The US Auto industry is in shambles, over the last couple of years they have continually lost market share and support of the US car buying public. Well at least that is how I see it, and frankly the facts support this broad assumption.
I come from a family with over a 70 year of history in the industry, starting with the sales of the first Oldsmobile sedans to being the #1 Cadillac dealer in the country to then being one of the first Datsun (Nissan for those to young to remember) dealers in the country. Our family had over 65 dealerships at one point through the east coast, and we had the number one Oldsmobile dealership in the world, selling about 1000 cars per month at the pinnacle of the business. The majority of the dealerships were GM or Chrysler related, with the exception of some trials into the Japanese lines. So I do come to this discussion with some history and love for the US Auto industry, not to mention that I worked for General Motors in the mid-1980's, and my current company does product and advertising market research for the auto industry. Enough about me! Let's get into the meat of this little dissertation!!
The reality is that the industry has grown and change many times over the years but the one fixed factor that had always been in place, year after year, was the strength and leadership of GM and Ford. Whether it is due to arrogance or simply stupidity their leadership and strength has fallen to almost a second tier player with Toyota, Honda, Daimler (Chrysler has been sold), Nissan and VW leading the design and technology future of vehicle development. With Toyota poised to eclipse all but GM in production and far exceeds all of the US players in profitability.
The US management teams will try to blame the issues on labor and the unions; personally I believe this to be "Hog Wash" (I was raised by a Southern Mom & Grandmother). All the other manufacturers have labor cost, union contracts, and they all seem to be doing very well. They all have chosen to build cars here in the US, while the "boys" in Detroit seem to believe that all manufacturing needs to be sent over to China or other low cost labor zones in south Asia. As they say "Reality Sucks", for all the good will that has been pontificated about buy American, the US public will buy what they trust and what they like, and frankly both the Asian and European competitors are designing more appealing vehicles and building a much better product, that appears to suit the demand of US consumer's. Although, there have been some very solid attempts to provide interesting production vehicles to the market: Ford GT, Chevrolet HHR, Chevrolet SSR, Chrysler PT Cruiser, Dodge Viper, etc. all of which are impressive design concepts and styling cues, however they are low volume sellers that never translated their design concepts into any of the large scale production models. Yes they generate a marketing buzzzz, but unless they provide a link to the product line and name plate their marketing effectiveness can be greatly limited or even completely diminished.
A key factor in vehicle sales and market penetration is hardcore MARKETING. For years Detroit was the leader in how to market vehicles, more importantly they were the leader in how to target market a vehicle to the middle-market, the bread & butter of the auto buying market. Somehow they have lost their way in reaching out to their core market. Granted their is a tremendous amount of confusion in the marketplace and more competition than ever, but the US Big Three still can gain the upper hand against the majority of the competition, except Toyota.
The good news is that not all is lost. We are finally beginning to see some very good designs coming from GM (Saturn & Chevy), Ford and Chrysler in their primary large scale production line models, and some creative thinking. Quality is still somewhat of an issue, although significantly better, they still need to take a quantum leap forward. There will be some very difficult cost restructuring actions that must take place, and if they do it properly then they will have a huge cost and distribution advantage over the foreign competition. Although some dealerships will need to disappear in order to ease the competitive pricing & support issues, there is still more than enough sales outlets to dwarf virtually all of the competition (except Toyota).
Unions and suppliers will not be happy, but operational & component purchasing restructuring will be the price they have to pay if they want to survive as partners with Big US manufacturers. Pay must be inline with the Japanese competition, and pricing for parts must be inline with the economies of Toyota and Honda. Manufacturing processes will have to significantly change so that they align more with a modified Asian and European model that allows for lower core production cost while ensuring a very high build quality, using physical labor only in specific areas of the building process. Manufacturers must always remember that they are building product for a very discerning customer that now has many choices not just a few.
Finally, design and marketing must step up to a new level and maintain this pressing level to ensure long-term market success. Companies like Hyundai and Kia have proven that a company, perceived to be poor quality, can bounce back from extreme adversity. That being said it will be a very difficult road to drive. Detroit must continue to use market and product research to help them establish product and marketing direction. Most importantly US manufacturers must figure out the best methods to reach their buyers, not just from an emotional level, which Chevy is doing a good job with their current ad campaign, but also from a reason to purchase (Hyundai is using both emotion and key high quality points to convince people to buy their product). Buyers are a very fickle group, and they make initial buying decisions on what they believe and are made aware of through advertising and positive press.
I am and always will be a big fan of the American Auto industry, and truly believe in buying American where it makes since. Unfortunately, US manufacturers have a lot to work on to catch up with the rest of the world, fortunately there is time and skill (I believe) to get this done. It is important to realize that we are now truly living in a world economy, which will continue to be dynamic and robust well into the future. As long as the Big Three can be creative, focused and resourceful there is a very strong chance that they will bounce back and be even stronger than before, positioning themselves to truly be the WORLD leaders in vehicle development and production.
We will continue this discussion looking at the individual company's and their challenges to regain leadership and profitability. I look forward to a fun and robust discussion about this endeavor and many more. Thank you for spending time with me and have a great day.
The Rambling Jester