Answer: They can. Meet the bestselling cars in Europe:
1st: Peugeot 207 (437,505, +105.5%)
2nd: Volkswagen Golf (435,055, +4.5%)
3rd: Ford Focus (406,557, -7.5%)
4th: Opel/Vauxhall Corsa (402,173, +41.7%)
5th: Opel/Vauxhall Astra (402,044, -7.9%)
6th: Renault Clio (382,041, -11.5%)
7th: Fiat Punto (377,989, -5.9%)
8th: Ford Fiesta
(300,566, +0.6%)
9th: Volkswagen Passat (300,566, -9.4%)
10th: BMW 3 Series (295,312, +2%)
In other words, four of the top ten cars in Europe last year were small cars made by an American company (Opel is GM's European marque). People who criticize Detroit for insisting on making only gas guzzlers have to ask themselves: why weren't these cars made here?
Well the answer is that they wouldn't have been popular and wouldn't have been profitable, until recently. Detroit made us large vehicles because that's what we wanted and that's what we were buying!
The guys on BBC's Top Gear (no yankee-philes by any stretch of the imagination) called the Ford Mondeo their Car of the Year for 2007.
The Focus is available here in the US. According to Wikipedia, it is the #3 bestselling doemstic car in the US.
I've driven the Ford Focus before; it's a lovely little car.
I might note that my wife, being a Honda lover, would never, ever voluntarily own an American car. I think that's the Big 3's core problem.
Interesting that the Astra ad looks like the car is driving somewhere in Arizona or Utah...
Well the answer is that they wouldn't have been popular and wouldn't have been profitable, until recently.
You're answering the wrong question. The question was not, "why aren't they *sold* here?" but rather, "why aren't they *made* here?". Clearly, the answer she was looking for is, "because it costs too much to make them here."
No, the Focus is quite popular here. The Renault convinces me the Europeans might just be happier with crappy unreliable cars though and the Passat confirms it -- we were looking to buy one but the reliability ratings put us off.
The absence of Japanese cars on this list stuns me and tells me right off that the European market is ten kinds of goofy, too, though.
I believe the answer comes down to two things:
1) A greater percentage of the cost of manufacturing a small car is the labor involved. Since the Big 3 are at a huge disadvantage in labor costs in the US, they couldn't profitably sell those small cars in the US.
2) Manufacturing small cars abroad and importing them is a loose because of a wrinkle in the CAFE standards: foreign fleets and domestic fleets are counted separately. So if you manufacture a small car abroad and it displaces a small car you manufacture in the US... you just screwed yourself for meeting domestic CAFE standards.
Put those two together and you simply can't profitably sell small cars as an American automaker in the US.
Well, obviously discrepancies in tastes and gas prices has something to do with it as John Wright points out above. Also, one should point out that the European divisions of GM and Ford are highly independent of Detroit, especially Opel/GM Europe. Ford tried to introduce homogenous "world cars" for a long time but until the mondeo that just wasn't succesful. European and American buyers have historically had rather different priorities in cars in terms of handling, price, mileage (go figure...) etc. The Japanese responded to this by building European and American versions of their Camrys, Accords etc so it's not just a Detroit thing.
I have huge issues with the Big 3 after owning several Fords... the unions are the problem if you ask me and they're churning out crappy cars. The next car I buy will be Japanese. I vote with my dollars in a free market - if the Big 3 can't compete, they don't deserve to exist!
*My* question is, if these cars are so profitable, why doesn't GM or Ford or whatever relocate to Denmark and dump their US operations? I don't understand why the would *want* their US dead-weights to survive.
Maybe the better questions is why can't they be imported? Why commit billions of dollars to retooling U.S. factories when the demand is going to be ephemeral? With gasoline below $2/gallon in many parts of the country, demand for small cars will wane, and GMs and Fords executives won't look so stupid again.
This is also a bit of an unfair shot at Detroit (and NB I've pretty much been with Ms. McA until now except for a small matter of flying cars). Honda can't figure out how to make Euro-style cars here either -- the European Accord, for example, just isn't the American one (for a side-by-side, go to an Acura (a uniquely American brand!) dealer: the TSX is based on the Euro Accord, the TL is based on the American one. See how much bigger the TL is?)
The European Ford Focus is a different, and by all acoounts, vastly superior car to the one sold here. I think Megan posted a picture of the U.S. model.
