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U.S. automakers suffer image problem of old
Source: Reuters
Written by Nick Carey
CHICAGO - Iain Robertson opted to buy his 1999 Honda Civic for three reasons; reliability, fuel efficiency and a little family history.
"My mother has owned several Hondas over the years, and she swears by them," said the self-employed 26-year-old from Bloomington, Indiana. "My impression of this and other Asian brands is that they are well made, efficient and don't break down much."
He said he was unable to make the same assumptions about American auto brands.
Among the myriad challenges facing U.S. automakers, including skyrocketing health-care and production costs, is the perception that U.S. vehicles are not as well built as Asian ones. Quality is a variable that has not received much attention lately, but still affects Detroit's prospects.
Analysts say beliefs like Robertson's are grounded in problems Detroit car makers had 20 to 30 years ago with reliability and efficiency, but do not reflect the significant progress made since then.
"This drives Detroit nuts," said David Healy, an auto industry analyst at Burnham Securities. "They have come a long way, but public perceptions don't reflect that."
Jokes surrounding General Motors Corp. , Ford Motor Co. and the American brands of DaimlerChrysler AG -- such as Ford standing for "Fix Or Repair Daily" -- are still told, and laughed at.
The perception has also helped erode the market share of the Big Three and lowers the resale price of used American cars. And while they have narrowed the gap with Asian car makers, Burnham Securities' Healy said their cars are still "spotty in places."
"Detroit (car makers have) high pension costs that put them at a disadvantage compared with the Asian car makers," he said. "They can't invest as much so they are constantly playing catch-up."
An October survey of more than 1 million car owners by nonprofit publication Consumer Reports reported that 29 of the 31 most reliable cars named by respondents were Japanese. The other two were the Chevrolet Monte Carlo and the Mercury Mariner.
Of the 48 least reliable, 22 were American, 20 European and four were Japanese, according to the survey.
Brian Moody, road test editor at automotive information Web site Edmunds.com, said the quality nadir for the American automobile industry lasted from the late 1970s to mid-1980s, when they lagged behind Asian car makers and produced cars famous for persistent problems.
"This is where the perception comes from," Moody said, adding it's possible children growing up in those years may have been influenced by seeing their parents deal with balky Big Three vehicles.
"Many people are subconsciously influenced by what their fathers may have said about different brands, even if those statements are no longer necessarily true," he said.
"It is an emotional issue," Moody added, saying some Big Three cars match their Asian counterparts, but "thanks to this emotional baggage some people don't give them a second look."
Moody and other analysts say the worst is now behind the Big Three, with some brands regaining some U.S. market share and earning recognition for advances.
From 2000 to 2005 J.D. Power and Associates' study of APEAL -- Automotive, Performance, Execution and Layout -- measuring "owners' delight" with their cars, has seen Asian cars in the lead with 47 awards. American brands have taken 35 and European brands 24.
Overall, the Big Three saw their U.S. market share decline to 56.9 percent in 2005 from 65.6 percent in 2000, according to J.D. Power data, although the Chrysler brand rose to 3.8 percent from 2.8 percent in the same period.
Toyota Motor Corp.'s market share rose to 10.6 percent in 2005 from 8.1 percent in 2000, while Honda Motor Co. Ltd.'s went to 7.4 percent from 5.9 percent.
Analysts said part of the problem can be resolved through improved communication.
"The challenge is to get people back into the showrooms," Edmunds' Moody said. "The key to that challenge is to reach people on an emotional level rather than just claiming they are making good vehicles."
Susan Jacobs, president of automotive consulting company Jacobs & Associates, said that rather than constantly pushing incentives and discounts "that give the impression these cars are on sale because no one is buying them," the Big Three need to "communicate the advances they are making in technology and comfort."
Jacobs said that when asked, she advises people to choose based on cars' attributes, as "there is very little between the brands nowadays."
"Many people don't know that," she added.
Blazin's Note: I've been saying this for years, American cars are good, people just don't see it that way.
