Bad mileage = sales crash for Detroit

Posted by: Adam Aston on August 10, 2007

Could it get much clearer? Bad fuel economy is crippling the US auto makers. If this hasn’t sunk in among Detroit auto execs or Congessmen still debating the need to boost US mileage standards, it should now. June proved to be an abysmal month for Detroit, with shrinking sales across the board. For the first time ever, foreign carmakers sold most (51.9%) of the new vehicles in the US, relegating the overall domestics to a minority market share (see David Welch’s musings on this grim milestone here). A few days before these sales figures surfaced, I had news of a new study saying that US auto mileage ranks last among the world’s wealthiest nation. Maybe make that “dead last” if US car companies continue on this trajectory?

Reader Comments

A. DaSilva

August 13, 2007 9:12 AM

I think that american car manufacturers need to do alot more then increase mpg ratings in order for them to keep up with the global market. American cars are notorious for breaking down more often then any other type of car in the world. Not only do such automakers as Honda and Toyota have better mpg ratings on all or most vehicles they also have more reliable vehicles then any of the Ford or GM lines. No American wants to be stuck fixing his car every month after the car goes about 30k miles. Foreign vehicles often provide better warantees also. Such auto makers as Hyundai in the low price range offer a 100,000 mile warranty which is far superior to the 30,000 mile warranty which american car companies often give the consumer. So in all Ford and GM not only need to create more fuel-efficient cars but they also need to beef up their reliability, waranties and need to begin producing cars which are worth their value. Nobody should pay 30,000 for a car and have the car break down 2 or 3 years later as soon as the warantee expires.

s perkins

August 13, 2007 12:02 PM

aside from the fact that Mr. DaSilva can't spell he obviously can't read.... the last JD Power survey showed US made cars by US manufacturers occupying 3 of the top 5 spots for reliabililty. Mr. Da Silva and his ilk have signed on to the popular pastime of "made in the US bashing"... he probably goes out of his way to fly on foreign airlines and vacation in Europe rather than the US. I rent a new car from Hertz every weekend for 26 weeks. I prefer the Chevy Malibu and Ford Fusion over any Toyota product and the good old (new)Buick is a much nicer car than its foreign couterparts.

N Oftadeh

August 13, 2007 1:57 PM

I think the problem for Detroit automakers comes down to fit, finish, and feel. Compare, say, the Saturn Ion/Chevy Cobalt to Honda Civic. There is really no competition in the realms of material quality, gap tolerance, handling, etc. Even moving up-market, the only formidable Detroit offering that can stand up to import luxury is Cadillac. And even there most auto journalists agree it's mid-pack. I think the U.S. auto industry needs to adopt the more advanced manufacturing processes of the imports, slim down the dealer distribution network, and, most importantly, decrease the power of the UAW.

Paul

August 13, 2007 2:29 PM

Mr. Perkins, It is not a matter of "US Bashing", it is a matter of reliability. Please keep in mind that the last JD Power survey placed US manufacturers in top places on INITIAL reliability. I do not own a crystal ball, but very likely, 6 years or 50K miles later, the Toyota cars will be in far better shape than their GM or Ford counterparts. I currently own a 135K 2000 Accord and a 129K 2001 Sienna, both in excellent shape only with minimal maintenance. I can't recall seeing lately a 2000 Taurus or 2001 Windstar in the same conditions. The numbers are evident for the US manufacturers. Consumers are not stupid. Consumers prefer Apple or HP computers over Sony or Fujitsu PCs. Why? They provide what consumers want. In the car market, consumers value reliability (among other variables). Although US manufacturers have improved, they still have a long way to go. (Please don't be so critical about spelling. This is not a English grammar contest).

James Pigg

August 13, 2007 2:34 PM

Fuel economy is just one small part of the equation. Perception is one of the main reason that foreign models are selling better than domestics. Based on erroneous information people perceive that foreign models are more dependable than domestic brands when in reality the domestics are as good and in some cases better than the foreign cars. Do not rely on statistics from a magazine that only polls its own subscribers this is not a statistically correct method of ascertaining reliability. For some people the snob appeal is a factor. Read comments in blogs and you can hear the snobbishness coming through with comments such as "I have never driven any car but a Toyota and wouldn't have anything else" These people are just plain ignorant and can't be helped don't let ignorant people influence your thinking. Think for yourself. Rent an American car for the weekend, drive the stuff out of it see what kind of mileage you get, what kind of performance etc. Base your decision on experience not on what some overrated magazine states.

JROJAI

August 13, 2007 2:52 PM

@ Perkins:
I did not see a J.D. Powers Reliability study at their web site. They either have an initial quality study or a dependability study.
The initial quality is important for reputuation sake, but in my opinion the dependability study is more important because I better not have repairs in the first 90 days. Ford did win 5 out of 19 categories, but Toyota won 4; not that far behind. In either case, the Japanese are still up there as respected manufacturers for initial and long term quality. I don't think any American auto maker is close.

Here is what J.D. Powers says about these two studies.