The Opel Astra looks like it's in Arizona or Utah because it's also the Saturn Astra, sold right here in America. Nobody buys it, though.
That brings up a cultural difference. Europeans like smaller cars. John Wright is correct: we like 'em big. Even cars like the Accord and Camry have morphed into mid-size or even full-size cars.
Here's my question: Why do they make the Chevy Aveo, which although it is small, looks like $hit and only gets 27mpg in the city? Two words: Honda Civic.
The European 2008 Focus is not the same vehicle as in the US. Also, the Focus was the best selling car in the [i]world[/i] in 2003 (I think).
There has been a large push at Ford for almost 20 years to commonize products across global markets, but they haven't been able to make inroads until recently. One good reason is discordance between US and rest-of-world emissions standards which requires different hardware and engine/transmission/vehicle calibrations for differing markets. The US, for many years had relatively strict emissions standards for
Add this to the regulatory structure differences in fuel economy requirements, and it makes a little more sense. CAFE allows for emissions credit trading. Since US manufacturers saw more revenue and profit with larger vehicles, they simply saw the production of small-unprofitable cars as a way to earn those credits.
Most European nations, on the other hand, tend to use displacement/power output taxes added with high fuel taxes to induce manufacturers to make more fuel efficient vehicles. This worked. After some time, Europe went with high-output small-displacement engines and the Americans ended up with high-displacement underpowered/de-rated engines.
It was the differences in the markets and regulatory structures that created incentives for the manufacturers to create differing small engine platforms across different markets. They even have completely isolated and separated engineering departments in different markets that do not communicate with one another. As an American automotive engineer trained in Europe, this has been persistent characteristic of Ford that has driven me absolutely insane. Truly maddening.
Europe has always kept fuel prices high so small cars are the standard. In the US, they don't sell since we think cheap gas is in the bill of rights. Several years ago a local Ford dealer was tossing in a Focus for everybody who bought a big fat SUV.
Anyone who has worked at a company of any size knows the answer ... it is very easy for two divisions across the street from each other to develop different cultures. For divisions in different countries, it's impossible not to.
Detroit has always been about declaring what Americans want, and not giving them the options that would show differently.
Why did the Smart come in and not the Ka?
Culture.
Though it is true that automobile manufacturers made cars that the population wanted, isn't the real answer because (somewhat artificially) depressed oil prices in the United States have allowed US citizens to purchase those cars? High oil prices in Europe (and Japan and China) necessitated innovation and the purchase of smaller and more fuel efficient car, as well as higher CAFE standards. The same necessity was not present in the US. Need begets innovation.
"That brings up a cultural difference. Europeans like smaller cars. John Wright is correct: we like 'em big. Even cars like the Accord and Camry have morphed into mid-size or even full-size cars."
Is that a cultural difference, or a rational economic response to the fact that gasoline is taxed at a much higher rate in Europe than in the U.S.?
One reason Americans like big cars is that until relatively recently, gas has been pretty cheap in the U.S. It was cheap throughout the late 80s and the 90s, and started slowly rising in the 00s. At the same time, Detroit (and all other car manufacturers) had perfected technology to help squeeze more efficiency out of car engines, that in effect, made gas even cheaper because it took less gas to move the same weight of car forward than it had in the 50s, 60s, and 70s.
So if gas is cheap, and sprawl and low interest rates make garage space cheap as well for most Americans, why not drive tank? So we did, and Detroit happily built them for us.
A better question is: Why is Jerry Lewis so much more popular in France?
Except for trucks, minivans and SUV's I don't see many US made cars here (DC metro). The perception is the cars made in Detroit are crap. Fair or unfair.
Back in the 80's when I worked for a Japanese bank in the midwest, my boss was suprised that he could by an Accord for less than an Acura. In Japan the Accord was considered a more upscale car. In the states the opposite was true. Go figure.
Both the left and the right will have to give something here: the UAW ultimately has to surrender a large portion of their pension plan, since that is where the laborcost discrepancy comes into play. If the government wants to bail out the automakers, buying out a share of the existing pensions might be a part of the package. The bailout money in this case could be paid for in the long run with higher federal gas taxes. Given the political unpopularity of both proposals, they will never happen.
