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Who Is Going To Be The First to Fall And How Soon?

Agent009 submitted on 09/02/2008 Official AutoSpies Timestamp: 3:18 PM
from: www.forbes.com

[37] user comments | category: Misc News

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Who Is Going To Be The First to Fall And How Soon?

It is astounding how weak the three Detroit carmakers are in the traditional passenger-car business. The media commonly states that the three US manufacturers now hold less than half the total market--only 43% in July. If you look at cars only and exclude light trucks, such as sport utility vehicles, the numbers are even worse.

In July, for example, General Motors, Ford Motor and Chrysler accounted for only 32% of passenger car sales; foreign car brands grabbed 68%. True, July was an unusually bad month, but even in the first seven months of this year, Detroit took only 36% of the car sales and the foreign nameplates took 64%.

These figures include fleet sales, such as to rental car agencies. Detroit's fleet sales have been large, about 30%, but the industry is trying to cut back on this business because it sells these cars at steep discounts. I would estimate that if we were counting only retail customers, Detroit's share of car sales would be somewhere between 25% and 30%.

How bad is the situation?

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LexSucks - 9/2/2008 3:34:39 PM

+1 Boost

Where did the US Auto manufacturers go wrong?

reply to this comment

Agent009 - 9/2/2008 4:50:17 PMView My AgentSpace

+10 Boost

They sat on their tails and raked in the profit when the times were good and didn't invest in their own future.

They passed on incredible contracts to the unions rather than REAL negotiations that now hamper them to this day.

Then passed on incredible dividends to share holder who dumped them when it starting getting difficult.

Basically every single way a consumer can get into trouble they did the same.

bmwdrvr - 9/2/2008 6:05:41 PM

+3 Boost

and GM started investing money in the wrong places....that whole FIAT ordeal really hurt them it cost them billions of dollars, and while ailing Fiat walked away with capital, new engines, new platforms, and styling...GM didnt walk away with much.......but I think Chrysler is most in trouble out of the big 3 their cars are still below par, have low epa ratings by comparison to many other cars, and they dont seem to have figured it out yet. Ford would be next to me, though they appear to be trying to fight back....but GM appears to have the best product of the 3, and made the most improvement of the 3 the problem is can they afford to keep up until the profits rake in from these new models...I hope so they really are showing American companies can make good cars

GreenPlease - 9/2/2008 10:44:13 PM

0 Boost

My prediction is Chrysler: their product pipeline seems the least well suited to the future. Ford and GM are announcing small cars with fuel saving tech hand over fist. Chrysler, not so much.

IMO, Chrysler's only real hope is to drastically scale back manufacturing and seriously bank off of the Smart brand.

Whelan - 9/2/2008 3:51:38 PM

+5 Boost

They let their European and Asian counterparts pass by.

This all started one could say back when the Asians came out with their small but fun trucks in the 80's. The Nissan, Toyota's, etc. offered durability and usefulness while the big 3 laughed and gave us little bar bones Rangers and S10's. They were beat out repeatedly by the Jap small trucks and such were lost in that market to be dominated by the Tacoma and Frontier for a time.

Move forward to the Civic, Corolla, Sentra, Jetta, etc. and you see what did the big 3 have? An unreliable cheap Neon, an old, outdated frame/engine Cavalier, and a Escort/Focus that was no where near on par with the European cousins. We never saw an Escort Cosworth or a Focus with a turbo 4.

The Asians and Europeans offered small cars that had the amenities of the larger vehicles in the lineup, and at a price many could afford. Not too mention they offered an aftermarket for kids to play and upgrade their cars. Think of the muscle cars and such from era's back where kids would tweak and tinker in garages to change their motors. Well same scenario, different time, different cars. The Escort, Focus, Neon, etc. did not offer too much in the same sense as the others and were also not able to compete by offering amenities and reliability like the Euro/Asian competition.

Now you are here today, where they others across the world have stepped up to build cars competitive with all the markets that the US dominated. They can make big SUVs, trucks, full size sedans. They can build them in our own country using our own labor. They are paid better, and yet still maintain a cost/profit ratio greater than the big 3.

