"The Real Problem with the American Auto Industry"

[PimTac]

"Disagree.

American automotive manufacturing was always about making large vehicles. Forcing American companies to build what they have little experience and even less prowess in, is a recipe for failure. "





Any company that cannot adapt to societal changes or needs is doomed. You just exemplified that in your comment.

 

[SirTanon]

Originally Posted by StevieC
Originally Posted by Chris B.
It doesn't help that all they make is junk. I have owned over 20 GM vehicles and with the exception of 2 or 3, they were all garbage. I'm on my 1st Honda Accord and it is FAR better built that ANY GM I have owned or driven. I'll buy GM again when they stand on their own 2 feet and produce a quality vehicle.....so in other words, never again.

I'm glad you said it because all the GM "garbage" that came through my dad's shop was always the same sorts of problems year after year decade after decade. The GM owners in the family that bought and got burned by them but continued to buy anyway finally got tired after decades of poor quality vehicles and have now moved to other brands such as Kia/Honda/Toyota. Not that these OE's are perfect but they don't seem to keep repeating the same issues over and over like GM seems to do. And yes Chrysler is just as guilty. Ford on the other hand is a bit of a mixed bag from my experiences. They can make some really great vehicles and they can make some really terrible ones. I'm personally glad they are getting out of cars and sticking to what they do best SUV's/Trucks. Although they have to fix that ***** escape. The Boxier version was much nicer looking.


FWIW, I spoke with a pretty reliable source a few weeks back about this.. turns out Ford is rethinking getting rid of the Fusion. Looks like it may actually stick around.

 

[dtownfb]

Originally Posted by fdcg27
Originally Posted by dtownfb
This article appeared in today's (12/17/2018) CNN Business page. It looks at the US auto industry through the lens of plant capacity for the domestic and the growth of foreign automakers plants in the US. It speaks to the true issues GM, Ford and Fiat Chrysler face which is a rapidly changing market and plant over-capacity. Couple this with a continuing decline in market share and high legacy costs, they can no longer absorb fluctuating sales. BTW, overall US car sales were down 5% in 2017 after a record 2016 (fairly even this year).

I guess now is not the time to invest in Ford or GM.....


I don't find this convincing.
The real issue has long been that foreign competitors produced a more advanced and higher quality product while the Big 3 were always a step back in both.
Playing catchup is never enough and none of these firms had the vision to leapfrog their foreign competitors. Overcapacity is never an issue if your product offerings and build costs are kept in line and labor costs are only a small part of the cost of a finished vehicle. Legacy costs have no impact unless you're shrinking your company because you can't come up with competitive product and must discount heavily, as the Big 3 did.
This was a failure of senior management and its roots lie in the seventies, when these American companies found that mediocre was good enough.
They never did see the changes that were coming commencing in the eighties, when mediocre was no longer good enough.



Sorry fdcg27 I forgot to provide a link to the CNN article: https://www.cnn.com/2018/12/17/economy/us-auto-plant-glut/index.html

I find most analysis of the auto industry interesting. It gives you insight into so many aspects of business and the world.

 

[Vikas]

Man, the guy tells us about his American car and it is Buick Encore! The very first Google hit "The Buick Encore is assembled at the GM Korea plant in Bupyeong, South Korea and marketed in North America."

With customers like that, no wonder American car industry is in trouble.

After four pages of diatribe, nobody even bothered to notice that irony on BITOG proving that most respondents here use their rear end to sprout garbage.

Just in before the eventual moderator lock!

 

[edyvw]

Originally Posted by Cujet
Originally Posted by BMWTurboDzl


Every mass manufacturer that sells in the US must meet the same regulations so clearly that's not the issue.



Disagree.

American automotive manufacturing was always about making large vehicles. Forcing American companies to build what they have little experience and even less prowess in, is a recipe for failure.

Yet, American companies still make excellent pickup trucks that American drivers want. Best or not, American drivers want F150s, Rams and 1500s.

I know, let's force Boeing to build light aircraft trainers, such as a modern Cessna 152 type aircraft, at a competitive price point. Heck, one single Boeing 10 pound structural part costs more than a Cirrus SR22 turbo. You think they can meet the challenge? I know they can't. Boeing can make something excellent. But they can't make excellent, cheaply.