RWB, you're exactly right, lower gas prices made larger cars a rational purchase here. Also, Europeans are more urbanized, making small, easy-to-park cars a sensible purchase. A Chevy Suburban only makes sense in, well, the suburbs (or the countryside). I oversimplified by calling it "culture."
For the most part, Americans want efficient cars (and trucks) not necessarily small ones.
One of GM's stars, the Chevy Malibu, illustrates the point. It was the top midsize car in the latest J.D. Power initial quality study, and it leads the segment in highway fuel economy. No surprise that Malibu sales are up 39 percent this year in a very lousy market.
Midsize cars and small and midsize crossovers are the hottest segments in the U.S. market right now.
Does anyone in this thread have data on labor costs to produce these cars in Europe, as compared to the U.S., and if not why are you assuming labor costs are less in Europe?
You can buy the Euro focus in North America; it's called the Mazda 3 or the Volvo S40...
Ford actually may be bringing the Fiesta over here in 2010.
I think the other puzzler is why US companies don't bring some of the small trucks they sell abroad over here. Ford makes a very nice Ranger pickup that they sell in Thailand, but won't bring it to the US and is planning on dropping the Ranger after next year - because, you know, everyone who needs a pickup definitely needs a big, gas-guzzling F-series.
Seems a pretty simple two-prong problem to me:
American automakers (justly) earned themselves a reputation for making crap cars, and they're finding it really hard to shake. (If you were in the market for a car--any car--and had the choice between a Toyota and a Chrysler, what are you going to choose?)
Then they managed to saddle themselves with an industry-choking union which has every incentive to protect its older, entrenched members while not giving a whit about future members (to the point of killing off their own industry to pay extortionate pensions and health car benefits).
Bottom line: if the Big 3 get around to making a car that people actually want to buy, at a competitive price, they'll recover. If they don't (and they haven't yet), I wish them the worst. Whining about unemployment in Michigan fails to stir me.
Then they managed to saddle themselves with an industry-choking union which has every incentive to protect its older, entrenched members while not giving a whit about future members (to the point of killing off their own industry to pay extortionate pensions and health car benefits).
Indeed. People of the left and the Democratic Party often were too busy patting themselves on the back supporting unions, not realizing that younger and better workers were being left out of the workforce or being forced into unstable contract positions that acted as a pressure release valve whenever there was a downturn.
I went to the GM Romulus engineering center Tuesday and the median age was simply staggering. 30+ year workers milking their contracts while younger workers are moving to other industries. And these people haven't been able to deviate from failing standard procedures for that tenure. change is so difficult there.
(Do not take this as a tacit approval of management. They have acted even more stupidly and slowly)
Howl -- if one of the U.S. Three goes down, they take most of the industry down, too. See: http://www.cargroup.org/documents/FINALDetroitThreeContractionImpact_3__001.pdf
Like it or not, you have a stake in this. We all do.
Also, a lot of what you are pointing to is ancient history. GM has closed the productivity and quality gap with the imports, and the 2007 UAW agreement will close the labor cost gap by 2010. A lot of hard work has been done over the past 10 years or so, all of it at risk thanks to a credit crisis the automakers did not create and cannot manage their way out of.
Everyone here seems to categorize buying bigger cars largely with ego or attitude towards cheap gas. Americans have built a culture that requires a high degree of mobility. We're spread out. Try moving around with a family of four or more in one of these little boxes. Now add groceries, stuff from Home Depot, Bicycles, soccer equipment, luggage, etc. It's just not practical. Detroit should focus on building big fuel-efficient vehicles. This is not an imossible task. Why are modern diesel engines so hard to find in the US?
Al: You're right but you're wrong.
There is a car called the Focus in North America.
There is a car called the Focus in the rest of the world.
They are not the same car, as Dave Ruddell pointed out.
(The non-North-America focus isn't exactly the same as a Mazda 3 or Volvo S40, but it's the same platform. And of course as a "Volvo" it costs more.)
Here's another issue. When in England, I cheerfully an comfortably drive 80+ mph on the motorways in a Ford Focus. We're all going about the same speed, in vehicles that are about the same size or a small multiple larger. And, all of those vehicles drive in the slow lane until they are about of overtake, when they signal, move out, pass, and move back.
Here, I am very nervous on the Interstates in a Focus. Most of the vehicles are bigger. The trucks are much, much bigger. The cars are all over the road, in all lanes, driving all speeds. Scary.
