While hearing a lot about the demise of the auto industry recently, I came across some information in that I found very interesting, information one doesn’t normally hear a lot about from mainstream media. This information actually offers some hope for the recovery of the industry much sooner than a lot of people may think. That idea doesn’t really surprise me because I’m convinced that some, if not most of the news about how American manufacturers haven’t been building or planning the right products is, simply stated, hyperbole.
Here’s what the gist of the information is and why I believe a relatively quick recovery almost has to happen. The average age of cars on the road today is aver 9 years old. The age of light trucks is over 7 years old and by 2011 there will be some 35 million cars on the road at least 10 years old. When one does the math, even at 15,000 miles a year, a very conservative number, what that means is that those vehicles have at least 150,000 miles on them. That many miles means lots of dollars have to be spent on maintenance and upkeep.
There are some 250 million vehicles on the road, 5% of which are scrapped every year. 12.5 million cars off the road every year while at present, only 9 million cars are being built. According to industry metrics, three quarters of current sales are replacement vehicles and that demand will increase to 13 million cars by 2012. Now while some people say these numbers are a little optimistic because people are driving less and keeping cars longer, keep in mind that there are 2 million new drivers coming on line every year. Also, based on historical data, GDP directly correlates to auto sales and a 4% increase in GDP propels auto sales up some 7% and when you combine that with cars being scrapped, demographic changes from boomers children beginning to drive along with economic recovery which will happen, it isn’t unreasonable to expect sales of new vehicles to reach the 16 million mark again in 5 years. And by the way, that doesn’t include sales in China and Russia where GM has a very strong presence.
Interestingly it seems as though used car prices are starting to rise which makes new cars more attractive and with the inventory of new homes finally dwindling, construction will spool up and that means sales of trucks will improve. Also, congress is mulling the idea of a 3 to 5 thousand dollar voucher to people to junk older cars, which will not only help stimulate sales but will help get polluting cars off the road.
A lot of people are unaware of is the fact that the Buick LaCrosse and Chevy Malibu have earned best in class in reliability studies from J.D. Powers & Associates, and the Ford Fusion won a comparison study against the Honda Accord and Toyota Camry. The Edge is a very solid car and the new F150 is top drawer once again. The problem U.S. automakers face is one of perception and that takes a lot of time to overcome. While Ford, GM and Chrysler are working on smaller platforms, we need to hope that China doesn’t import the Chery and India doesn’t bring the Nano to America before U.S. automakers get it together.
With regards to the Congressional Auto Task Force, well let’s just acknowledge that there have to be some changes made with the Detroit three but those changes have been in the works for some time and I’m no fan of government dictating to the auto industry. There need to be some serious changes and that will be painful. And like it or not, new labor contracts have to happen to make profitability possible on smaller, lower grossing platforms. But all of that will take time and serious negotiations and sacrifice as well trimming the number of dealerships across the country, something that will in fact be very painful but will have to be done. U.S. automakers may have been a bit slow on the uptake, but they didn’t and don’t need government telling them how to build cars.
Showing posts with label chrysler. Show all posts
Showing posts with label chrysler. Show all posts
Sunday, April 5, 2009
Monday, December 15, 2008
Are U.S. Automakers really building cars no one wants to buy?
by Bill Zervakos
December 2008
There is a lot of hyperbole about how bad the vehicles coming out of Detroit are; ergo American automakers are in trouble. Are American automakers really building inferior products? Let’s look at the numbers from November of 2007 through November 2008 for a few of the key players:
Chrysler, down 47% Nissan, down 42.2% General Motors, down 41.3% Toyota, down 33.9%
Honda, down, 31.6% Ford, down 30.6%
You’ll notice that Ford is down less than anyone else and Nissan sales are even worse than General Motors.
No doubt labor costs for unionized shops are higher than those of non-union shops but are labor costs the reason for the collapse in sales? Leaving aside all the differences in compensation between the U.S. makers and importers, I don’t see how any manufacturer can exist for long with over 30% losses in sales.
We’ve clearly seen the incompetence of CEOs’ on Wall Street, seemingly without consequence or accountability and certainly without any oversight, given billions of dollars specifically, we were told, to loosen up credit for consumers. Instead they chose to use those billions to pay dividends and bonuses while buying other financial institutions, choosing to do nothing about making money available for loans. To then watch Congress address the CEOs’ of the U.S. automakers as though they’re inept seems a bit self serving.
