my pevious post, the Service Manager and the his staff at the Chevy store are as good or better than their counterparts at the BMW, Mercedes or Porsche stores. The salesman that sold the ‘Vette was okay, but I knew as much about the car as he did!
Overall, the experience of buying American was a good one. (A guy who works for me,certainly doesn’t feel that way albout his VW dealer!)
I don’t know if I’d be interested in any other US car, but I’m pleased with the Corvette on many levels!
Litlebritdifrnt
My humble opinion? They make crap cars. Okay my experience, I bought my first car in the UK in 1988 (when I first learned to drive at the age of 28 no really). A 2litre ford escort who I named Eric. Eric was a wonderful car. Had all the emission stuff (ya know unleaded fuel was not the norm back then), got 45 mpg round town 57 mpg on the highway. Could get it up to 90 (at least my nerves would not allow me to go higher) on the motorway and it could sit five people comfortably. It needed little if any maintenance, I think I had the oil changed once in the entire three years I owned it.
American cars are BUILT with an oil leak, just look at any parking lot in the States, oil on every spot. Oil change every 3,000 miles, who the ever loving f**k came up with that? Went through several crap american cars when I came over here and eventually ended up with my 2001 Kia which I bought at one year old. It now has 90K miles on it, I have driven it for 7 years and it has NEVER (touch wood) broken down. I have had one problem with it and that is the battery connectors got all fuzzed up and I had to have them replaced. Other than the usual, oil changes, tire rotation, fluid top-ups, replacing the tires and brake discs this baby has NEVER (touch wood) broken down.
Ford makes brilliant cars in the UK, (someone already mentioned the Fiesta, almost everyone I know has a Fiesta), I do not know why they cannot make such cars over here. It baffles me.
Three letters S.U.V. GM and Chrysler put all their eggs so to speak in one basket, they were completely and utterly short sighted in thier development of vehicles, SUVs SUVs SUVs, they did no R&D on small, fuel efficient vehicles, they were completely and utterly clueless when it came to a future where gas was $4.00 a gallon and people would be ditching SUVs like a bad investment and buying small, fuel efficient cars. Ford, luckily for them, have a huge market in Europe and they therefore have a stable of small, fuel efficient cars which they can, and will build in the US. GM has nothing, nor do Chrysler, they are dinosaurs and should be allowed to die for not seeing the meteor coming and getting out of the way.
Heard a guy on the radio the other day, he was a previous Ford F350 driver who had been on a waiting list for 6 MONTHS for a smart car. He absolutely loves it and says his truck has been parked in the driveway since he took delivery of the new car. He said he just smiles as he sails passed gas stations. CHANGE OR DIE. IMHO any car company who has been so shorted sighted should be allowed to die.
Andrew
The Ford Focus is a particularly notable fuck up for the Ford management. The "premium" Euro Focus was thought to be far too expensive to sell here in the U.S., so they spent a few hundred million developing the much crappier next generation U.S. Focus. Whoops. They could have subsidized the existing, better Euro Focus for sales in the U.S. for significantly less than they spend developing the crap box that we get.
Not to mention that Ford has completely missed the small car boom that the Japanese have capitalized upon. Ford even has the car, the Fiesta, but it was too stupid to bring it here.
Andrew
Also, we should let Chrysler die and we should let the angry mob set upon the management.
luc
GM and Ford have good Diesel engines over in Europe. Furthermore, great engine designs are certainly available from Renault and Peugeot. All these engines might not fit into the current US manufactured cars – which was obviously a stupid design decision.
The most worrisome aspect of the car industry bailout is, that there is no alternative to it and consequently the management that has failed these manufacturers and especially their employees for decades will stay in the same.
Not only is the manufacturing of the GM cars usually inferior here, there is also a curious tendency towards the ugliest possible design (Chevy Monte Carlo, Pontiac Aztec, the previous generation Chevy Malibu, ….).
ThymeZone
No, it’s not complicated, but it isn’t true either.
Nobody who really knows cars thinks that Americans make bad cars right now. No reading of the car literature in the last ten years could possibly lead to that conclusion. Hell, not even the radically slanted Consumer Reports is saying that about American cars any more, and they are the guys who started the mythology in the first place. I say mythology, because their "ratings" are based on self-selected polling and anecdotal information, and not on the only data that matters, which is the manufaturers’ actual reliability data, data that is not available to CR or to the public AFAIK.
There’s no substantive quality difference between, say, a Ford Focus and a Honda Civic or Toyota Corolla, no matter what the mythology says. I have owned a Focus and a Civic and they are remarkably similar products. If you held a gun to my head and made me pick the best product between the two, I’d probably go with the Civic, but for very subtle reasons having to do with esoterics more than pure vehicle basics.
There are some Chrysler products that are shit, but that has been true for about 60 years now, and it’s more about their engineering legacy than anything else. But GM and Ford are not Chrysler. I mean, the Dodge Neon, for crying out loud. Truly a hideous piece of shit. But also, extinct.
Anyway, the myth of the greatly superior non-American car is slowly, and finally, giving way to reality. American car companies have issues that are far more complex than the raw quality of their products. As these threads today will teach anyone who is paying attention.
Fifteen years ago, you’d have been right. That was then, and this is now.
TheHatOnMyCat
See the USA in your Chevrolet.
wb
@Jager:
Thanx, Jager. I’m one of those people that take a huge amount of pride in our product.
Now then;
Yes, health care costs are the biggest obstacle to profitabilty in the U.S. market. Current and legacy costs add about $2k to every vehicle we produce in this country. Pension costs are another. The last data I saw indicated that there were almost 2 retirees for every current employee, about 300k nationwide.