We would solve a bunch of problems if we restricted trucks to European sizes. Our road maintenance costs would go way down. Lanes could be narrower. Rail would be more competitive. Win-win-win.
Why are modern diesel engines so hard to find in the US?
Incentive to make passenger diesels has lagged Europe for a couple reasons:
1. Relatively expensive US diesel prices compared to US gasoline prices. Whereas, European diesel prices are nearly on par with gasoline prices.
2. The US supported much more strict emissions standards for passenger car diesels for a long time. Electronic diesel control systems helped to mitigate this problem, but the price discrepency still exists.
3. We use much more diesel trucking than Europe, where rail is much more eheavily employed.
In ME, where snow is an issue, there seem to be two types of vehicles on the road: oversized suvs and pickup trucks and subarus. I'll take the subaru any day; the one I owned was made in Indianna.
I don't buy the Union argument; I think we could have made small, energy effecient cars here, and I think the numbers of Toyotas, Volvos, BMS's, Mercedes, etc., sold indicates the truth of the matter.
Dig deeper, look at the portfolios of the CEO's making the decisions. How much stock in Exxon does GM's board members own? If you start asking those questions, you just might see some more sense to poor decision making. Nardelli was taking Home Depot into Mexico before he moved to Ford, maybe he understood the need for small vehicles better. But I really don't think any of these managers understood their customers well; I think they understood their own portfolios and that drove their decision making.
Dig deeper, look at the portfolios of the CEO's making the decisions. How much stock in Exxon does GM's board members own? If you start asking those questions, you just might see some more sense to poor decision making.
If you have that information, please supply it.
I don't buy the Union argument; I think we could have made small, energy effecient cars here, and I think the numbers of Toyotas, Volvos, BMS's, Mercedes, etc., sold indicates the truth of the matter.
Which 'union argument' are you not buying?
Zic -- GM has very strict conflict of interest rules and executives are prohibited from having more than 2 percent of their assets invested in any supplier. (As big as GM is, most major corporations such as Exxon supply us with something...) We build big vehicles because millions of people want them. We also build some pretty good small and midsize vehicles, too, as do all full-line carmakers, including Toyota.
The 2007 strike ended with GM agreeing to pay the UAW $30B in cash over three years, to fund retiree benefits that will be paid by the UAW starting in 2010. And now GM wants $25B in cash from the federal government. Hmmmm.
"...the 2007 UAW agreement will close the labor cost gap by 2010."
- Tom Wilkinson
I thought it closed much (around 70%) but not all of the gap? Or are you including other measures beyond the ones agreed to in 2007?
(The non-North-America focus isn't exactly the same as a Mazda 3 or Volvo S40, but it's the same platform. And of course as a "Volvo" it costs more.)
Oh yeah, Sigivald, I know. I was just pointing out that it is possible to sell that platform (the C1) in NA at a reasonable cost, at least in the case of the Mazda. An oft heard excuse is that the Euro Ford cars are too expensive to produce over here.
Mike F -- The VEBA you are referring to moves a massive legacy cost off the balance sheet and into a trust fund at a signficant savings to GM. Details are on the GM Investor site. Please do some research before you assume the worst. The need for cash right now is strictly a result of the credit crisis, which again, the carmakers did not create and cannot solve themselves.
Every step of the auto chain relies on credit -- carmakers, suppliers, dealers and customers.
Don't federal regulations make it illegal for Ford and GM to import the small cars they make in Europe here? The U.S. government is trying to have domestic auto companies do two things, when they can only do one of them profitably: they can either sell small cars here made elsewhere, and make a profit on them, or they can be forced to make them here and lose money on them.
To amplify what MarkN says: My wife and I bought a 2008 Jetta last December, and found it roomy and delightful.
Or at least, we did right up until the birth of our first child two months ago. Putting the child seat in the safest position requires moving both the front two seats ludicrously far forward. With Thanksgiving travel coming up, it's really not clear that we will be able to fit the three of us and our retriever in the car even if we move the child seat to a less safe position in the back.
Suddenly I understand why the local elementary school is so often awash in a field of minivans and SUVs....
