General Motors, Ford and Chrysler – America’s ‘Big Three’ car makers – are in trouble. There are rumours of an imminent declaration of bankruptcy from Chrysler; Ford has been in a pickle for years; and GM’s share price plummets as sales do the same. Merrill Lynch says it’s ‘not impossible’ that GM – the strongest of the trio – may go bankrupt.
As the world’s motor industry moves inexorably east, so western makers suffer. Some will go out of business. And the western makers suffering most are the Yanks.
American car makers have, for 30 years, consistently underestimated the intelligence of American consumers. They have been producing substandard cars – in refinement, quality, design and fuel efficiency. They have allowed Japanese and European makers to get a toehold and, through generally superior products, turn it into a stronghold.
Bad product = bad sales
The Koreans have lately joined in, piling more misery onto the domestic makers. Failing to heed the warning signs, the US makers blithely went their own way, briefly taking solace (and making big profits) from SUVs and pick-ups. Now that market is sinking faster than a Hummer in Lake Huron, their whole US business model has gone belly-up.
Yet GM and Ford know how to make good cars. GM was one of the first makers to spot the significance of China. Ironically, the last bastion of communism is proving the saviour of the capitalist world’s most famous car company. Its purchase of Korea’s Daewoo was also shrewd, giving it access to a technically skilled company making increasingly good small cars.
And GM’s European cars (Opels and Vauxhalls) are improving enormously: they’re almost at Volkswagen levels of quality and refinement, and a notch or two ahead stylistically.
Ford: US vs EU
Meanwhile, Ford has the best range of cars of any mainstream manufacturer in Europe. The chasm between Ford US and Ford Europe is amply demonstrated by the Focus. The European version is probably the world’s best small hatch. The American Focus (different car, same name, similar concept) is dreadful.
One sets out bravely to set new standards – just as founder Henry Ford successfully did, more than 100 years ago. The other is a mediocre car aimed at (Ford thinks) an undemanding public. Such customer indifference has come back to haunt the US auto industry.
It may even destroy it.
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