It’s important to point out here that Ford President Alan Mulally has been with the company for just over 2 years, Chrysler CEO Robert Nardelli has been with them since 2007 and GM CEO Rick Wagoner took over the controls of General Motors in 2005. So while there were problems in the past, linking the ills the industry faces today exclusively to these executives performance is short sighted, and appointing a car czar is not the answer.
Rick Wagoner of GM has acknowledged that allowing the EV1 to be eliminated was not the right thing to do. But GM, Ford and Chrysler have made huge strides in developing electric vehicles, some that will be on the road by 2010. They’ve been doing this without government or a car czar telling them they had to. But here’s what we must remember: Detroit built what people were buying. It’s true that some gas guzzlers were incentivized but in a capitalistic society businesses are all about making money and big vehicles were money makers. Proof of that is the 22% increase in truck sales this November, with gas under $2.00 a gallon, over July sales when gas was $4.00 a gallon. The consumer drives the market and will continue to do so.
With legislators pontificating and blustering about how outraged they are with the big 3 CEOs’ and the media right there with them, talking about how irresponsible Detroit has been in product development, without laying out all the facts, it’s no wonder that people aren’t buying American cars. The facts are that there were several automakers, including some importers, that made some pretty bad cars in the past, but today everyone is building pretty solid vehicles. The prevailing perception is that American cars aren’t as good, yet in a Consumer Reports study as far back as 2006 provided results showing that the Ford Fusion and Mercury Milan outperformed the Honda Accord V6 and the Toyota Camry V6 in reliability studies. Interestingly those same studies indicated that people will still buy the imports. Perception is true even if it isn’t fact and when a false perception is promulgated, change takes even longer.
So, are U.S. automakers really building bad cars? Not at all, and if people would do their homework and not buy into all the negative hype, they’d be very pleasantly surprised with what’s coming out of Detroit.Other countries are supporting their automakers and we should do no less. If we were in a normal economy and automakers weren’t manufacturing the right products, then the market should be allowed to correct itself. That isn’t the case today.
Generally speaking, I’m not for government intervention but this is a critical industry for America and the three CEOs’ weren’t the cause this financial crisis and they can’t fix it. But allowing any one of the heretofore big three to die could create a tragedy of epic proportions. The facts are, until the consumer starts buying again, all automakers are in peril.
December 2008
There is a lot of hyperbole about how bad the vehicles coming out of Detroit are; ergo American automakers are in trouble. Are American automakers really building inferior products? Let’s look at the numbers from November of 2007 through November 2008 for a few of the key players:
Chrysler, down 47% Nissan, down 42.2% General Motors, down 41.3% Toyota, down 33.9%
Honda, down, 31.6% Ford, down 30.6%
You’ll notice that Ford is down less than anyone else and Nissan sales are even worse than General Motors.
No doubt labor costs for unionized shops are higher than those of non-union shops but are labor costs the reason for the collapse in sales? Leaving aside all the differences in compensation between the U.S. makers and importers, I don’t see how any manufacturer can exist for long with over 30% losses in sales.
We’ve clearly seen the incompetence of CEOs’ on Wall Street, seemingly without consequence or accountability and certainly without any oversight, given billions of dollars specifically, we were told, to loosen up credit for consumers. Instead they chose to use those billions to pay dividends and bonuses while buying other financial institutions, choosing to do nothing about making money available for loans. To then watch Congress address the CEOs’ of the U.S. automakers as though they’re inept seems a bit self serving.
It’s important to point out here that Ford President Alan Mulally has been with the company for just over 2 years, Chrysler CEO Robert Nardelli has been with them since 2007 and GM CEO Rick Wagoner took over the controls of General Motors in 2005. So while there were problems in the past, linking the ills the industry faces today exclusively to these executives performance is short sighted, and appointing a car czar is not the answer.