Given that, I have no idea why Big 3 executives weren’t calling for universal health care and improved social benefits in the past. Maybe because things looked so good for so long that it could only go up, market share could only increase? It’s changed, I think, in the past year or so. Rick Wagoner seemed to be getting on the bandwagon.
Why did U.S. automakers continue to produce large SUV’s,(that Americans demanded and bought), when the raising cost of gas was so obviously going to drive buyers to small, efficient vehicles? Well, because that’s where the profits were. The same profits that were neccesary to fund the R&D to produce small, fuel efficent vehicles that could be sold in the US at a profit. Remember, taking a vehicle from concept to market does take some time, 3+ years. If you look, the current and near-term GM vehicle launches reflect the newer marketplace.
Who’s to blame for the current conditions? The UAW? Sure. Management? You betcha, they’ve got a big piece of it too. Also. Hell, we spent how many millions on a data processing company that couldn’t keep their head-end on line two weeks in a row? How much cash did we suck out of the mortgage market with our financing arm instead of focusing on our core business?
What’s sad about all this is that the company really has made great strides in the last ten years. From cost to quality we’ve matched or beaten our European and Asian competion.
stickler
WB has a point. Quality for GM and Ford (and, in places, Mopar) has improved a lot in the last ten years. Pick up a copy of the latest Consumer Reports: they laud Ford for equalling Toyota (sort of). The GM Lambda SUVs (GMC Acadia, Saturn Outlook, etc) are porky, but a damned sight trimmer than a Yukon and more or less as capable; they might only get 23mpg on the highway, but compare that to a big-ass body on frame Suburban at, what, 17?
But the Big 3 have zigthousand retirees, and not enough volume to pay their obligations. Even if GM sells 100,000 Volts next year.
I’m not sure what the solution will be, but I damn sure know that GM in bankruptcy, and the millions of jobs lost because of it, are non-starters in 2009. No way this or the next Congress let that happen. "See the USA in your Chevrolet" takes on a whole new meaning when Uncle Sam is the majority stakeholder in GM!
Xenos
About that mortgage financing arm of GM: terrible reputation for customer service, semi-illegal collections, putting false incriminating info on credit reports, not letting people talk to customer service managers, ignoring complaints, and so on. I am working on a simple credit reporting case with them and they would not respond to phone calls, letters, nothing until sued, and even then they are acting like dicks.
I am glad to see them going out of business. Default judgments for everyone! Good luck collecting, tho.
Mr Furious
I lived in Michigan for the last seven years, so the cars on the road there, I suspect, were somewhat of an aberration—with domestics overly represented.
I’ve been in Asheville for three months and I don’t think I’ve seen a Ford Fusion.
Anyway, the last generation Focus was supposedly a pretty good car. They were cheap—especially used—and when I was in MI, my buddy at Car and Driver kept telling me that’s the car to grab since you can get a great deal. It seemed like very third car was a Focus—and 80% of them were hatches.
What do the geniuses at Ford do last year? Re-style the car to look like a Fusion (fine…), and offer it in 2- and 4-door sedan models only… no more hatchbacks (fucking retarded).
LiberalTarian
So, my roommate has worked in the car industry the last 35 years. He says you want to see what the issues of a car maker are, go to their service centers. With American cars, you see engines laying around the floors. With foreign motors, you go in, you see cars getting serviced. He says they are putting 40+ year-old designs in todays cars–well duh, look at the gas mileage. It is obvious they are dead set against investing in new designs.
But, this rot is throughout the US manufacturing design infrastructure. They don’t want to invest–and when they can’t pay good wages and keep up, they want to blame it on labor. These are not people who deserve their paychecks, and they have set up the system (read trademark) to keep innovation from emerging.
And, while we’re at it WE SHOULD START ENCOURAGING ENGINEERING AND SCIENCE. Thank you very much!
Batocchio
Health care, pensions, and a refusal to change with the times. Oh, and crappy cars.
satby
Health care, union wages, and pension costs may be part of the blame, but people work hard for years for all of that. Another factor is this (from commondreams.org):
"A generation ago, top CEOs made 30 to 40 times the pay of average workers. Last year, CEO pay outpaced average worker pay by 344 times."
I’m thinking these guys haven’t been working 344 times harder than their line workers.
TheHatOnMyCat
Let’s say they burned through $2.5b in a quarter. How much did the CEO get that quarter? I’m guessing, around 2 million, give or take. Ballpark.
So that’s $2m versus $2500m. Less than 1/1000th of the loss.
So the CEO pay is not a factor at the bottom line, therefore the chatter about has to be driven by the resentment of the people with the pitchforks.
Are people suggesting that a company that big could find somebody to do the CEO job and not get that kind of pay? Absurd.
Are they suggesting that the CEO only get paid if the company makes money? Also absurd.
If I am not mistaken, the GM CEO recently took a voluntary 50% pay cut while the company struggles. How many line workers volunteered to do the same?
*
Hat-
Ok, while you’re "guessing," sprinkle in all the other executives’ pay and get back to us. You might find your mythological 0.1% grow into something much more substantial.
Which is beside the point, if these guys want to mis-manage their companies (and use the necessity of their industry as a crutch) to get on the dole, these guys shouldn’t be making more in a month than the rest of us make in a decade. It’s a principle thing.
I’m pretty sure American industry and business were doing just fine until the last quarter of the 20th century. Back then, CEOs were paid extraordinary salaries, not GDP of moderately-sized emerging country salaries, but there were enough zeros in their paycheck to keep everyone happy. And yes, CEOs should have their compensation packages linked to the health of the company, not because they play golf and sit on other boards with boardmembers.
luc
The question is:
Which mechanism will be able to replace the current executives/management with a new one, that is actually capable and worth some of the money they are paid.
The same perspective-less dimwits are running these companies into the ground for decades – and they will keep on doing so a few bailouts into the future.