Handwriting Is On Wall In Detroit, With Foreign Cars Vastly Preferred

IBD Editorials ^ | July 29, 2008 | CONSTANTINE KAMBANIS, RAGHAVAN MAYUR AND BERT HOLLAND

[Kaslin]

Auto-industry insiders over the years have often blamed Detroit's mounting problems on mediocre management, poor technological leadership and a lack of vision for the future.

While the successful foreign firms relied on technological innovation, a thorough study of the market, clever marketing and high quality, Detroit's Big Three automakers relied on massive economies of scale, price discounting, zero-percent financing, rebates and volume fleet sales, all of which led to erosion of vehicle resale values.

What were customers to do? Buy highly rated "foreign" cars with high resale values or steeply discounted American vehicles with lower resale values?

The answer is in the numbers. From 1992 to 2007, the number of imported passenger vehicles more than doubled, and Toyota Motor Co. is now the world's largest automaker. According to a new joint study by TechnoMetrica Market Intelligence and Auto Futures Group, the No. 1 brand Americans will consider buying is Toyota.

Our study also shows that when it comes to brand power among customers, Toyota and Honda owners are — on average — four times more likely to promote their brands to friends than Ford owners are, and three times more likely to promote their brands than GM or Chrysler owners.

This does not bode well for Detroit, where the Big Three are at crossroads. Already bleeding from declining sales, increasing incentives and heavy lease losses, they must at the same time find the resources to retool their lineups, remake their images and shore up their market values.

[MrB]

60 posts before the real culprit is fingered:

UNIONS.

[MrB]

I read an estimate that unions have COST the average worker about 15% in wages because of their drag on the economy.

[Alberta's Child]

I hate hearing stories like that about Ford vehicles. My 1994 Explorer now has about 325,000 miles on it, and when I had some maintenance work done on it a few months ago the mechanic told me everyone in his shop insisted on taking it out for a “test/diagnostic drive” because nobody could believe how well it ran!

[Alberta's Child]

I hear ya. I've always driven Fords -- mostly trucks, though. I do know their cars aren't quite as reliable as their trucks are (overall).

When it comes to light trucks, nothing beats a Ford!

[Alberta's Child]

LOL — good post.