Source: Reuters
Written by Nick Carey
CHICAGO - Iain Robertson opted to buy his 1999 Honda Civic for three reasons; reliability, fuel efficiency and a little family history.
"My mother has owned several Hondas over the years, and she swears by them," said the self-employed 26-year-old from Bloomington, Indiana. "My impression of this and other Asian brands is that they are well made, efficient and don't break down much."
He said he was unable to make the same assumptions about American auto brands.
Among the myriad challenges facing U.S. automakers, including skyrocketing health-care and production costs, is the perception that U.S. vehicles are not as well built as Asian ones. Quality is a variable that has not received much attention lately, but still affects Detroit's prospects.
Analysts say beliefs like Robertson's are grounded in problems Detroit car makers had 20 to 30 years ago with reliability and efficiency, but do not reflect the significant progress made since then.
"This drives Detroit nuts," said David Healy, an auto industry analyst at Burnham Securities. "They have come a long way, but public perceptions don't reflect that."
Jokes surrounding General Motors Corp. , Ford Motor Co. and the American brands of DaimlerChrysler AG -- such as Ford standing for "Fix Or Repair Daily" -- are still told, and laughed at.
The perception has also helped erode the market share of the Big Three and lowers the resale price of used American cars. And while they have narrowed the gap with Asian car makers, Burnham Securities' Healy said their cars are still "spotty in places."
"Detroit (car makers have) high pension costs that put them at a disadvantage compared with the Asian car makers," he said. "They can't invest as much so they are constantly playing catch-up."
An October survey of more than 1 million car owners by nonprofit publication Consumer Reports reported that 29 of the 31 most reliable cars named by respondents were Japanese. The other two were the Chevrolet Monte Carlo and the Mercury Mariner.
Of the 48 least reliable, 22 were American, 20 European and four were Japanese, according to the survey.
Brian Moody, road test editor at automotive information Web site Edmunds.com, said the quality nadir for the American automobile industry lasted from the late 1970s to mid-1980s, when they lagged behind Asian car makers and produced cars famous for persistent problems.
"This is where the perception comes from," Moody said, adding it's possible children growing up in those years may have been influenced by seeing their parents deal with balky Big Three vehicles.
"Many people are subconsciously influenced by what their fathers may have said about different brands, even if those statements are no longer necessarily true," he said.
"It is an emotional issue," Moody added, saying some Big Three cars match their Asian counterparts, but "thanks to this emotional baggage some people don't give them a second look."
Moody and other analysts say the worst is now behind the Big Three, with some brands regaining some U.S. market share and earning recognition for advances.
From 2000 to 2005 J.D. Power and Associates' study of APEAL -- Automotive, Performance, Execution and Layout -- measuring "owners' delight" with their cars, has seen Asian cars in the lead with 47 awards. American brands have taken 35 and European brands 24.
Overall, the Big Three saw their U.S. market share decline to 56.9 percent in 2005 from 65.6 percent in 2000, according to J.D. Power data, although the Chrysler brand rose to 3.8 percent from 2.8 percent in the same period.
Toyota Motor Corp.'s market share rose to 10.6 percent in 2005 from 8.1 percent in 2000, while Honda Motor Co. Ltd.'s went to 7.4 percent from 5.9 percent.
Analysts said part of the problem can be resolved through improved communication.
"The challenge is to get people back into the showrooms," Edmunds' Moody said. "The key to that challenge is to reach people on an emotional level rather than just claiming they are making good vehicles."
Susan Jacobs, president of automotive consulting company Jacobs & Associates, said that rather than constantly pushing incentives and discounts "that give the impression these cars are on sale because no one is buying them," the Big Three need to "communicate the advances they are making in technology and comfort."
Jacobs said that when asked, she advises people to choose based on cars' attributes, as "there is very little between the brands nowadays."
"Many people don't know that," she added.
Blazin's Note: I've been saying this for years, American cars are good, people just don't see it that way.