Sure, American companies can make pick up trucks, at least those that can sell in North America. However, problem with that is changing customer base, fluctuating oil prices etc. Adaptation is the problem for American companies. It is historical thing. USA is outlier when it comes to cheap gas+standard of living. However, that is not working in the rest of the world, and when oil prices spike up, they are ready for that, unlike big three. Also, when financial crisis hit, people want smaller, cheaper, more reliable vehicles, and big three is not good in it. They had a lot of time to adjust, but they are quick to drop models like Fiesta. Ford is actually doing good in Europe, but they never built base around Fusion or some other car. GM dropped Opel, an entity that actually knows how to make cars (after GM basically destroyed company with quality control (or lack of it) in 80's and 90's). Fiat did brought back Chrysler, but let's see what replacement there is for platforms that are coming from Mercedes and are becoming too heavy compared to competition.

 

[PimTac]

Originally Posted by Vikas
Man, the guy tells us about his American car and it is Buick Encore! The very first Google hit "The Buick Encore is assembled at the GM Korea plant in Bupyeong, South Korea and marketed in North America."

With customers like that, no wonder American car industry is in trouble.

After four pages of diatribe, nobody even bothered to notice that irony on BITOG proving that most respondents here use their rear end to sprout garbage.

Just in before the eventual moderator lock!




Now that you've had your say, it would have been good to reference to what you were speaking of.

 

[Vikas]

Right on the 1st page

Quote
My daughter bought a Buick Encore. It's a cute little SUV she paid about $17k for. Lots of tech and goodies in it. Fits her dogs in the back with the seats down. Small enough for her to zip around Philly. Better buy than a CH-R or HRZ or whatever Honda and Toyota call their small SUVs. 1.5L turbo. It's slow. But it suits her.

 

[edyvw]

Originally Posted by Vikas
Right on the 1st page

Quote
My daughter bought a Buick Encore. It's a cute little SUV she paid about $17k for. Lots of tech and goodies in it. Fits her dogs in the back with the seats down. Small enough for her to zip around Philly. Better buy than a CH-R or HRZ or whatever Honda and Toyota call their small SUVs. 1.5L turbo. It's slow. But it suits her.

And GM sold company that developed Encore.

 

[edyvw]

Originally Posted by PimTac
Originally Posted by Vikas
Man, the guy tells us about his American car and it is Buick Encore! The very first Google hit "The Buick Encore is assembled at the GM Korea plant in Bupyeong, South Korea and marketed in North America."

With customers like that, no wonder American car industry is in trouble.

After four pages of diatribe, nobody even bothered to notice that irony on BITOG proving that most respondents here use their rear end to sprout garbage.

Just in before the eventual moderator lock!




Now that you've had your say, it would have been good to reference to what you were speaking of.

It is this BS that American consumer due to patriotism has to buy American. However, it does not work other way around, and that is that American companies should also have patriotic attitude. It's you know that BS: what is good for business it is good for America.
Here is an example. I have two cars and two different car seats. When my kid was about to switch from that small "carry on" seat to actual child car seat, I bought one Recaro since I heard they are big. So, it fitted in my BMW but was too big for Tiguan. So, I get Graco seat for Tiguan.
Now this here is why this "buy American" is all BS. Recaro is German company and I paid really good, very comfortable seat $265. My kid loves it, sleeps like baby should sleep. Did this summer 5,114 mile trip in BMW, with some legs long some 800 miles in a day. Graco, a cheap plastic and textile seat with some awkward seating position I paid $245, so $20 cheaper than Recaro. Graco is American company, based in ATL. Well, Recaro is Made in USA, but Graco in China. WHo the [censored] is fool here? So Recaro can make much, MUCH better seat in USA, for only $20 more, but Graco cannot?
Next kid s on the way, and it ain't going to be Graco.

 

[PandaBear]

Originally Posted by Ded Mazai
What always amazed me is how the Americans could design cars using inches. Just recalculating the units back and forth could lead to mistakes, and confusion, and waste of time. Need to have metric and imperial threads, wrenches. Simply amazing.


Not necessarily. These days you use CAD and you won't get that kind of conversion mistakes.

The really bad thing IMO is the auto industry is in the salt belt, and full of people who think 8-10 years is good enough, 120k miles is good enough, because salt rust everything and who in the world need a car that last 20 year and 250k miles.

That's why you don't see people driving domestic on the coast away from the salt anymore. They know better.

 

[jeepman3071]

Originally Posted by PandaBear


The really bad thing IMO is the auto industry is in the salt belt, and full of people who think 8-10 years is good enough, 120k miles is good enough, because salt rust everything and who in the world need a car that last 20 year and 250k miles.

That's why you don't see people driving domestic on the coast away from the salt anymore. They know better.


What? That doesn't make any sense. Plenty of domestic vehicles around here in my salt spreading state that are older with 200k+ miles, and plenty of foreign vehicles that have rusted out as well. Vehicles last longer than they ever have regarding corrosion around here.