There was also the whole Detroit marketing model that the young buyers would start with the smaller cheaper models and progress to larger higher quality vehicles as their incomes grew. The message was that larger cars were better cars. Chevettes and Pintos were crappy for a reason. I once drove a company Maverick that had the classic 2 second throttle lag and a hood that visibly rippled in the wind when it went over about 50. Japanese companies put a quality build on the bottom end models and won a lot of buyers for life.
Even in Europe auto manufacturing is moving to Eastern Europe. Why? Lower costs.
Still from GM Europe:
"General Motors will not close any factories in Europe "unless an asteroid hits the earth," its European boss says. Carl-Peter Forster, General Motors Europe president.."
At the same time, Germany has rejected GM requests for government aid
Why is GM Europe doing so well while GM North America is struggling? They both have the same top management.
And as to the cars Megan lists, I wouldn't buy any of them, I don't live in an urban area and I don't like small cars. I like larger full efficient cars.
Regretfully, I have not bought a big three product in many years. Why? I just didn't trust them anymore.
When I was a kid I loved GM cars. I went to GM dealerships, before I was close to driving, and grabbed brochures on the latest cars. I bought my first GM car (used) when I was 15 from the money I had earned. I loved the thing. For me, a new Chevy was a wonderful daydream. I worked on my old car, I did some customization, it was a great source of pride.
I drove with friends, I made love in it, it was the center of my teenage life. But when I was in college I didn't have time for tinkering on cars. I needed something cheap and worry free.
Cheap cars from Detroit felt cheap, felt like I was slumming, a segment of the market that Detroit seemed to look down on. I bought a new Toyota. It was inexpensive but it felt solid. Not perfect by any stretch, but a very good value.
GM has recaptured some of that with it's pickups. They seem to respect and acknowledge that people who buy pickups may not always have a lot of money, but they still deserve to be treated with respect.
Plus my wife is very reluctant to buy a domestic car. She had a nightmare of an experience with a new GM car. The stress and tension of needing to make payments for four years while your car has been in the shop on and off for the first six months you've owned it. The terrible feeling in the pit of your stomach that you were taken and that you own not a dream car but a nightmare.
I don't think I could ever get her, or really any member of her family, to ever again buy a GM car. GM doesn't have a price advantage, they don't have a styling advantage, the brand is damaged, but I still remember when I loved those classic GM cars.
Fred - There are a few regulatory differences between the U.S. and Europe, but the real issues are content and currency exchange.
Because of high fuel taxes, middle-class consumers who might buy a midsize car or truck here tend to buy small cars in Europe, so those cars often have a content level too high for what Americans will pay. (Luxurious European small cars like the Mini tend to be expensive, low-volume products here.)
Also, floating currencies make importing cars from Europe a very riskly proposition. Your profit margin can disappear overnight. When we start production of GM's next global small car, the Cruze, we will build it in Ohio.
Because larger vehicles, particularly SUVs, are more profitable. So they don't market or sell the small ones here, because they won't make as much money.
Europeans won't buy the biggest cars, in fact most can't due to the price of gas, parking, small streets and compact cities, etc.
But to assume that American consumers have totally free choice, and their purchasing decisions aren't influenced by what the automakers want them to buy (and thus heavily market), is erroneous.
The cars are all over the road, in all lanes, driving all speeds. Scary.
No offense, dude, but HTFU. Seriously.
Talk to a few Europeans and you'll quickly find that the lower-end US marques (like Opel and Vauxhall) don't have an unblemished quality record, either. The difference is, the Western Europeans all tax their fuel past an equivalent of US$5/gallon and provide price breaks that incentivize diesel, while living in dense urban environments that obviate the need for extensive personal cargo hauling. So naturally, you end up with a culture biased toward smaller cars with an abundance of turbo-diesel engine options, and a population that is willing to buy them in spades.
In the US, we have less density, larger family sizes, an ingrained resistance to social engineering via structured fuel or vehicle taxes, plus draconian emissions regulations on diesel composition and emissions (mostly targeted at sulfur reduction) and more competing uses for heavy fuel in shipping. And thus we get a culture biased toward large, gasoline-powered cars, while buyers of smaller cars have expectations for quality reliability that only the Japanese companies have been able to consistently meet.
Someone pointed out the size difference between the European and American market Accord -- this is true, but that reflects the taste of midsize car buyers. It also doesn't change the fact that there are ten million Honda Civics and Toyota Corollas on the road. Meanwhile, Ford and GM have to change small-car names every 5-10 years to get away from the stigma of the old model. Example: The current Corolla and the previous Corolla are about as different as the current Cobalt and the previous Cavalier, but Toyota can release an essentially new car on the same brand reputation while GM had to dump the name and hope the dirty laundry wouldn't follow.