Yes the hometown hero's have the healthcare and pensions issues. But it was something they could have changed a LONG time ago had them not left their small car market to waste, followed by the full size sedan market with outdated Taurus' and Impalas. They stuck to their money makers with SUVs and trucks, until energy costs and oil went up and cracked their back.

You can and can't blame them for their mistakes, they went with what was profitable, as did the competition. But while the competition was innovating and updating, and creating appealing cars for the masses, the big 3 were overly concerned with the next big F150 instead of utilizing resources elsewhere. So we get a Euro-like Ford Focus that has no power, nor any appeal like it's European cousin. We get a heavy 500/Taurus that has no style, no ability, reminds me of an old floater car, instead of a sleek, sexy, powerful Maxima competitor.

The flaws are great, the mistakes were made, but the question is one that puts me in the same situation I am in with my Yankees. At what point are they mathematically out of the running for the Playoffs, some say its too late, but until that day happens, I still have hope.

reply to this comment

CRS2112 - 9/2/2008 4:06:44 PM

0 Boost

I was going to boost you until the Yankees comment......

Maverick2020 - 9/2/2008 5:05:30 PM

+1 Boost

I was going to boost you until the "Jap" comment. Make your points, but don't use racial remarks.

tkindred - 9/3/2008 3:05:23 AM

+7 Boost

Is "Japanese" too difficult to spell out.

cptamazing4 - 9/3/2008 6:57:00 AM

-6 Boost

Don't be a bunch of effin wimps. screw the japs.

Maverick2020 - 9/2/2008 4:04:50 PM

+4 Boost

Chrysler will be the first to go.

Whatever pieces of value (brands, plants, etc.) that are left after Daimler and then Cerberus completely screwing the pooch on this once great company will be sold off by 2010.

It's going to happen quickly. Ultimately it will be a good thing. But its not going to be fun in the short-term.

reply to this comment

neutral - 9/2/2008 4:51:01 PM

+2 Boost

The Big3 are hurting so badly for all of the above mentioned reasons, but mostly nowadays because the American public and American politicians just don't care.

The Big3 have made massive changes in their product lineups, business models, business outlooks, etc. The thing is, you cant go from selling super-highly profitable trucks & SUV's to selling small-profit cars overnight. If our politicians weren't bought by Wall-St. and the Oil companies, oil speculations would be controlled like it used to be (pre-clinton) and the big3 could stay afloat while getting operations in order.

Another problem is perception, Americans don't care about anything buy how they look. They heard some know-it-all badmouth Detroit and now they go strait into a Toyota dealership and buy another, boring Camry.

As for Buick, the problem is that only 1 vehicle is a hot, sexy ride (Enclave) and even though its driver-observed fuel economy is good (some reports 27-28mpg hwy), people just see "too big and thirsty). Wait until the LaCrosse is updated, just gotta hope the public will even care.

reply to this comment

Bmw8ter - 9/2/2008 6:05:48 PM

+5 Boost

"Another problem is perception, Americans don't care about anything buy how they look. They heard some know-it-all badmouth Detroit and now they go strait into a Toyota dealership and buy another, boring Camry."

We're not all superficial. But I can definitely agree with the second part of that comment; we're pretty gullible.

cyco - 9/2/2008 5:27:32 PM

+2 Boost

Of the big 2.5, I think Chrysler is in the most danger, followed by Ford, then GM.

reply to this comment

EnnNorak - 9/2/2008 7:37:30 PM

+2 Boost

LexSucks, they lost their way decades ago by negotiating ridiculous self-destructive contract terms with the auto workers, by failing to implement manufacturing methods that would have allowed proper fit and finish, by beating up on suppliers to minimize cost to the point where they were penny wise and pound foolish, by allowing bean counters instead of engineers to rule the roost, by using el cheapo materials and fasteners, by failing to keep automotive technology current and, before I get started on bad sales and marketing practices, by allowing some old-school idiots to linger on in top positions while rewarding them on the basis of incorrect performance measures.

