Author Topic: Gee, Detroit Auto makers finally open eyes  (Read 1045 times)

Offline Ripsnort

  • Radioactive Member
  • *******
  • Posts: 27260
Gee, Detroit Auto makers finally open eyes
« on: January 07, 2004, 07:57:23 AM »
They're actually gonna focus on making cars more desireable to the public! What a concept! ;)

Quote
New realism at U.S. carmakers?  
Fara Warner NYT
Wednesday, January 7, 2004  

 
Big 3 stop vowing to regain market share and focus on profit
DETROIT The strengthening U.S. economy and generous sales incentives produced robust car sales last year, automakers say, but domestic companies' market share continued to shrink as import brands like Toyota, Honda and BMW saw the biggest gains.

Despite those declines, the American companies did not vow to increase market share this year as they have often done in the past. Instead, they said Monday that they would look for ways to make the cars and trucks that they do sell more profitable, largely by making them more desirable to consumers.

"Oversupply of vehicles consumers don't want has led us to raise incentives or run to daily rental fleet sales, and we have to stay out of that trap," Steve Lyons, president of Ford Motor's Ford division, said during a conference call.

Including its Lincoln and Mercury divisions but not its foreign luxury makes like Jaguar and Volvo, Ford sales fell 8 percent in December from a year earlier, and its share of the North American market slipped to 20.7 percent from 21.3 percent in 2002. For the year, Ford's sales were down 4 percent, including an 11 percent decline in car sales.

Lyons added that while Ford planned to introduce several vehicles, including a minivan and an upscale sedan, he expected the Ford brand's market share to remain where it was last year, at about 17.1 percent, in 2004.

Wesley Brown, a partner with Iceology, an automotive research firm in Los Angeles, said Ford's forecast suggested a new situation in Detroit.

"Maybe the companies are finally getting to that point of acceptance where they recognize what their true market share really is and then determine how to be profitable at that figure," he said.

American automakers' share of the North American market has been dropping for decades and now stands at 61.8 percent, according to Ward's AutoInfoBank.

Japanese makers now have 29 percent of the market, with German and South Korean companies supplying the rest. Two decades ago, the American automakers commanded 80 percent of the domestic market; in the 1970's, GM alone commanded more than 50 percent.

The market itself shrank to 16.6 million cars and trucks in 2003 from 16.8 million in 2002. Still, that was above some analysts' forecasts of 16.2 million, largely because of the aggressive use of low-interest loans, cash rebates and other incentives to buyers. For some GM models, the incentives totaled about $4,000 per vehicle, according to Edmunds.com, a consumer research company in Santa Monica, California.

But in 2003, GM's market share dropped to 28.3 percent, according to Paul Ballew, chief sales analyst for GM. That was down from 28.7 percent in 2002 and the first decline for GM in three years. Some GM executives had started wearing lapel pins with "29" on them to encourage employees to push the company's share over that figure.

Ballew said that "2003 was a solid year for GM, but we didn't get to where we wanted to be." But instead of saying that the company would push for market share gains in the next year, he noted that GM's market share had remained stable in the 28 percent range for the past five years despite tough competition.

GM's 2003 sales slipped 2.2 percent, to 4.7 million cars and trucks, with car sales sliding 5 percent and truck sales up 0.2 percent.

Chrysler's market share slipped to 12.8 percent from 13.1 percent in 2002, putting it just 270,000 units ahead of Toyota, which said its 2003 sales rose 6.3 percent, making it the company's best sales year in its 46-year history.

Toyota said it was now the "No. 1 car brand" in America, counting passenger cars but excluding sport utility vehicles and pickup trucks.

There is one area where virtually every automaker is winning: the luxury market. For the first time, four luxury brands sold 200,000 or more vehicles in 2003. According to Ballew of GM, one of every 10 cars sold in the United States is now a luxury make. After Toyota's Lexus, at 259,755 unit sales, came BMW and Mercedes. Cadillac, which GM has given new product and marketing muscle, was fourth with 216,090 sales, just 2,831 short of Mercedes, Ward's AutoInfoBank reported.

The luxury sector has been driven by ever-increasing sales of sport utility vehicles. Acura, Honda's luxury division, has been helped by strong sales of its MDX sport utility. MDX sales were up more than 8 percent in 2003, to 57,281. Although it is one of Acura's newest vehicles, the sport utility now accounts for 34 percent of the division's sales.

