American Perception Problems of the American Auto Industry

[Ranger]

December 1, 2006

American Perception Problems of the American Auto Industry

Ford and General Motors have taken turns besting the Toyota Camry in quality surveys for the past two years, but if you talk to many Americans - especially the ones who would never consider supporting home-based auto companies - you'd never know it.

Last year, the Chevrolet Impala beat the Toyota Camry in initial quality according to J.D. Power & Associates, and Consumer Reports just announced that both the Ford Fusion and Mercury Milan scored higher than both the Toyota Camry and the Honda Accord this year.

After the announcement, Ford's Director of Global Quality Debbe Yeager commented "It's a perception gap," referring to the struggle American companies have had overcoming the perceived and seemingly untarnishable reputation of their foreign rivals.

Even as GM and Ford have accumulated award after award on vehicle quality, you'd almost never know about such quality gains made by American companies - or quality declines of foreign companies - by listening to the media. Did you hear about it when the National Highway Traffic Safety Administration announced that Toyota recalled more vehicles than it sold in the U.S. last year? Probably not. Did you hear about Toyota making an elaborate apology for their worrisome series of recalls that has tarnished its reputation for quality?? Probably not. Did you hear about the Toyota senior manager quote that stated "We used to do quiet recalls called "service campaigns" to deal with defects but we're not going to hide anything anymore?? Such a statement suggests Toyota's past recall numbers were probably much higher than we were led to believe, and they profited handsomely by having a perception of higher quality than they deserved. In Japan, prosecutors are looking into possible negligence on the part of Toyota for shirking recalls for the last eight years. How ironic. You probably didn't hear about that one either because the American media doesn't like to bash foreign auto companies, only American ones.

Then there's the mythical perception that foreign automakers produce the most fuel efficient cars and that Detroit only makes gas-guzzlers when the truth is that all automakers - including Toyota, Honda and Hyundai-Kia alike, have allowed fuel economy to slide in the past 20 years since they all now sell bigger trucks and more SUVs. One of Toyota's senior executives was even quoted in the Wall St. Journal September 28 saying that both the Toyota Sequoia and Tundra are big gas-guzzling vehicles and expressed concern about the longer-term prospects. These longer-term prospects about their admitted gas-guzzlers are questioned because they know that Ford's F-150 and Chevy's Silverado have led the pack in sales year after year.

Yes, gasoline has been getting more expensive, at least until recently, but the fact that Americans continue to buy it in greater quantities qualifies us as hypocrites for suggesting GM and Ford stop building so many big trucks and SUVs. After all, GM and Ford are only responding to demand as any company would and should if they want to remain profitable in a cut-throat competitive market. According to a Business Week survey, we Americans bought 10% more gasoline in the first six months of 2006 compared to the first six months of 2000 even though gas prices rose 75% in that period. Maybe here I could also mention that the Chevy Tahoe beat the gas-guzzling Toyota Sequoia in quality surveys and gets better gas mileage to boot.

But what has happened since gas prices have been on the decline in recent months? The Wall Street Journal reported a "slight" increase in truck sales by American companies, as Ford Expedition sales were up 41% and Lincoln Navigator sales were up 44%. The American media even tries to restrain its applause for home-based auto companies by referring to gains of over 40% as "slight".

Perhaps the biggest perception problem is that American automobile companies GM and Ford (Chrysler is now German-owned) squander all their money on plants overseas and foreign automakers build their factories in the U.S. Foreign car lovers will surely point to Kia's plans to build its first-ever U.S. plant in Georgia, but they probably won't mention that they received $400 million in tax giveaways to do it, which translates into $160,000 per job. Among the many benefits for the foreign-owned company, your tax dollars are going to be used for road improvements surrounding the complex, complete with flower beds and other beautification features. Hey, as long as we're going to allow states to bid for private jobs with our public tax dollars, we might as well make it look good, right?