General malaise in industry has two key roots:

1) "if it ain't broke, don't fix it" mentality, and

2) lack of vision due to excessive focus on short-term outlook.

reply to this comment

Type707 - 9/2/2008 8:37:01 PM

-3 Boost

I would say FORD. Two main reasons: 1.) As for reliability and longevity of its vehicles, it really doesnt fit the two categories. Look at Land Rover for instance...(FORD engines) and they always tend to break down.

reply to this comment

85bmw745i - 9/3/2008 2:11:39 AMView My AgentSpace

+3 Boost

Land rover doesn't use any ford engines. the range rover and discovery used 4.0 and later 4.6l buick engines based on the old buick 215 rocket v8. When the Range rover was re-designed it used the 4.4l v8 from BMW and then the lr3 (discovery series 3) used the BMW engine. the range rover sport and range rover supercharged use jaguar v8 engines. the old land rover freelander did use the 170hp 2.5l v6 from ford however, which was a mazda designed engine.

keyzi747 - 9/2/2008 9:46:43 PM

+3 Boost

No! ford is just fine. Range Rover had reliability issues long be fore ford took over. Chrysler may be the weakest.

reply to this comment

jt716 - 9/2/2008 9:52:41 PMView My AgentSpace

+3 Boost

Ford vehicles believe it or not are the most reliable beating GM and are equal to Toyota! I have a Ford Fusion and its been 2 years going on 3 soon and I drive it on some pretty sh**ty roads and it holds up just fine! nothing out of the ordinary! People complain their cars don't last long but then again they don't send it for its routine maintenance.

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minhvunguyen - 9/2/2008 10:45:09 PM

0 Boost

Sticking to the title heading of Who and How Soon, my guess would be Chrysler and Within 2 years. Chrysler because it's owned by a financial group now. Ford and GM are still run and managed by car people (you can question their strategy, product portfolio and decision but they're still car people). Chrysler's current owner didn't buy Chrysler to run it for the next 10 years, they bought it because they thought there were hidden values that they can extract (broken up and sell, cut cost, and other financial tactics). The current and medium term outlook for the car industry indicates you need i) cash ii) promising technology and iii) patience, to survie. Chrysler doesn't have anyone of these. GM and Ford have a combination of the three necessities. As to how long, my answer is pure guesswork but I can't imagine Cerberus can withstand the pressure from their investors on having to infuse more cash into Chrysler "just to keep it going" (rather than the promised "realise its hidden value").

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adamsaf723 - 9/3/2008 1:00:48 AM

+1 Boost

At least they have the truck market.

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tkindred - 9/3/2008 3:14:19 AM

+2 Boost

Chrysler will be bailed out again with your tax dollars.

" 276 July 13, 1983 THE CHRYSLER. BAIL- OUT BUST INTRODUCTION Chrysler Corporation auto sales are roaring into high gear.

And so is the myth of the Great Chrysler Comeback of the once dying automaker has become the favorite example cited by proponents of national industrial policy who call for massive and costly federal efforts to revive what they describe as a des perately ailing American economy.

Chrysler in 1979 seemed destined for bankruptcy, and now it's showing a profit. What saved Chrysler, we are told, are the 1.2 billion in loan guarantees provided by the federal government"

http://www.heritage.org/research/EnergyandEnvironment/bg276.cfm

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woood - 9/3/2008 11:11:03 PM

+1 Boost

That's assuming someone at Chrysler has the balls to do what is necessary to take the company onto the next step of making profit again. And it has to happen soon.

cptamazing4 - 9/3/2008 6:59:04 AM

0 Boost

GM makes the best cars in the world. Of course they are going to lose market share, look at all the competition and the fact that Americans are too stupid to realize that domestics can make class leading products.

reply to this comment

neutral - 9/3/2008 9:25:18 AM

+1 Boost

I agree, we are too stupid to realize that domestics CAN make class leading products and that we are so happy to belittle our own industry.

However, best cars in the world? Well, if you ask me, GM makes the best cars in the world in the segments GM wants to. CTS / Malibu / Acadia (and its sisters)/ full-size trucks. Fortunately, GM has phased out all but the trailblazer from its good-ol boy days. Once the Cruze comes out (and the Volt for that matter), hopefully Americans will wake up.