Rick Wagoner of GM has acknowledged that allowing the EV1 to be eliminated was not the right thing to do. But GM, Ford and Chrysler have made huge strides in developing electric vehicles, some that will be on the road by 2010. They’ve been doing this without government or a car czar telling them they had to. But here’s what we must remember: Detroit built what people were buying. It’s true that some gas guzzlers were incentivized but in a capitalistic society businesses are all about making money and big vehicles were money makers. Proof of that is the 22% increase in truck sales this November, with gas under $2.00 a gallon, over July sales when gas was $4.00 a gallon. The consumer drives the market and will continue to do so.
With legislators pontificating and blustering about how outraged they are with the big 3 CEOs’ and the media right there with them, talking about how irresponsible Detroit has been in product development, without laying out all the facts, it’s no wonder that people aren’t buying American cars. The facts are that there were several automakers, including some importers, that made some pretty bad cars in the past, but today everyone is building pretty solid vehicles. The prevailing perception is that American cars aren’t as good, yet in a Consumer Reports study as far back as 2006 provided results showing that the Ford Fusion and Mercury Milan outperformed the Honda Accord V6 and the Toyota Camry V6 in reliability studies. Interestingly those same studies indicated that people will still buy the imports. Perception is true even if it isn’t fact and when a false perception is promulgated, change takes even longer.
So, are U.S. automakers really building bad cars? Not at all, and if people would do their homework and not buy into all the negative hype, they’d be very pleasantly surprised with what’s coming out of Detroit.Other countries are supporting their automakers and we should do no less. If we were in a normal economy and automakers weren’t manufacturing the right products, then the market should be allowed to correct itself. That isn’t the case today.
Generally speaking, I’m not for government intervention but this is a critical industry for America and the three CEOs’ weren’t the cause this financial crisis and they can’t fix it. But allowing any one of the heretofore big three to die could create a tragedy of epic proportions. The facts are, until the consumer starts buying again, all automakers are in peril.
Monday, April 7, 2008
Gilles continues to work his magic at Chrysler
Just about everyone knows about Chrysler’s 300 success—the model won Motor Trend’s car of the year award in 2005—some even know that Ralph Gilles was the moving force behind the design team that developed the car. What most don’t know is that Gilles was so intent on becoming a car designer that he sent sketches to none other than Lee Iacocca. The Chrysler head was so impressed with Gilles’s work that he suggested some design schools to attend, which Gilles did.
In 1992 when Gilles received his BSC from the Center of Creative Studies in Detroit, he joined Chrysler as a designer. He quickly moved through the ranks to director in the design office in 2001. He spearheaded the design team on the development of the 300 and the rest is history.
In 2005 Gilles was named directory of the Truck Exterior/Interior Design Studio before ascending to his present position as Vice President, which is a notable achievement for a 30-something. During that time Gilles and his team developed the all-new Ram: a vehicle which Chrysler calls a game-changer.
We got to get up close and personal with Gilles in Phoenix at a press preview of the Ram and the new Dodge Journey. Gilles talked about how the design shift in ’94 to the big rig look was very polarizing. I was one that didn’t care for it. The new truck is very refined, however, and much more appealing to me and for the hard core Dodge truck people, the original dropped fender big rig look is still there. But, the new Dodge Ram is a whole lot more than just a pretty face.
When talking about pickups, aerodynamics is rarely discussed, and yet changes in design are a noticeable improvement. Reworking the hood, grille and even the side view mirrors made a big difference, and air dams help direct air around the vehicle and improve engine cooling. I won’t bore you with the drag coefficient specifics but, suffice it to say, they’re pretty happy with the improvement.
The HEMI powerplant delivers an impressive 380 horsepower and, more importantly, 404 lb-ft of torque and delivers an estimated 13/19mpg in the 2WD iteration on mid-range 89 octane fuel.
I was very impressed with Ralph Gilles long before meeting him. After talking with him and seeing his true passion for designing exciting vehicles that not only look good but perform extremely well, I have even more respect for him. I know he doesn’t like to be called a genius, but what he’s accomplished in his relatively short career is groundbreaking. I'm betting that Gilles will be a very important part of the automotive industry along the lines of Harley Earl, Bob Lutz and, of course, lee Iacocca, for a long time to come.
There is a lot more to the all-new Ram and we’ll be talking more in depth when we drive the press vehicle later this year.
