Car Buyers Spurn GM, Ford as Japan Brands Retain Aura (Update3)

Car Buyers Spurn GM, Ford as Japan Brands Retain Aura (Update3) http://www.bloomberg.com/apps/news?pid 601109&sid=aw1th8uBIqps
June 22 (Bloomberg) -- U.S. automakers spent much of this decade retooling their lineups to offer cars rivaling Toyota Motor Corp.’s Camry and Honda Motor Co.’s Accord. Now comes the challenge of winning over consumers.
While models such as Ford Motor Co.’s Mercury Sable got top quality marks today from researcher J.D. Power & Associates, U.S. buyers aren’t embracing the cars on which Detroit is staking its future. Imports held 69 percent of the U.S. car market through May, 4 points more than a year earlier.
Ford, General Motors Corp. and Chrysler Group LLC are suffering from their sins of the past, when they lavished development dollars on trucks and sport-utility vehicles and let their sedans languish. Building better cars still hasn’t enabled them to overcome Asian automakers’ aura of superiority.
“It doesn’t take long to lose your reputation for making reliable cars, but it takes 10 to 15 years to get that reputation back,” said David Champion, auto test chief for Consumer Reports magazine, who dubbed Ford’s Fusion “the best car you don’t know about” in the April issue.
Recovery plans at Ford, Chrysler and Detroit-based GM ride on cars. Truck sales plunged 25 percent in 2008, more than twice the decline for cars, to help drag the U.S. automakers to $62.4 billion in losses.
Quality Ratings
Bolstering the automakers’ efforts are car-quality gains as assessed by companies such as Westlake Village, California-based J.D. Power.
The Mercury Sable grabbed first place among large cars, up from second in 2008, J.D. Power said, and GM’s Chevrolet Impala was third. GM’s Pontiac G6 and Chevrolet Malibu ranked among the top three among mid-sized cars, while the Cadillac CTS trailed only the Lexus IS in the entry premium car category.
Cadillac finished third among 37 brands, beating Honda in fifth place and Toyota in seventh. Ford and Chevrolet were eighth and ninth, J.D. Power said.
The trick is convincing U.S. car buyers who see companies such as Toyota City, Japan-based Toyota and Honda as the quality standard. Detroit can’t advertise its way out of the perception that it makes shoddy cars, said David Martin, president of the New York operations of brand consultant Interbrand Corp.
“The Japanese have done well because they deliver the goods first before they start talking about it,” Martin said. “Detroit historically has believed they can just talk and they can pull the wool over our eyes. They need some hero products that get you and I talking, and then they can start advertising.”
Technology Focus
U.S. automakers are responding by deploying technology and fuel efficiency that they say connote quality.
GM, the biggest U.S. automaker, plans to start selling the Chevrolet Volt plug-in electric car next year. A redesigned Ford Taurus debuting this month has pre-collision sensors that boost braking power to help avoid a crash.
“People have to buy a car and live with it to recognize improvements in reliability and durability,” said Derrick Kuzak, product development chief for Dearborn, Michigan-based Ford. “But this is technology with immediate appeal.”
Marketing mileage is making inroads for Ford. The new Fusion had record U.S. sales in April and May. The Fusion’s fuel economy is the highest among mid-size sedans, with the hybrid version getting 41 miles per gallon in city driving.
Research shows buyers equate high mileage with high quality, Jim Farley, group vice president of marketing, said in an interview.
‘Driveway Credibility’
Fuel economy “is a proxy for trusting the company,” said Farley, Toyota’s U.S. marketing chief until joining Ford in 2007. “It gives you driveway credibility. You can talk to your neighbor and say, ‘This is why I bought a Fusion,’ and your neighbor would understand.”
Toyota and Tokyo-based Honda built their reputations on the quality and fuel efficiency of small cars starting in the 1970s.
Ten years ago, Asian automakers’ U.S. market share was 25.8 percent. In 2009, it’s 46.8 percent, compared with 44.7 percent for domestic brands, according to researcher Autodata Corp. of Woodcliff Lake, New Jersey. Weaning themselves from the trucks that provided profits in the 1990s, the U.S. automakers are gearing up to add cars.