And the foreign car lovers will probably also not tell you (or maybe they just don't know or don't want you to know) that GM and Ford pour more money into existing American facilities than foreign automakers spend on new plants, usually with little or no tax breaks. GM has already spent over $500 million upgrading two transmission plants this year, and has spent nearly a billion dollars over the last decade, for example, for facility upgrades in Texas. And what do GM and Ford get for making their existing plants more efficient? It isn't tax breaks. Instead, they get accusations of not being "competitive" enough! Maybe here I should also mention that the average domestic parts content for Kia is 3%, while the average domestic parts content of Ford and GM is 78% and 74% respectively. This means that buying a U.S.-assembled (or even foreign-assembled, for that matter) GM or Ford supports more American jobs than a U.S.-assembled car or truck with a foreign nameplate.

Fortunately for our benefit, the U.S. remains the overall global leader in research and development, and a big reason for that is that American automakers, according to the Level Field Institute, invest $16 billion in R&D (Research & Development) annually, which outpaces any other industry one could name. Admittedly, the Level Field Institute counts German-owned DaimlerChrysler as an American automaker, so Ford and GM's combined R&D contribution to America is closer to around $12 billion. But who's counting, right? Certainly not the American auto-bashing media.

Japanese companies do employ 3,600 American workers in R&D, but that still leaves the foreign competition behind in the dust staring at American rear bumpers. 3,600 sounds like a big number until you realize that 65,000 Americans work in R&D facilities in the state of Michigan alone. In fact, two of the top four R&D spending companies in America as reported by the Wall Street Journal are, you guessed it, Ford and General Motors The other two are also American companies: Pfizer and Microsoft.

Ford has recently made headlines as the American automaker with the most challenges to its future, but these challenges certainly are not because they aren't making cars people want to buy.? Toyota did outsell Ford in July, but since then, Ford has reclaimed the No. 2 spot and has held it ever since. GM has the highest market share, increasing over 2 percentage points from a year ago. So apparently they can't be accused of not making cars people want to buy either. Ford sales are also up in Europe, and Ford doubled their sales in China, where GM has the highest market share of any automaker.

General Motors also reported a 3.9% rise in August vehicle sales despite high gas prices and a supposedly slowing economy. And even though Toyota reported record sales that month, they couldn't match the non-record setting sales volume of Ford. GM's sales rose 17% in October from the same month in 2005 and Ford sales rose 8% in the same period. Ford also sits on $23 billion in cash, so they have plenty of money to focus on and fix any problems.

And for all the talk about the lack of fuel efficiency of American automakers, it seems three-fourths of all automakers failed to meet Europe's improved fuel-efficiency standards intended to cut carbon-dioxide emissions. Japanese and German automakers topped the list of the study's worst performers, but according to an environmental group's study, GM's Opel division and Ford both come out well.

In closing, I'll leave some encouraging numbers for those of us who actually like to root for and support the home team. The J.D. Power 2006 Vehicle Dependability Survey reports that Mercury, Buick and Cadillac (in that order) grabbed the number 2, 3 and 4 spots to beat Toyota, Honda, Nissan, BMW and everyone else (except Lexus) in having the least number of problems per 100 vehicles.

Perhaps someday the American media will give GM and Ford the credit they deserve. And once they do, perception among the majority of the American public will rightfully change. GM and Ford aren't only doing what they should to make gains in the American market to deserve American consumer loyalty; they're also doing what they should to make gains in the markets of China, Europe and across most of the rest of the globe.

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Roger Simmermaker is the author of "How Americans Can Buy American: The Power of Consumer Patriotism." He also writes "Buy American Mention of the Week" articles for his website http://www.howtobuyamerican.com/ and is a member of the Machinists Union and National Writers Union. Roger has been a frequent guest on the Fox News Channel, CNN and MSNBC and has been quoted in the USA Today, Wall Street Journal and US News & World Report among many other publications.

[GreenMachine]

Interesting article, great points but you need to read it knowing both sides of the arguement.

Not trying to defend Toyota but its very easy to recall more vehicles than you sell, especially on vehicles such as Camry and Tundra. Lets say you sell 200,000 of X vehicle a year for 3 years. Thats 600,000 of X vehicle. Lets say they all share component W. You make a recall on component W and recall 600,000 vehicles but only sold 200,000 for each year.