I'd just like to point out that down here in South America there are also lots of small, energy-efficient American cars running on a variety of fuels. I drove past a Chevy factory in Brazil and in front of it were hundreds of brand-new, reasonably-sized Chevys that probably run on ethanol. American car companies clearly have the technology to provide Americans with something other than gas-guzzling SUVs.
My first car was a Toyota Tercel. My mother got it for me because it was cheap and reliable. That car went through many things and kept on moving... I've moved on to a new car but that car still keeps going to this day.
My next car was a Toyota Corolla... A semi-truck hit me... the car was totaled but I walked away...
My current car is a Toyota Matrix. Why did I buy a Toyota? Let's see... My first car was cheap, efficient and last forever... My second car saved my life...
Toyota treated me well from the bottom when I had no money. It treats me well even today. That's why I buy Toyota because they realize that a cash strapped kid may grow up to have money and you should treat them well from the get go. Give them quality over hype and they'll keep coming back.
My first experience with a Ford was my friend's new car breaking down on the side of the road... That kind of seals the image into your mind too... Cars are suppose to get you to your location. If it can't reliably do that why would you buy that car??
I'm shocked FORD is still in business...
Tom,
Thanks for that explanation.
I live in Europe and it's not just the size of these cars that makes them different. The cars here have very small engines and are also lighter weight which makes them a bit louder but much much much more fuel efficient. My 10 year old Reneault (4 doors, plenty of leg room) has a 1.4 litre engine (fairly average here) and gets 50 mpg. Not an exaggeration.
Also, the gas taxes are much higher--to the point that if you were to take the taxes away, gas would be quite a bit more expensive in the states. Thus, the gas companies make quite a bit more per gallon sold in the US than in the UK. I know you're for lower taxes, but frankly I would rather my money go to the infrastructure than Shell's pocket. But this is another thing altogether.
Something lost in all this is that unlike many technologies, car technology actually moves from the low end to the high end. In other words, by learning how to efficiently make small inexpensive cars, you also learn how to make higher end models more efficiently. It should not have been a surprise that Toyota started its ascent by making Corollas and then moved on to high end Lexus models and not the other way around.
When GM gave up the low end of the market, they lost their ability to get more efficient in a market segment where margins were low so they could continue to make lots of money at the high end. Also, body on frame trucks (i.e., most of the SUVs GM sold until recently) are basically 1950's technology. So they did not learn how to be efficient building trucks either.
Chrysler might be a different story, as they were run into the ground by Daimler. Chrysler was actually a pretty innovative company (although they still did not know how to make a quality product) before Daimler killed them.
Just my opinion, but that is where alot of their problems come from.
Another thing to think about is that there are just too many car companies. It seems to me that for most people, they can buy a Toyota, Honda, Nissan or BMW and get pretty much what they want. There are many companies that have no reason to exist. Think Mitsubishi. There will be a shake out and it could be that GM/Ford/Chrysler will go down even if they figure out a way to make decent products.
I actually rent a lot of cars and by far the worst car I rented recently was a 4 cylinder Camry. I'm not some kind of car buff (I drive an Accord) but the Camry was horrible. Next trip, I ended up with a Ford Fusion and it was actually not bad. Then on the trip after that, I had another Fusion that was almost as bad as the Camry. It seems to me that the car companies probably off load a lot of junk on the rental car companies where it could be a decent place to good exposure. Of course, the last car I rented was a Pontiac G6 which was also bad. I had requested a Malibu because I was curious but that's not what they gave us.
Sorry for the ramblings.
Tom: I can't tell if you're a terribly earnest company man, or the most awesome troll ever. But I will assume the former. :)
As for your comment that the American automakers have drastically improved quality and reliability in the last few years, you may well be right. But it doesn't help being right if you're also irrelevant. Customers remember the bad much longer than they do the good; when you're talking about 20-something young customers like myself and my fiancee--your ideal demographic--you're still not winning. People like me aren't willing to risk a huge portion of our yearly incomes just because your industry says 'hey guys, really, this time we mean it about quality!' Sorry, but I know my Corolla is going to still be working in a couple years, and it'll still have a good resale value, too.