 

[Cujet]

I'm sorry but the "so called" cheap gas in the USA is simply a normal price for gas. The confiscatory taxation in other locations Simply drives people into specific vehicle types. Those vehicle types are not favored by American drivers. They never have been.

 

[SeaJay]

Seems that a lot of folks are offended that US auto manufacturers are trending away from sedans. It is the marketplace, same and simple. Better to have a smaller lineup of profitable products than to have a lineup where some make money and others either have a low margin or actually lose money.

Continuing to produce products with low margins is not an efficient use of capital.

 

[edyvw]

Originally Posted by Cujet
I'm sorry but the "so called" cheap gas in the USA is simply a normal price for gas. The confiscatory taxation in other locations Simply drives people into specific vehicle types. Those vehicle types are not favored by American drivers. They never have been.

Of course it is taxation, roads, maintenance do not pay for itself. That is why American roads are somewhere on par with Gambia's.
If 1993 tax on gas just fallowed inflation (which it did not) gas would be some 0.70 cents more expensive than it is.

 

[edyvw]

Originally Posted by SeaJay
Seems that a lot of folks are offended that US auto manufacturers are trending away from sedans. It is the marketplace, same and simple. Better to have a smaller lineup of profitable products than to have a lineup where some make money and others either have a low margin or actually lose money.

Continuing to produce products with low margins is not an efficient use of capital.

Problem is when recession hits, and it will, people who have to buy vehicles are going to switch to cheaper products. It is not problem that American companies are pushing trucks, problem is that American companies in 40 years did not figure out equivalent of Accord or Camry.

 

[cjcride]

Originally Posted by Cujet
I'm sorry but the "so called" cheap gas in the USA is simply a normal price for gas. The confiscatory taxation in other locations Simply drives people into specific vehicle types. Those vehicle types are not favored by American drivers. They never have been.

Bang on. In most places there is too much tax on gasoline. Look at France.

 

[javacontour]

It's not like GM and Ford didn't sell smaller vehicles outside of North America.

They did, and still do.

I do agree, American consumers don't go for them as much as other consumers.

However, that's no excuse for them to bring a lousy product to the marketplace.

The Asian and European carmakers are selling to the same consumer base and seem to be successful at it.

Maybe Chrysler, Ford and GM just didn't do a very good job.

Look at the UK. Small cars sell there. How are GM and Ford, not to mention the UK carmakers of the 1970s doing? Either not well, or they've largely gone out of business.

Vauxhall, Rover, British Leyland....

Dead or sold off to others.

Yep, adapt or die.


Originally Posted by PimTac
"Disagree.

American automotive manufacturing was always about making large vehicles. Forcing American companies to build what they have little experience and even less prowess in, is a recipe for failure. "





Any company that cannot adapt to societal changes or needs is doomed. You just exemplified that in your comment.

 

[edyvw]

Originally Posted by cjcride
Originally Posted by Cujet
I'm sorry but the "so called" cheap gas in the USA is simply a normal price for gas. The confiscatory taxation in other locations Simply drives people into specific vehicle types. Those vehicle types are not favored by American drivers. They never have been.

Bang on. In most places there is too much tax on gasoline. Look at France.

There is too much (France) or too little (USA).
French tax (recent developments) are much more complex than overtaxation. They slashed taxes for corporations and rich, and thought they could come up with 5 billion euros through gas tax.

 

[Traction]

Most of the manufacturers just need to start over. Despite all of their problems, Chevy will always be my favorite. Now, if they could just re-invent a quality
1955 Chevrolet, that would be perfect. It is the same physical size as my stupid Tahoe, which pales in appearance to the 1955 Chevy it eventually replaced.

 

[fdcg27]

Originally Posted by edyvw
Originally Posted by SeaJay
Seems that a lot of folks are offended that US auto manufacturers are trending away from sedans. It is the marketplace, same and simple. Better to have a smaller lineup of profitable products than to have a lineup where some make money and others either have a low margin or actually lose money.

Continuing to produce products with low margins is not an efficient use of capital.

Problem is when recession hits, and it will, people who have to buy vehicles are going to switch to cheaper products. It is not problem that American companies are pushing trucks, problem is that American companies in 40 years did not figure out equivalent of Accord or Camry.


Exactly right.
The next recession, probably coming in the new year, will kill demand for these higher profit vehicles and leave some companies with too much capacity in vehicles that they can't sell. Not a good long-term business plan.
The next gas price shock will bring the same result even in the absence of any economic contraction.
It can't be that hard to build a smaller sedan that people will actually buy. Honda and Toyota figured it out decades ago and BMW and Mercedes had it figured out well before that.