Just being devils advocate But all in all, quality for the American brands have really been in an up swing, especially since 2000 or so when GM not only announced a new vision for Cadillac, but the whole company.

[mmarinov]

Interesting article, great points but you need to read it knowing both sides of the arguement.

There probably (always!) is a little bias there on both sides. I can see where our media would want to side with the "large U.S. corporations are greedy gas-guzzlers in the Republicans' pockets, whereas the rest of the world has a better thing going" mentality. To-wit, the actual failures or perceived poor quality of other auto makers is underreported.

That being said, I proudly drive two GM-made vehicles and one from Mazda. All three are great cars, and I will say that my "buy anything GM over 100K and you're in trouble" mindset has been eradicated in the last five years. In my opinion, which concurs with BBF's, is that the "soft" side of the GM brand (dealerships, service departments) are really behind the times...at least here in the midwest.

It seems like pulling teeth to get a loaner car from a GM dealership while your vehicle is under warranty repair, while my Mazda dealer lets me either "rent" a car (on their dime), or has offered to let me drive something from the lot. Well, presuming a next sale no doubt

Just remember folks, there are lies, damned lies, and statistics

[rmac-etc]

Yes, there is a perception problem with domestic auto's and that is (imho) in part because of the less than stellar quality of design and build that persisted in general from late 60's to the early 90's. Many reasons, no doubt. But that perception is ingrained in the consciousness of a generation of American's who do not read automotive periodicals, subscribe to eriadite forums such as this or in any way care to inform themselves. They just want a reliable vehicle and when they grew up that meant for the most part Toyota/Honda .... or Mercedes for the well heeled .

My opinion is that the significant quality gap that existed a couple of decades ago is now negligible. The current difference between the best and the average is much smaller that it was then. The domestis USA average auto is way more reliable and well built that it was 20 years ago and the quality gap is nill if at it exists at all (esp when factoring cost). But, for the mainstream non auto aware public that doesn't matter. They don't want a 'bad assss Cadillac', they want an appliance with no personality to get them to work or the mall or the school yard, the hood of which they will never open ... and that is ok, it's just that that perception thing is sticky and not easily overcome.

my $.02 (and well worth it! )

[Kristinsmom]

And the check is in the mail....

Heard all this before... yadda, yadda, yadda.

[tjtjwdad]

Regarding Toyota's,

Unless you own one or stumble across it, don't here to much press coverage about there sludged up engines either ... just how great they are!

Jim

[BodybyFisher]

And the check is in the mail....

Heard all this before... yadda, yadda, yadda.

Hi DFB! I would appreciate it if you would not write nasty PMs to me and block my answer and have a private email address, its cowardly.

***********************************************************

And I am sure you will hear it again.

Perceptions are hard to change. American car manufacturers are going to need to walk on water to win this battle. The liberal press is against America.

[Regis]

DFBonnett,

You're getting sloppy. Spotting you this time was much easier. For those that aren't aware DFBonnett was put on the Banned list. But he just can't seem to stay away for long. If you do a search you'll find him all over the internet. He likes to sneak in under different names but the jerk behind the names always stinks through like month old trash.

[mmarinov]

DFBonnett,

You're getting sloppy. Spotting you this time was much easier. For those that aren't aware DFBonnett was put on the Banned list.

My misunderstanding - honestly, I thought the acronym meant Dumb Freaking ******* (nice version).

DFB - stop sending nasty PM's anonymously. That's chicken-bleep. Send me a personal "sample" of your vitriol and I'll give you the offline ride of your life.

Mark

[WarrenJ]

Ranger,

That was an excellent read.

A very good friend of mine (along with a partner) broadcasts an automotive related show on a local FM radio station. I emailed that article to him suggesting he might find it of interest.

His response? . . . . . "Interested?! I'm printing it to read on the radio show!!"

We've won another battle, but not the war.

Thanks for your contribution!