Porsche's sales show an even more dramatic dependence on SUV's. The company's sales were up 33 percent in 2003, to 28,416. Almost half of those - 12,290 - were Cayennes, its new SUV, which outsold its flagship 911 cars.

The New York Times

Offline GRUNHERZ

  • Plutonium Member
  • *******
  • Posts: 13413
Gee, Detroit Auto makers finally open eyes
« Reply #1 on: January 07, 2004, 08:15:06 AM »


Oh the desire!!!  :lol

Well better late than never.

Offline Ripsnort

  • Radioactive Member
  • *******
  • Posts: 27260
Gee, Detroit Auto makers finally open eyes
« Reply #2 on: January 07, 2004, 08:22:54 AM »
Quote
Originally posted by GRUNHERZ


Oh the desire!!!  :lol

Well better late than never.


:rofl :rofl :rofl

Offline miko2d

  • Parolee
  • Gold Member
  • *****
  • Posts: 3177
Gee, Detroit Auto makers finally open eyes
« Reply #3 on: January 07, 2004, 10:21:15 AM »
The car designs are not their major problem - the unions are.

 The "japanese" that are taking over the market are buiding their cars in union-free states and making profit on every vehicle sold where americans companies take loss or barely break even.

 miko

Offline GRUNHERZ

  • Plutonium Member
  • *******
  • Posts: 13413
Gee, Detroit Auto makers finally open eyes
« Reply #4 on: January 07, 2004, 10:31:17 AM »
I'm not gonna defend unions, especially not the car ones,  but the tremendous decline in US buolt market share of passenger cars (not trucks mind you) is directly related to poor design which makes the cars unappealing to consumers.  

Miko, if the unions were the chief cause of this problem why are trucks and SUVs so profitable on a per unit basis for US automakers, they are built in the same plants by workers with the same extravagant union contracts.

Plus are you saying the car manufacturers are losing market share because of the unions?  How would that work? If you take the the union contract and consider a sort of fixed cost then the car manufacturers would surely want to manufacture and sell as many as possible to get economies of scale to offset the fixed costs - enroumus enough allready in the car business. They arent gonna do that by loosing market share in passenger cars at this rate.

What else, is your contention that because the manufacturers are not "internally" profitable because of the unions and related labor cost structure is the reason the cars are not popular with consumers and thus arent bought and thus cannot be priced high enough to be profitable (to say nothing of not needing massive incentives for purchase). How would you argue that the unions are responsible for lost passenger car market share?
« Last Edit: January 07, 2004, 10:36:11 AM by GRUNHERZ »

Offline Urchin

  • Platinum Member
  • ******
  • Posts: 5517
Gee, Detroit Auto makers finally open eyes
« Reply #5 on: January 07, 2004, 10:49:47 AM »
I want a new mustang, they look cool.  And what the **** is this?!  Grunherz the mad capitalist is choosing NOT to blame something on a union?  Surely you jest!?

Offline gofaster

  • Platinum Member
  • ******
  • Posts: 6622
Gee, Detroit Auto makers finally open eyes
« Reply #6 on: January 07, 2004, 11:11:07 AM »
Quote
Originally posted by Urchin
I want a new mustang, they look cool.  


I saw photos of the new 'stang on Yahoo and I gotta admit it looks pretty sharp.  The styling cues from the old 2nd-generation Mustang fastback is a good idea.  I think it'll tie in nicely with the whole retro-style movement FoMoCo is doing, led by the Thunderbird and the promised GT40.

Offline miko2d

  • Parolee
  • Gold Member
  • *****
  • Posts: 3177
Gee, Detroit Auto makers finally open eyes
« Reply #7 on: January 07, 2004, 11:14:48 AM »
GRUNHERZ: Miko, if the unions were the chief cause of this problem why are trucks and SUVs so profitable on a per unit basis for US automakers, they are built in the same plants by workers with the same extravagant union contracts.

 Some cars are more profitable than others, but if you compare how much the pension and other benefits are contributing to a car made in Detroit compared to the one made in Alabama, you will see that the domestic companies are saddled with a hhuge extra cost - which prevents the from lowering the price.

 Of course we can argue that workers should get lavish retirement packages, but the public apparently does not share that belief - buying more cars bilt in the south and fewer built in Detroit.

 The car models change from year to year but the pension liabilities and labor costs are persistent. The GM and Ford have been losing market share for decades - they could not have been producing crappy models all that time.
 Some models are bad, some are great - and promply matched by the competition.