GM will reopen a U.S. factory being shut in bankruptcy so it can make subcompacts, while Chrysler left Chapter 11 allied with Fiat SpA to get small-car technology.
Ford, alone in shunning a U.S. bailout, is converting four truck plants to make cars as it prepares to unveil two new small cars in 2010. The shares fell 34 cents, or 5.9 percent, to $5.38 at 4:15 p.m. in New York Stock Exchange composite trading.
‘Critical’ Year
“The next 12 months are critical,” Ford’s Farley said. “There are a group of customers in the U.S. who have goodwill for the company, but who are still wondering about the trust factor.”
Chrysler faces the biggest hurdle in luring buyers because it has the lowest quality rankings among U.S. automakers, said John Wolkonowicz, an auto analyst with IHS Global Insight in Lexington, Massachusetts.
Chrysler, the U.S. automaker most dependent on trucks, is counting on Fiat to jump-start work on new models stalled as the Auburn Hills, Michigan-based company slid toward bankruptcy. Technology from Turin, Italy-based Fiat will be the foundation for six Chrysler models, IHS Global Insight said on June 11.
Limits of Quality
Sales suggest that GM and Ford’s quality gains aren’t enough to overtake Toyota and Honda.
The Fusion and Malibu still were outsold by the Camry and Accord by almost 2-to-1 through May. Setbacks for Toyota such as having the V-6 Camry judged “below average” for reliability by Consumer Reports in 2007 proved short-lived. The model was rated “average” last year.
“It is very hard to open minds and get people to consider a domestic vehicle again, no matter how good,” GM Vice Chairman Bob Lutz said. “The product and fuel economy deficit, reliability deficit, styling deficit -- all those deficits have been erased. What has yet to be erased and is going to be the biggest challenge of all is erasing the reputational deficit.”
San Diego biochemist Keith Beatty said the Plymouths and Oldsmobiles he owned growing up needed frequent repairs and wore out prematurely. Beatty, a self-described baby boomer who declined to give his age, said he began buying Hondas and Toyotas more than three decades ago and never turned back.
‘Detroit Iron’
“I’m driving a 23-year-old, 33-mpg Toyota that runs better than any new 25-mpg Detroit iron,” Beatty said in an e-mail. “I would never in my lifetime own another Detroit automobile.”
GM stopped making Oldsmobiles in 2004, three years after Chrysler killed the Plymouth brand.
Toyota and Honda retain a number of advantages. After three years of ownership, a new Accord should keep 53 percent of its retail value and Camry should have 47 percent, more than Malibu’s 45 percent and Fusion’s 44 percent, according to Automotive Lease Guide, the industry standard for used-car prices.
Shoppers’ quality impressions also show GM and Ford coming up short compared with the findings in the J.D. Power study, based on a 2009 survey for Santa Barbara, California-based ALG.
“There’s a big lag between the actual improvement in how their cars are screwed together to what consumers perceive as their quality,” ALG General Manager James Clark said. “It’s frustrating for them. They wonder, ‘Why don’t people get it?’”
‘Build Better Cars’
At Galpin Motors in Los Angeles, Ford’s biggest-selling retailer, Vice President Beau Boeckmann said Detroit automakers can’t be content with just matching Japanese brands.
“Ford has to build better cars than Toyota,” he said. “Why would someone come into my showroom if they’re perfectly happy with their car? Therein lays the big challenge.”
Compelling designs are crucial, according to GM’s Lutz, who noted that members of President Barack Obama’s car task force lingered over a Cadillac coupe with a 560-horsepower engine on a recent visit to GM’s design studios.
“It doesn’t get very good gas mileage, but it got a good deal of attention from the automotive task force,” Lutz said in a May 28 speech in Detroit. “It doesn’t matter where you work or what you do, normal people get turned on by great cars.”
Russ Meyer, chief strategy officer for brand consultant Landor, endorsed that approach.
“Hammering on about quality is less important than getting people to feel like it’s cool to own an American car,” said Meyer, who is based in San Francisco. “They’ve got to ramp up their styling. Now is the time to swing for the fences.”
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Jim Higgins wrote:

Oh really? If that's really true (and I have *serious* doubts that it is) then part of the problem is very stupid buyers. How does a business deal with an idiot customer who's going to demand what he thinks he wants and then kill you when you deliver that very thing they demanded and then discover they aren't happy with it?

Funny. I though Ford's stock was in the low $2 range only 4 or 5 months ago. Why is this article emphasizing a blip like that and not mentioning that it has more than doubled in 4 or 5 months? Is that not just as important? Shows how statistics can be distorted/misused.
It's getting so I don't believe anything anybody says anymore for all the B.S., all backed up by "facts", that comes at us in a steady stream.
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Jim Higgins wrote:

No.
When they lavished development dollars on fat union wages, health care and retirement benefits, which they had no choice but do it because they were not able to mass-fire their entire workforce and hire other people willing to work for the same pay.
Regan did the same thing with the air traffic controllers. But corporate USA can't do it because of labor laws and police who will not enforce the law and arrest picketers who block access to private property.
The japs who came to the US to build factories are almost all non-unionized. Tell you anything?
And it doesn't help that the US auto market is wide open to foreign competition and importation, especially from asia, but not vice-versa.
So why blame the big-3 for making about the only type of vehicle that is not made by a competitor in their home market for export to the US?
Japan's car market is closed to US importation, and Japan forces their citizens to turn over their cars every 3 to 5 years because of how their emissions testing works (old cars must pass *current* emissions standards). This forced obsolescense and captive domestic market insures that the jap car makers are financially healthy, and they can sell their cars in the US, even at break-even (or slight loss) and remain viable.
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"Japan's car market is closed to US importation"
An old saw, as far as I know. Do cite a law.
And even if an import ban were true, it would apply to all foreign manufacturers.
From what I can recall from many years ago from a previous occasion when the US auto industry was bleating about difficulties in Japan they were trying to force unmodified vehicles onto Japanese consumers. No wonder they declined to buy when they drive on the left. And yes, I am well aware of non-tariff trade barriers, but they tend to be against everybody.
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"MoPar Man" wrote: "When they lavished development dollars on fat union wages, health care and retirement benefits, which they had no choice but do it"
The union does not set the wage by itself. Its called negotiations. If the Big 3 did not think they could afford what the union wanted they would not have offered the contract. They would have been willing to allow a strike and hire replacement workers.
"because they were not able to mass-fire their entire workforce and hire other people willing to work for the same pay."
So it okay to fire the union workers and replace them with non union workers for the same pay. This makes no sense at all.
"Regan did the same thing with the air traffic controllers. But corporate USA can't do it because of labor laws and police who will not enforce the law and arrest picketers who block access to private property."
This is not entirely true. Reagan did fire the air traffic controllers because it was illegal to strike against the US government or any of its agencies. He gave them 48 hours notice to return. If you ever walked a picket line, you would know that in most cases companies go to court and get an injuction setting rules for picketing. The court order usually deals with such things as limiting the number of picketing at a time, how long you are allowed to block the entrance and what entrances you can picket. Private companies do not fall under the same rules that the government or any of its agencies do. The president can shutdown any strike if the strike is of national interest. Take for instance if the USW union representing workers that fall under the oil bargaining agreement would go on strike all at once, the president probably would step in an order this workers back to work or risk being arrested or fired. The reason is almost all you major oil refineries would be shutdown or at severely reduce rates. this in turn would cause and fuel shortage.
The japs who came to the US to build factories are almost all non-unionized. Tell you anything?
Many foreign corporation do not want a union and do what ever they can to prevent one from every getting started.
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Licker wrote:

Should people have the right to collectivize and form a union - Absolutely.
Should unionized workers have the right to strike if they believe their working conditions, pay, benefits, etc, are not sufficient for the job they are doing - absolutely (but only when their current contract has expired).
Should unionized workers who have gone on strike need to picket their workplace and/or prevent replacement workers from entering the workplace? No, they should not need to do that. If they believe the pay they receive for the work they do is not sufficient, then neither should anyone else. If they believe their own position, then all they need to do is stay home and sit in their sofa with a beer in one hand and a remote control in the other, and wait for the employer to agree to their demands and call them back to work.
On the other hand, if they believe that they are asking form more pay than than a free market would or should otherwise pay them, then they logically would feel threatened by replacement workers, and try would do best to stop them from attempting to do their job. And that is exactly what they do. They know they are asking for more than a fair wage, and they are preventing a free market (a job market in this case) from operating to determine just what that wage is.
If employers are not free to hire replacement workers, if replacement workers are not allowed free and unhindered access to the workplace, then a true and fair equillibrium can not be reached between what the employer wants to pay vs what people are willing to work for.
Look what it took for US automakers to keep paying the high wages and benefits that the unions extorted from them. The automakers leveraged their operations with billions in debt. This has been going on for decades. And with the credit-crisis they could no longer roll-over that debt. The result is bankruptcy.
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MoPar Man wrote:

I don't always agree with you, but you hit el nailo on la cabeza with that post.
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The problem with this approach is that what typically happens is that there is no equilibrium that is ever reached, and wages spiral lower and lower indefinitely - until the government steps in and starts creating labor laws that disallow stuff like child labor, mandatory overtime, etc.
That is also why laws were passed that disallow illegal immigrants from working.
Unfortunately, those laws are routinely flouted in many areas of the country.
And laws were also passed that capped the quasi-illegal immigrants (ie: H1B visas)
Unfortunately, those are also being ignored.
Once the government ejects the illegal immigrants, and start arresting business owners that routinely employ them, and scotch the veneer of legality applied to what are fundamentally illegal immigrants (H1B) I'll be more than happy to sign on to your anti-union agenda.
But until then, if the government is going to make the business owners happy by turning a blind eye to the abuse of the system by the illegal and quasi-illegal H1B immigrants, then it is only fair for the government to make the unions happy by supporting their causes.
Ted
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Ted Mittelstaedt wrote:

I know of no non-unionized employer, in any market sector or job classification, where salaries have fallen over time.
If you know of one, please describe it.
A job is worth what someone is willing to earn. If their work is sub-standard then product quality will suffer and so will sales and reputation. If you are a clever employer who can properly design your parts and your assembly methods such that even a monkey can put the product together reasonably well, then you can hire monkeys and pay them bananas.

Illegal immigrants should not be physically present in the country in the first place. That you must rely on employers to act as immigration police is a disgrace.
Why are you equating the right for someone, if offered, to take the job of a striking worker with that of the illegal immigration situation?
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MoPar Man wrote:

Bravo!
And immigration officials are discouraged and threatened by the government (ala Nancy Pelosi and others) if they enforce the laws on the illegals. We are experiencing anarchy within our own government.
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Bill Putney wrote:

Thats very true. Just look at what the left is doing attacking Sheriff Joe Arapio in Arizona. He's extremely popular with the Arizona citizens but the left has been trying to stop him like crazy from going after illegals and the companies that hire them.
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MoPar Man wrote: "Should unionized workers have the right to strike if they believe their working conditions, pay, benefits, etc, are not sufficient for the job they are doing - absolutely (but only when their current contract has expired)."
I guess you never been in a union. Striking is illegal in most contracts and it clear states that in its message. Beside Wildcat strikes have been deemed illegal since 1935. The law does allow the company to terminate anyone involved in an illegal strike.
"Should unionized workers who have gone on strike need to picket their workplace and/or prevent replacement workers from entering the workplace? No, they should not need to do that. If they believe the pay they receive for the work they do is not sufficient, then neither should anyone else. If they believe their own position, then all they need to do is stay home and sit in their sofa with a beer in one hand and a remote control in the other, and wait for the employer to agree to their demands and call them back to work."
And please explain how this would be profitable. Let see news media broadcast 2000 ABC union workers go on strile becuase of unfair wages. Camera crews pan to the company and no one is walking the picket line. This would be real effective way to get the company to come to terms.
"On the other hand, if they believe that they are asking form more pay than than a free market would or should otherwise pay them, then they logically would feel threatened by replacement workers, and try would do best to stop them from attempting to do their job. And that is exactly what they do. They know they are asking for more than a fair wage, and they are preventing a free market (a job market in this case) from operating to determine just what that wage is."
First and far most, most contracts are not all about wages but more about working conditions. The company will not settle on wages if they can not afford to pay them. The last contract I was sitting at the table the company initial offer to the union was a 1 percent raise each year for the 3 year contract. This is coming from a comapny that posted record profits the last 10 years. The union did not list a percentage raise on the initial offer. It just stated a yearly raise and wages was the last thing on the list. On the companies offer it was first along with a signing bonus.
"If employers are not free to hire replacement workers, if replacement workers are not allowed free and unhindered access to the workplace, then a true and fair equillibrium can not be reached between what the employer wants to pay vs what people are willing to work for."
The employer is free to hire replacement workers but if the strike is deemed to be legal by the NLRB, then one the strike is over they most likely won't have a job. Under the NLRA replacement workers can not displace llegally striking workers permanently. There has been several cases where companies have tried this and lost. Caterpillar and Kaiser Aluminum are two that come to mind.
"Look what it took for US automakers to keep paying the high wages and benefits that the unions extorted from them. The automakers leveraged their operations with billions in debt. This has been going on for decades. And with the credit-crisis they could no longer roll-over that debt. The result is bankruptcy."
You are really clueless. The entire world economy is in a collapse all because of UAW workers. Get real.
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Why can't you quote properly?
Licker wrote:

Strikers should not have the legal ability to block the workplace or hinder replacement workers from entering the workplace.
If a workforce goes on strike, then by definition they have ceased their employment with the employer of their own free will. They have in face terminated their own employment.
Any replacement workers that the employer hires are not really replacement workers - they are the new workforce of the company.
Why can't you understand that simple, fair and equitable concept? If the above situation can't happen because of labor laws, then the laws are an ass.

That is a huge flaw. What is the moral and logical reason for such a law? There can be none.
If a workforce goes on strike (for more of something, more pay, more benefits, more beneficial employment terms) then their demands can't be tested fairly unless others are allowed access to those same jobs for the same pay (or benefits, or employment terms).

You are the clueless one. I never said that the economy collapsed BECAUSE of the UAW. I said that US auto makers have been held hostage by artifically high wages and benefits given to UAW employees because how the labor laws operate. And that left the auto companies financially vulnerable to the current credit crisis (a crisis that had it's roots in the collapse of billions of dollars of worthless mortgage contracts in the US, UK and Europe). The auto companies have been financing their operations by leveraging and rolling over huge amounts of debt. That couldn't last, and the credit crisis brought down their deck of cards earlier than they ever anticipated.
Ford borrowed a huge amount of money 2 or 3 years ago and that's the only reason why they haven't declared bankruptcy yet. If credit markets haven't recovered in a year and Ford can't get access to new loans, then they'll be selling off assets and closing dealerships like GM and Chrysler have just done.
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MoPar Man wrote: "Why can't you quote properly?"
Last time I looked up how to quote someone is says use quation marks " nd not greater than symbol >.
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It's a question of Heducation...
DAS
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Licker wrote:

You are the only person I've ever seen, in the 20 years that I've been reading and posting to usenet, to quote previous material using "---" instead of indenting quoted material using a standard character (like > ).
You seem to be using Outlook Express. I'm sure it has the ability to properly construct usenet posts by using the > character to indicate quoted material. Why don't you use it properly?
Don't you see how you're the only one quoting in that manner?
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But don't you rmember "---" from your youth?
This > indendation business has only arisen because that's what happens in e-mail replies. It's not actually a quote in the grammatically correct English sense.
If I were to quote you, say, correctly and show that your brain has been overwritten ( :-) ) by computerisation over a long period I would show the evidence like this: "You are the only person I've ever seen, in the 20 years..."
Julius Caesar said "Et tu, Brute"
not
Julius Caeser said

In German they sometimes use << and >> if I am not mistaken, but this is not a German discussion group...
Here endeth the lesson...
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Dori A Schmetterling wrote:

Quotes would not be at the start of each line quoted and only around an entire section. That would make multiple quotes less clear in usenet and a quoted thread more difficult to read.
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Licker wrote:

Not in usenet! > is used at the start of each line to break up each persons quoted text for clarity. Quotation marks would not be used on the start of each line so clarity is then lost.
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And e-mail.
Each level gets another bracket... unless one switches it off or uses rich text (which sometimes has vertical lines)...
DAS
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