Regards,

Warren

[Fivepointfive]

Yes, its nice to defend the home team...BUT...lets be honest: Why did Chevy put an A/C outlet just above the ash tray in 1961? Why did the glove compartment lock and the tailgate lock break on the three S-10 Blazers that I owned over a 10 year period? Why do I need to take off the air cleaner snout to check the transmission oil to my STS? Why is it necessary to pull the tranny to change the filter? Why does it take 6 hours to change the A/C compressor?

The reality is that American "designers" drop a body on a chassis on the assembly line with no regard to service or replacement parts--Their unstated plan is make a car that lasts for awhile, then have the customer throw it away and get a new one. Should struts cost $3000? I've never taken a car to a mechanic because they don't fix stuff, they replace stuff. This "Jack up the radiator cap and drive a new car under it" philosophy is why I am down on American cars. I have spent $5000 on parts alone on the STS with 120K. The Toyota, with nearly 200K has only needed brakes and tires. Sure, I ain't gonna "get lucky" driving the Toyota, but I know I won't spend a fortune getting there and back.

I wore the uniform, and I wave the flag, but I am also a realist. We had it, we lost it, and we don't have it back yet, and I don't blame America's car industry problem on the "Liberal Press".

[BodybyFisher]

Allow me to clarify, I blame the poor PERCEPTION of the AMERICAN car industry on the LIBERAL press... not their PROBLEMS... BIG DIFFERENCE.

I don't know what you heard about the tranny filter, but the filters/screens in the side pan do not require replacing until rebuilding they don't need regular replacing! Personally I think GM has come a long way since 1961, and if that ash tray is the biggest thing you can think of they are doing pretty good, stop smoking...

The transmission filler is under there because it rarely needs checking unless of course you have a leak, and if that is the case, fix the leak (pan gasket, cooler lines, seals etc).

Six hours to change an AC compressor? That's BS, I changed mine, that is a big exaggeration. See my post #43 (Scotty) here, it was an easy job to get out, but then again, I have great hands and a good tool collection, my memory tells me it took about an hour to get out, it's totally visible from the wheel wheel >> http://caddyinfo.ipbhost.com/index.php?sho...essor&st=30

Many front wheel cars are hard to work on and many cars require major procedures for seemingly easy repairs. I am sure others can cite some of them for you. I was told recently that the Ford Town Car requires the BODY to be lifted to replace the brake line. You need to remove the dash board in the Taurus to fix the heater. There are a ton of these types of issues.

I guess if you are looking for problems you can find them. I owned one non american built car, a new 1991 Nissan 240SX (death trap in the wet weather), I was driving 70 and the wheel well exploded off the car, where I put my elbow on the door dented, parts fell out from under the dash while I was driving, the drivers seat material wore out in 2 years, the paint spotted very easily from 'acid rain' and in the rain, you couldnt keep it on the road and I finally did a 360 in the rain and totalled it, I could have been killed in that death trap...exit ramps were very scary in wet weather as the rear end came around, its no wonder that Japanese cars are used for DRIFTING , you could feel the car hydroplane, it was a white knuckle car, real garbage... never again.

[Astrak]

I've never had problems with American made cars, 1995 Chrysler has over 150 thousand or so and still runs and the Caddy has a lot more miles to go. I will never buy foreign after my parents bought a Honda Odyssey and the engine blew at 60,000 miles and Honda replaced the engine and I didn't get a christmas because of that darn car. Oh and when they supposedly replaced the engine it still had major problems.

[Ranger]

Ranger,

That was an excellent read.

A very good friend of mine (along with a partner) broadcasts an automotive related show on a local FM radio station. I emailed that article to him suggesting he might find it of interest.

His response? . . . . . "Interested?! I'm printing it to read on the radio show!!"

We've won another battle, but not the war.

Thanks for your contribution!

Regards,

Warren

WOW! That's great Warren. I got it in an email from a friend who has retired from Ford. Just thought it was interesting and that you guys would find it likewise.

[kcd1184]

I'm not getting into this one too far , yet. But somebody must be doing something right (GM-USA) if they are making a worthy (still i hope) vehicle that I look forward to driving EVERY day. The media tries to run your life.

Kent