 What competition does different is not just the models but opening plants in areas where union influence is smallest. So it's not just my academic opinion but of the companies who make a lot of money because it is correct.

 They may have extra problems because of designs and may get some relief if better designs are adopted but unless some miracle happens or grvernment intervenes to take care of their liabilities, they are headed towards bankrupcy withing a decade.

 You may be very surprised to find out that GM makes money not in manufacturing and selling cars but in financing - it's a profitable bank formally linked to a failing car maker.

 miko

Offline Ripsnort

  • Radioactive Member
  • *******
  • Posts: 27260
Gee, Detroit Auto makers finally open eyes
« Reply #8 on: January 07, 2004, 11:15:49 AM »
Quote
Originally posted by Urchin
I want a new mustang, they look cool.  And what the **** is this?!  Grunherz the mad capitalist is choosing NOT to blame something on a union?  Surely you jest!?


'04 or 05?  Wait for the '05...


Offline gofaster

  • Platinum Member
  • ******
  • Posts: 6622
Gee, Detroit Auto makers finally open eyes
« Reply #9 on: January 07, 2004, 11:22:41 AM »
Quote
Originally posted by Ripsnort
'04 or 05?  


This one.


Offline GRUNHERZ

  • Plutonium Member
  • *******
  • Posts: 13413
Gee, Detroit Auto makers finally open eyes
« Reply #10 on: January 07, 2004, 11:27:20 AM »
Quote
Originally posted by miko2d

 Some cars are more profitable than others, but if you compare how much the pension and other benefits are contributing to a car made in Detroit compared to the one made in Alabama, you will see that the domestic companies are saddled with a hhuge extra cost - which prevents the from lowering the price.

The car models change from year to year but the pension liabilities and labor costs are persistent. The GM and Ford have been losing market share for decades - they could not have been producing crappy models all that time.


If the cars were competitive they would not have to lower prices. Thats exactly why US make trucks and SUVs are so profitable on aper unit bases - consumers actually seek them out and are willing to pay higher prices for them.

The passenger cars are not that popular and so suffer to the more poular japanes cars which now cost more yet offer supperior buyer satisfaction and desirabilty.

In truth GM and Ford passenger cars have had bad and outdated designs since the 1970s. In the beggining it was over the fuel issue and size, the 1980s were over quality and finally in the 1990s they suffered from poor styling, technology and up to date design. Just comapre a chevy cavalier to a honda civic to see what I mean.

While I ceratinly agree that union contracts degarde overall profitabilty of US carmakers I think I have shown well enough that the issue of per unit profitabilty is strongly linked to design quality and customer desirability as seen in US trucks and SUV. US passenger cars simply cannon command the higher prices of their japanese rivals - thats why american families buy Honda Accords and american rental fleets buy Ford Tauruses. And BTW who do yoiu think pays more per unit, the 100,000 individaul families buying one car each or the rental fleet buying thousands of otherwise unwanted cars at a time.

Offline FUNKED1

  • Platinum Member
  • ******
  • Posts: 6866
      • http://soldatensender.blogspot.com/
Gee, Detroit Auto makers finally open eyes
« Reply #11 on: January 07, 2004, 11:29:52 AM »
Why would they make cars that people like?  They make all their money selling SUV's and trucks.  Their car sales are mostly fleet deals - rental cars, government agencies, big companies, etc.

Offline GRUNHERZ

  • Plutonium Member
  • *******
  • Posts: 13413

Offline Ripsnort

  • Radioactive Member
  • *******
  • Posts: 27260
Gee, Detroit Auto makers finally open eyes
« Reply #13 on: January 07, 2004, 11:32:55 AM »
Quote
Originally posted by gofaster
This one.



Yep, thats the '05.  I'm looking at the Cobra '06 myself (Its wise to wait a year to let them work the bugs out of a new production  car)

Offline GRUNHERZ

  • Plutonium Member
  • *******
  • Posts: 13413
Gee, Detroit Auto makers finally open eyes
« Reply #14 on: January 07, 2004, 11:32:57 AM »
Quote
Originally posted by FUNKED1
Why would they make cars that people like?  They make all their money selling SUV's and trucks.  Their car sales are mostly fleet deals - rental cars, government agencies, big companies, etc.


Beacuse selling cars to individual consumers is more profitable. Thats the whole point of the article and the source of the problem.