Once you've squandered your customers, you've lost them for a long time.
And this isn't just a measure of quality. It's a measure of price. Your management fell into a sucker's bet with unionized labor, and that has caused you to raise your margins on your decent vehicles. So now, I won't buy your cheap stuff, and I can't buy your good stuff. My boss's GMC pickup cost more than his wife's Mercedes. That's what you want me to buy?
I feel bad that you made these mistakes, and if all things were equal, I'd prefer to buy American. But, and this is the fundamental truth about both your products and your desired bailout, it is /not my responsibility to fix your company/. It is yours. You want something from me, namely, my money. I don't particularly want something from you. A bailout is just a back door way of forcing me to give you my money when you have failed to entice me in an honest way.
As for feeling bad about who's going to lose their jobs: I don't. The skilled talent will get a job somewhere else; the unskilled who have been supported by the unions all these years, well, call me a libertarian, but I'm not going to cry to see them eating mayonnaise sandwiches in double-wide trailers. I work in a job where I can be fired at will, I make less than your average autoworker, and I have a family too. Cry me a river.
It seems to me that the car companies probably off load a lot of junk on the rental car companies where it could be a decent place to good exposure.
Yes indeed! The US manufacturers spent a lot of effort making crappy cars intended for the rental fleet.
PS...
I rent a ton of cars myself (at least once a month), and I drive a lot of American cars. I have yet to drive an American car that I fell in love with... Most times, I'm annoyed at how much gas I spent on a 3 day business trip where I traveled very little...
Tom, would GM be open to something similar to what was done with Chrysler in 1979? Government extends credit, but takes warrants to be sold back at a profit later; at the same time the company brings in new management.
I'm still pretty far from sold on any sort of bailout, but I have to admit - the Cruze and the Volt are exciting projects that I'd like to see hit the market.
I think it was Mr. Honda who said (something like) to break into a new market your cars need to be 20% better and 20% cheaper. To win back their market share, the big three need cars that are not only much better but much cheaper.
If Toyota is paying $30/hr the UAW needs to work for $25 and agree to any and all work-rule changes that will increase efficiency. Once the Big Three's reputation for superior quality and engineering is cemented the UAW can start to demand more than what Toyota is paying.
But, you can't expect to demand 40% higer wages unless your cars are 40% better.
Want to know why Americans have bigger cars than Europeans?
Americans are more likely to have two-income families, and more likely to have kids.
The parts of America that look like Europe and Japan demographically also look like Europe and Japan in terms of automotive tastes.
The parts of America that have no analogue in Europe (that would be the part of America where three kids is considered normal) don't look like Europe. These parts of America have wide-open spaces for kids, necessitating longer drives. These kids play equipment-intensive sports, and get driven around as teams.
"Friends don't let friends drive Fords."
And "F.O.R.D.: Found On Road Dead"
Obviously the Ford brand (and GM) is just severely damaged here in the US. Maybe those jokes don't translate well to other languages.
Before I caved and bought a car, I used to take the same 5 hour drive about once ever 6 - 8 weeks for work. I rented many cars for that drive. The American cars were simply worse. They felt cheap and plastic, didn't handle well, looked worse, and got worse mileage.
I lived in Canada for two years and they had more loyalty to GM than anyone I met here.
Personally, I think the big 3 need to go bankrupt, and maybe after they restructure, they could emerge as leaner, better companies. I'd LOVE to be proud of American cars again. It makes me sad that they make such crap cars.
Shouldn't that be "people who criticize Detroit for making only gas guzzlers have to ask OURselves"?
But the post reminded me, duh, it hasn't been that long since I drove an American car. I drove a rented Opel compact a few years ago in the Netherlands. It was fine -- not quite as nice as the Peugeot but they weren't in quite the same price class.
Tesla Motors is building a $250 million dollar factory in San Jose to make electric cars. The dinosaurs of Detroit may not survive the meteoric impact of the financial crisis, but little electric car manufacturers will have huge ecological niches to fill.
The only survival strategy for the "Big 3" is to evolve into birds. Toyota started doing that with the Prius in the mid 90's (in Japan) and Honda a few later. But it's probably way to late to start for the lumbering giants of another era.
"Friends don't let friends drive Fords."