In 1992 when Gilles received his BSC from the Center of Creative Studies in Detroit, he joined Chrysler as a designer. He quickly moved through the ranks to director in the design office in 2001. He spearheaded the design team on the development of the 300 and the rest is history.
In 2005 Gilles was named directory of the Truck Exterior/Interior Design Studio before ascending to his present position as Vice President, which is a notable achievement for a 30-something. During that time Gilles and his team developed the all-new Ram: a vehicle which Chrysler calls a game-changer.
We got to get up close and personal with Gilles in Phoenix at a press preview of the Ram and the new Dodge Journey. Gilles talked about how the design shift in ’94 to the big rig look was very polarizing. I was one that didn’t care for it. The new truck is very refined, however, and much more appealing to me and for the hard core Dodge truck people, the original dropped fender big rig look is still there. But, the new Dodge Ram is a whole lot more than just a pretty face.
When talking about pickups, aerodynamics is rarely discussed, and yet changes in design are a noticeable improvement. Reworking the hood, grille and even the side view mirrors made a big difference, and air dams help direct air around the vehicle and improve engine cooling. I won’t bore you with the drag coefficient specifics but, suffice it to say, they’re pretty happy with the improvement.
The HEMI powerplant delivers an impressive 380 horsepower and, more importantly, 404 lb-ft of torque and delivers an estimated 13/19mpg in the 2WD iteration on mid-range 89 octane fuel.
I was very impressed with Ralph Gilles long before meeting him. After talking with him and seeing his true passion for designing exciting vehicles that not only look good but perform extremely well, I have even more respect for him. I know he doesn’t like to be called a genius, but what he’s accomplished in his relatively short career is groundbreaking. I'm betting that Gilles will be a very important part of the automotive industry along the lines of Harley Earl, Bob Lutz and, of course, lee Iacocca, for a long time to come.
There is a lot more to the all-new Ram and we’ll be talking more in depth when we drive the press vehicle later this year.
Saturday, September 22, 2007
Chrysler Visits Phoenix Automotive Press Association
September l8, 2007 – Hermosa Inn – Scottsdale, AZ. Cathy D's take on the all new Jeep Liberty.
Scott Brown, from Chrysler Corporation of the Southwest region, invited 15 top Phoenix press writers to preview three new products from Chrysler. The Town and Country Mini Van ( a movie theater on wheels without a popcorn maker), Dodge Dakota Truck (for the day to day truck lover and urban cowboy) and the 2008 Jeep Liberty (giving a whole new meaning to topless). All three models have some distinct changes in power, appearance and technology, but I was most excited about the 2008 Jeep Liberty.
Over the years my family has had two Jeep Wranglers and two Jeep Cherokees; none of which had any female input for the purchase. We’re not big off road people but before SUV’s became as common as reality shows, it gave me an elevated feeling in traffic and the men in my family felt rugged, cool and able to relate to a scene from the TV show MASH.
The 3.7 liter V-6 (210 horsepower/237 lb-ft torque) hasn’t changed along with its two transmissions but the rest is new and exciting and priced well. Jeep Liberty, no longer Jeep’s entry level model, has a longer wheelbase, width and overall length. It has kind of a Jeep Commander looking style with a little Wrangler-ness butt; less the rear-mounted spare tire on the outside of the cargo door. The spare now stores under the load floor where I would have liked it from the get go.
Okay, here is the cool part… the cloth, roman shade look roof (Sky Slider) opens from front to rear to give that open road look one might imagine on a safari. Chrysler has constructed this jeep continue to appeal to jeep lovers and then added some extras like stain resistant seats, center-stack infotainment, navigation system with MP3 capabilities, touch screen 20 gig hard drive and all the other technology that consumers want in a vehicle along with an off-road experience they can journal.
It is easy to see how you would take this one off road in the mountains or around town for food shopping or transporting kids. I think Chrysler/Jeep has taken the best of all their Jeep models, added a totally open roof, and priced it to make affordable for a younger buyer. The 2008 Jeep Liberty starts at $20,990 for the 4X2 and goes upward from there. The Sky Slider is an optional $1,200.00 but makes the new model attention-grabbing and makes star gazing possible without getting out of your vehicle.
Is Jeep thinking outside the box or did they just make the ’08 jeep look like a box?