LexSucks - 9/3/2008 9:48:25 AM

+3 Boost

"GM makes the best cars in the world. "

- That Quote alone relegates you to the loony bin.

LexSucks - 9/3/2008 10:24:26 AM

+2 Boost

"Once the Cruze comes out (and the Volt for that matter), hopefully Americans will wake up. "

- Are Americans sleeping now when it comes to GM's Current offerings? Is there anything that GM produces (other than the vette) worth waking up to? Americans are sleeping because the current GM cars are Yawners. GM has to actually deliver first before you can expect any enthusiasm. I’ve owned American cars in the past. When I’m ready for another substandard vehicle, I’ll buy another one. Unless I have the strange desire to own a gas guzzling SUV (which seems to be what GM bet their future on, Dumb move)

neutral - 9/3/2008 1:45:42 PM

+1 Boost

LexSucks,

"...I've owned American cars in the past." --

No one is debating the past, its embarrassing for Domestics. Seriously though, the new offerings from GM alone should make people re-think their attitudes towards vehicles they purchase.

Sure, if you are dead-set on a Toyota Camry, you've been lusting for one for your entire life, go buy it. But let's be realistic, no one is lusting over a Camry, its a transportation appliance. Since Detroit has finally started making everyday cars that are on par (or in some respects, better) than their Japanese or Korean competitors, its simply stupid to be sending money overseas when its better spent here.

Yes, Americans are sleeping now when it comes to GM's current offerings. Until its is beaten into our brains, we will continue to mindlessly buy Japanese and Korean (not to discredit the imports but lets cut the smiles and pleasantries). For the love of God, we elected Bush......twice. We were dumb enough to let him and his buddies mangle our national budget, get us into a B.S. war, neglect our real war.....etc, etc, etc.

As for GM products that are great:

-Acadia/Enclave/Outlook/Traverse
-Corvette (all iterations)
-G6/Malibu/Aura
-Astra
-Sky/Solstice
-Escalade/Full-Size Pickups/Full-Size SUVS
-Vue (all variants)
-G8

on and on and on. If you haven't been in one lately, go look. Domestics of today aren't anything like domestics of, lets say, 5-10 yrs ago. Unfortunately, the same people who vote here and the same peoeple who buy cars.

reply to this comment

LexSucks - 9/3/2008 1:52:36 PM

+1 Boost

The Envoy Denali is nice too

neutral - 9/3/2008 2:14:10 PM

+1 Boost

yea, but the Envoy is still the older GM stuff, I believe same platform as the trailblazer. Either way, I think they're getting cut in 2009 or 2010.

I have to ask, whats with the LexSucks screen name but a Lexus "L" as your icon?

LexSucks - 9/3/2008 9:26:33 PM

+1 Boost

My Icon; I was going to put a red circle around it with a diagonal line running across it, but I never got around to it. :-)

LexSucks - 9/3/2008 9:29:17 PM

+1 Boost

The new CTS is sharp too.

kut17 - 9/3/2008 8:44:28 PMView My AgentSpace

+1 Boost

I don't know if the government will let any of them go. They've bailed out other struggling companies before, I don't think they'll let a company as big as GM, Ford, or Chrysler go out of business. But if the government doesn't step in, hands down Chrysler. They've got nothing going on for them.

reply to this comment

woood - 9/3/2008 11:22:17 PM

+1 Boost

The Government will surely bail them out up to a certain point. But they have to convince the government that they can return the loans, at some point. And how they plan on doing it. The car market is complicated now as compared to the early 80s when Chrysler was in trouble and recovered after several years. Back then, there were only a few categories per brand. Cars-small medium large, pick up- small and large, van-large, SUV-4wd utility vehicle. Example, just count how many SUVs Toyota and Lexus has for sale now.

reply to this comment

avanti64 - 9/6/2008 12:07:50 AM

+2 Boost

If McBush gets elected, he'll bail out any of the US weaklings, while more and more Americans go hungry and get killed in the multibillion dollar Iraq fiasco.

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