Handwriting Is On Wall In Detroit, With Foreign Cars Vastly Preferred

IBD Editorials ^ | July 29, 2008 | CONSTANTINE KAMBANIS, RAGHAVAN MAYUR AND BERT HOLLAND

[Kaslin]

Auto-industry insiders over the years have often blamed Detroit's mounting problems on mediocre management, poor technological leadership and a lack of vision for the future.

While the successful foreign firms relied on technological innovation, a thorough study of the market, clever marketing and high quality, Detroit's Big Three automakers relied on massive economies of scale, price discounting, zero-percent financing, rebates and volume fleet sales, all of which led to erosion of vehicle resale values.

What were customers to do? Buy highly rated "foreign" cars with high resale values or steeply discounted American vehicles with lower resale values?

The answer is in the numbers. From 1992 to 2007, the number of imported passenger vehicles more than doubled, and Toyota Motor Co. is now the world's largest automaker. According to a new joint study by TechnoMetrica Market Intelligence and Auto Futures Group, the No. 1 brand Americans will consider buying is Toyota.

Our study also shows that when it comes to brand power among customers, Toyota and Honda owners are — on average — four times more likely to promote their brands to friends than Ford owners are, and three times more likely to promote their brands than GM or Chrysler owners.

This does not bode well for Detroit, where the Big Three are at crossroads. Already bleeding from declining sales, increasing incentives and heavy lease losses, they must at the same time find the resources to retool their lineups, remake their images and shore up their market values.

[goldstategop]

Its the quality, stupid. My VW is a reliable car. Its gone south only once on me and that after the alternator went bad after several years.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[VaBthang4]

This entire subject amazes me.

Foreign cars are just plain better. Better engines, better performance all the way around.

When I can get 300,000 miles on one car and only 150,000-180,000 on another....which one am I gonna choose.

The whole discussion is laughable. Sorry, but the big three deserve to bleed out.

[goldstategop]

I need to service my car twice a year. The costs are usually low. If an electrical part dies, ouch!

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[forYourChildrenVote4Bush]

My first car was a Nissan 240sx,second was a Mazda 626, my third was a another Nissan and now a Honda...out of all of them i loved to drive my manual rear wheel drive 240sx...but now prefer the drive and room of my Honda odyssey...I never owned an American car and probably never will...

[ROTB]

In related news, salaries of executives at the Big 3 are still 5 times higher than their foreign counterparts.

[ken21]

w edwards deming invented quality in autos,

but the big 3 american co’s wouldn’t pay attention.

the japanese hired deming and paid him for his expertise.

the following link shows toyota’s appreciation to deming:

http://www.managementwisdom.com/

[Jim Noble]

I would put a $20 000 tax on all imported cars, tomorrow.

[eyedigress]

I’ll be turning over 260,000 on my Accord this week with no major repair.

[wally_bert]

I had an 89 240 with 85K on it when I bought it. It lasted 6 years and started developing problems at about 230K. It was still running when I donated it as a kidney car. The steering rack was about to go. Of course it had been making that noise for about a year. 5th gear was starting to slip out too.

[donaldo]

I generally agree that foreign cars are better but I’ve owned two Fords over the last sixteen years and their performance has been very satisfying. I got ten years out of my Explorer and then downsized to an Escape which I’ve driven for the last six. It’s truly odd that virtually all my union loving liberal friends drive cars that aren’t built by the UAW.

[Grizzled Bear]

I thought they quit making cars in Detroit years ago. Most of the newer plants opened in Tennessee and Kentucky. Toyota wanted to open a factory in Michigan and IIRC Gov Granholm torpedoed it.

[PAR35]

When folks go to buy a vehicle, they shouldn’t overlook ones made in America - like Mercedes, Toyota, Honda, BMW, even Hyundai.

Of course, if you want to consider a foreign made car, you can look to GM or Ford.

[Grizzled Bear]

I would put a $20 000 tax on all imported cars, tomorrow.

And encourage domestic companies to continue churning out mediocre third rate junk.

[DManA]

When times are good - We need to compensate them for their great performance

When times are bad - Now especially we need to pay for competent management talent.

When times are bust - We have to pay them first, it's in their contract.

[Greenpees]

I know how the economy works, and I don’t buy the hype about foriegn cars. I haven’t owned an import (or ones that are made in the US out of convenience) for over 20 yrs. I have a Ford with over 250,000 mi on it, and a new Dodge Caravan.

All the rest is hype. and it’s hype that you’ll pay an extra 10K for.

I know the story line, about domestic cars being crap, and that they’re all made in Mexico, etc. Well, it’s not so in many cases. It’s just something we tell ourselves to feel better about buying another country’s supposed “better” product.

[buccaneer81]

I would put a $20 000 tax on all imported cars, tomorrow.

My Mazda was built in Michigan and my Toyota was built in Kentucky. Gonna tax those too?

[DManA]

What’s an imported car? My Subaru was made in Indiana.

[Grizzled Bear]

I bought a 93 Nissan Sentra, let an Airman take over the loan when I got orders to go overseas and then a bought 95 Dodge Dodge Neon through AAFES in Germany. I preferred the Dodge.

[Alberta's Child]

I've found that there's an inherent bias against Big Three vehicles just on their name alone.

The best evidence of this can be found when you compare identical vehicles that are built by the same manufacturer but have different brand names. I remember a Consumer Reports or Car & Driver rating of SUVs back in the early 1990s, for example, where they rated the Ford Explorer "Average" and the Mazda Navajo "Superior" even though the Navajo was built by Ford and was identical to the Explorer in every way except a minor difference in the front grille.