And "F.O.R.D.: Found On Road Dead"
In Australia and New Zealand, its
Fix Or Repair Daily
and
Found On Rubbish Dump.
Mind you, both these slogans are popular with drivers of Holden, the local GM brand.
I'd say it's the libertarian in you that prevents any sustained or substantive criticism of management. And part of what's Wrong With Society. I'll start believing in your sincerity when you become an equal-opportunity basher. Not before.
Diesel afficionados:
Keep in mind that diesel fuel isn't that much more efficient; the higher miles per gallon is a result of the higher combustible hydrocarbon content for gallon.
Keep in mind that diesel fuel isn't that much more efficient; the higher miles per gallon is a result of the higher combustible hydrocarbon content for gallon.
Incorrect. Diesel efficiencies are due to the fact they the engines are able to run higher compression ratios and the ability to run completely dethrottled. Stable combustion is not bound by air-to-fuel ratio requirements, allowing for lean running situations.
I should correct myself. Yes, there are gains due to the fuel characteristics themselves, but the efficiencies from engine operation are greater.
You were not, in fact, incorrect. Just incomplete. :)
Mike F -- GM has said it is open to a number of options, including having the government take a stake in the company.
I'm surprised no one has mentioned the differences in safety and emissions requirements. Emissions rules in the US rob horsepower, which makes for lousy performance. The reponse is to put in a bigger engine, which costs more, and hurts gas mileage. They also add significantly to manufacturing costs. And many of the safety rules also add to weight and cost. When you factor in these changes, the US versions of European cars would look a lot less attractive.
A friend of mine bought a Dodge Caravan while on temporary assignment in Canada. When he tried to bring it back to the US, he found out that he couldn't license it here because of the emissions and safety regulations, and he had to sell it in Canada. I would have thought that Canadian rules would be close to those in the US, but apparently not.
On a related subject, I spent about 10 days in Italy last year. I was surprised by the relatively few Japanese cars. I think I only saw one Honda the entire time. Lots of Renauts, Peugots, etc, though. Does anyone know if Europe has high tariffs or import restrictions on Japanese cars?
Happy Hunting Day, Tom!
Here's to hoping you can see another one!
Zic... nardelli is at Chrysler and not Ford
We just recently moved here to France, with our Ford Ranger pickup truck, from the US. The truck is one of the smallest made in the US, but it is larger than about 90% of the vehicles here, and is therefore quite a sight in the small towns. We are really happy to have it because it lets us haul stuff to our farmhouse for rennovations without having to pay quite stiff delivery charges.
However, we did have to pay 2000 euros in tax to get it into France, and we will eventually pay another 2000 euros in fees for inspections and modifications to establish that it is "safe" to register (i.e., complies with EU regulations, or is close enough) here in France.
So, we also bought a Peugeot 207 SW, with a 1.4l diesel engine, which gives us 42 mpg on the autoroute at 80 mph, and even better fuel consumption when we don't drive as fast. It is roomy enough to take us everywhere in reasonable comfort, and we can find parking, which is VERY important here.
I wish we could have bought a small diesel-engine car in the US.
I loved my long-term rental Ka when I was working in Germany. I loved it even more when I hydroplaned on a autobahn interchange. (my fault entirely --hint for Californians, interchanges are more like 90 degree arcs in german, rather than the gently obtuse transitions we have). I hit the guardrail going pretty fast, totaled the car (I think they are designed to crumple) but walked away with only a slightly bloody nose and fat lip. If I had a car now, it would be a Ka.
@ Uncle Bill.
"I was surprised by the relatively few Japanese cars. I think I only saw one Honda the entire time. Lots of Renauts, Peugots, etc, though. Does anyone know if Europe has high tariffs or import restrictions on Japanese cars?"
No, I don't believe there are import restrictions or high tariffs! I guess it's all a matter of taste and perhaps some slight chauvenism(?). In Germany for example, most people drive or prefer German cars like Volkswagen (Audi), Opel (GM owned though) or BMW. I guess the same will go for France with their Renault and Citroën brands. In The Netherlands, company cars tend to be a European brand because of the higher resale value at lease-end than the resale value of Japanese cars.
I believe Toyota is doing fairly well at the moment with their Aygo model. The same goes for the Citroën C1 and Peugeot 107.
Cars in Europe seem to get smaller because of increasing taxes, fuel prices and environmental issues.