"The Initial Quality Study serves as the industry benchmark for new-vehicle quality measured at 90 days of ownership and captures problems experienced by owners in two distinct categories—quality of design and quality of production (defects and malfunctions). In terms of new truck sales, the Detroit 3 dominate the Japanese nameplates. But when it comes to dependability, consumers say that Toyota Motor Corporation is building the highest-ranked pickups and multi-activity vehicles with the exception of the midsize MAV segment, in which the Oldsmobile Bravada ranks highest.

jrojai

August 13, 2007 2:59 PM

@ James Pigg

I think it is foolish to think that people choose cars on blind faith. I have had several American cars and trucks, and have been lucky not to have to replace the transmission on them before they hit 120,000 miles. After two hondas of which one went to 300,000 miles before it had a problem and the other I sold before I got to 150,000 miles, and a Toyota, now at 146,000 with no problems, I have to agree that American cars have a long way to go before they can match Honda or Toyota.
This is not American bashing, just making good financial sense. I have also rented many cars, American and Japanese, and with the exception of a very smooth ride in a Cadillac, I always like the Japanese cars better (Nissan and Toyota, vs. Ford, Chrysler and GM). The German cars aren't much better than American cars (and sometimes worse) in terms of dependability.

In Colorado

August 13, 2007 3:03 PM

FWIW, our American cars have been more reliable than the Japanese cars we used to buy. And FWIW, haven't Nissan and Toyota come out with their own gas guzzling trucks as well?

Marty Crocker

August 13, 2007 4:01 PM

Full disclosure here, I'm a GM employee, but I always find it interesting that people think of my employer as a company that makes gas-guzzling products. The truth is, GM makes more types of vehicles that get 30+ MPG than any manufacturer in the world. I also understand that people have experiences with their own vehicles that convince them of how all of a manufacturer's products are, but the big-picture data shows GM competitive across the board with foreign competition in terms of reliability. One last thought: last year Toyota had recalls affecting more total vehicles than they sold in the U.S. My sense is that if such were the case for GM, we'd be hearing a lot more about it than we do with Toyota.

nagaraj subramanian

August 13, 2007 5:06 PM

i have been a proud owner of hyundai elantra, suzuki sx4, and dodge dynasty 1989. I would safely say that foreign makes last a long time since my hyundai has run 130000 without any problems, SX4 comes loaded with amenities and safety features that are missing in any foreign makes, and Dodge dynasty was the worst car i ever had since it became a lemon after only 30k miles.Toyota would be my choice for my next car since the cars just last for long years before you get bored with the car.

Bob K

August 13, 2007 6:29 PM

The market is working...if Detroit does not make cars with the correct fuel economy someone else will. Keep the government out of it. They screw up everything they touch.

Leela JR

August 13, 2007 8:35 PM

I have driven the Malibu and I like it. But how reliable is it in the long run? Here is text from Wikipedia on the 1997-2003 generation:
"Many technical problems plagued this generation of Malibus, such as fuel pump failures, air conditioning component problems, and transmission failures. GM has been criticized because of their failure to aid owners in paying for costly repair of their Malibus. GM, to date, has offered no recall." Malibus are made in the USA."

Now for the Ford Fusion: it's actually a good car. Again, according to Wikipedia: "Consumer Reports has also given positive reviews to the Fusion, as it had to the previous Taurus. The magazine said it was "unexpectedly impressed" with its handling and ride, which it said was comparable to European models. In addition, CR pointed out that in its yearly car survey, where readers reply to questions about their cars, the Fusion stood out as having high reliability levels--an exceptional result for a first-year car." The Fusion is made in Mexico alongside the Mercury Milan and Lincoln MKZ. Now why is Ford selling a foreign car here? Contrast that with a Toyota Camry made, sold, financed, and serviced in the USA.

BCook

August 15, 2007 2:37 PM

i drive 50k mile a yr, sometimes more because of my job. I used to have a 2001 Ford Ranger - gas mileage was horrible, but dependability was great. I had it exactly 4 yrs, and put 202000 miles on it in that time. I NEVER did anything to it other then standard maintenance. It was an amazing vehicle. I now have a 2005 VW Jetta TDI. I bought it because of the mileage. I consistently get 45-50mpg out of it, and it also has been very reliable. 88000 miles without a hitch. So honestly I dont see what the big deal is as far as dependability. I have never had a Japenese car but the German and American cars have been great to me.

JK

August 19, 2007 7:26 PM

S Perkins, perhaps you should take a look at consumer reports. The American cars got hammered for reliability, as did the German/European...even/especially the luxury autos. I noticed a lot of American autos offering the 10yr./100,000 mile similar to that of Toyota, Honda and Hyundai. Not "bashing" American cars is what allowed for the collapse of the Big 3. I bet you don't own real estate in Detroit!!!

MG

August 24, 2007 11:40 AM

GO BACK TO AND READ JDPOWER AGAIN. AFTER 3 YEARS BUICK TIES LEXUS!!!!!

Buick ties with Lexus to rank highest
Another Win for American Nameplates is reported very little in the mainstream press.

WESTLAKE VILLAGE, Calif.: 9 August 2007 —Buick ties with Lexus to rank highest among nameplates in vehicle dependability—marking the first time in 12 years that another brand ties with Lexus for the highest-rank position, according to the J.D. Power and Associates 2007 Vehicle Dependability StudySM (VDS) released today.

The study, which measures problems experienced by original owners of 3-year-old (2004 model year) vehicles, finds that Buick and Lexus tie for the top rank position with a score of 145 problems per 100 vehicles (PP100). Following in the top five rankings are Cadillac, Mercury and Honda, respectively.

“With three non-premium nameplates—Buick, Honda and Mercury—ranking within the top five, and particularly with Buick tying with Lexus for the top rank, consumers seeking a vehicle with strong dependability have good choices at various price levels,” said Neal Oddes, director of product research and analysis for J.D. Power and Associates. “Consumers don’t necessarily need to pay premium prices to obtain high quality and dependability.”

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BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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