In photo
Chrysler VP Steve Bartoli, Mark Kudla/Dodge Dakota, Kim Adams House/Jeep Liberty Bill Zervakos and Cathy Droz, Two for the Road USA in front of the New 2008 Jeep Liberty.
Thursday, August 9, 2007
News and Notes from Two for the Road USA
With Cerberus Capitol Management as the new owner of Chrysler, one of the first things they did was bring back the Pentastar logo originally created in 1962 when Chrysler Corporation President Lynn Townsend decided the company needed a new symbol to represent all of the corporation’s brands. Townsend wanted a symbol with a strong, classic look that would be instantly recognizable, but was universal—without written words, so apparently Cerberus feels the logo will hearken back to the heyday of Chrysler while ironically referring to the company as “The New Chrysler.” The name change will take effect on October 4th.
Clearly it will take a lot more than a name change to reverse the $680 million dollar losses in 2006 and more than $2 billion in losses in the first quarter of 2007. The future of vehicles built on Mercedes platforms like the 300 and Crossfire will have a lot to do with the turn around, as will new product development. But perhaps the most interesting thing will be to see what having private ownership of a major manufacturer for the first time in half a century will bring to the market.
It’s interesting to know that in Greek mythology, Cerberus is the three-headed dog that guarded the gates of Hades, so I suppose one can infer a lot from that, or maybe nothing. The question is how well Cerberus will guard the gates of Chrysler now that they have control.
From Toyota comes news of a three-pronged sales strategy focusing on attracting young people to the brand, stressing green technology and trying to make the buying process more pleasant. That seems to exemplify the Toyota mantra of their “customer first” philosophy and the never ending pursuit of leading the market by listening to consumers.
Another area that Toyota is working on is making available in their vehicles the technology that the younger demographic is so enamored with. With products like the Scion xB, which offers customers myriad levels of accessorizing their vehicles, Toyota has taken a giant step towards garnering more that their fair share of the 2.3 billion dollar 35 year old and under market. The also realize that this demographic has very little patience to sit around a showroom for 3 to 5 hours to buy a car, and they certainly want the experience to be fun rather than stressful.
Having spent a lot of time with Toyota testing and evaluating their vehicles, I was, if not surprised, interested in a comment from Toyota Executive who was the moving force behind the development of the Scion brand Jim Lentz saying, “it’s time to change our image from an industry that drags its feet to one that runs on innovation.”
I’ve always seen Toyota as a leader in the industry, and with a philosophy like that, maybe that’s why and something the American Manufacturers can learn from.
Clearly it will take a lot more than a name change to reverse the $680 million dollar losses in 2006 and more than $2 billion in losses in the first quarter of 2007. The future of vehicles built on Mercedes platforms like the 300 and Crossfire will have a lot to do with the turn around, as will new product development. But perhaps the most interesting thing will be to see what having private ownership of a major manufacturer for the first time in half a century will bring to the market.
It’s interesting to know that in Greek mythology, Cerberus is the three-headed dog that guarded the gates of Hades, so I suppose one can infer a lot from that, or maybe nothing. The question is how well Cerberus will guard the gates of Chrysler now that they have control.
From Toyota comes news of a three-pronged sales strategy focusing on attracting young people to the brand, stressing green technology and trying to make the buying process more pleasant. That seems to exemplify the Toyota mantra of their “customer first” philosophy and the never ending pursuit of leading the market by listening to consumers.
Another area that Toyota is working on is making available in their vehicles the technology that the younger demographic is so enamored with. With products like the Scion xB, which offers customers myriad levels of accessorizing their vehicles, Toyota has taken a giant step towards garnering more that their fair share of the 2.3 billion dollar 35 year old and under market. The also realize that this demographic has very little patience to sit around a showroom for 3 to 5 hours to buy a car, and they certainly want the experience to be fun rather than stressful.
Having spent a lot of time with Toyota testing and evaluating their vehicles, I was, if not surprised, interested in a comment from Toyota Executive who was the moving force behind the development of the Scion brand Jim Lentz saying, “it’s time to change our image from an industry that drags its feet to one that runs on innovation.”
I’ve always seen Toyota as a leader in the industry, and with a philosophy like that, maybe that’s why and something the American Manufacturers can learn from.
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