the american car

2006-05-19T06:17:00.000-07:00

The new address for The American Car is

www.247wallst.blogspot.com

2006-05-10T08:12:00.000-07:00

Toyota Interrupted

Toyota (NYSE:TM) announced its twelve month results today, and it was hard to say whether U.S. car companies should cheer or cry. Revenue for the year ending March 31, 2006 rose 13.4% to 21.03 trillion yen. Operating income rose 12.3% to 1.87 trillion yen. For the fiscal year, total vehicle sales were 7.794 million.

The company said its business is Japan was basically flat at 2.364 million units. Sales in North America increased by over 10% to 2.556 million. Sales in Europe and all other regions moved up modestly.

The fly in the ointment was the company's forecast for the next fiscal year. Management's expectation have turned very modest with guidance for revenue of 22.3 trillion yen and operating income of 1.9 trillion yen. Total vehicle sales are forecast at 8.45 million. Several media outlets blamed part of this on the company's forecast for the dollar/yen exchange rate.

That means the topline growth is slowing to 6% and operating income growth to under 2%. But, unit sales will be up over 8%.

What's wrong with the picture? Toyota is slowing down. Margins must also be under pressure along with revenue yield-per-vehicle.

If Toyota's problems are theirs alone, it may be that GM (NYSE:GM), Ford (NYSE:F), and Chrylser (NYSE:DCX) have something to spark a bit of much needed optimism. All three companies watched their shares rise today, as Toyota traded flat near its 52-week high. Over the year, the stock has gone from $70.95 to $121.85 today, just short of the period high of $124.

But, the news could also be a mirage for the Big Three. It may be that the anticipated slowdown at Toyota represents the company's view of the global market and the a dropping tide could bring all ships down.

No one in Detroit should open the champagne yet.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also the president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix. He can be reached at douglasamcintyre@gmail.com.

2006-05-02T04:14:00.000-07:00

Oil Prices And Detroit's Recovery

Word has come out from several press sources, including MSNBC, that U.S. April automotive sales may be disappointing, below the 16.6 million vehicle rate that Detroit had hoped the economy would support in 2006. Oil prices hit $74 as concerns about production in Nigeria and Iran added risk and traders drove prices higher. Median gas cost at the pump is now about $2.92 with the heavy summer driving season less than two months away. As recently as 2002, gas prices were closer to $1 a gallon.

Oddly enough, the success of car and truck sales in China have made the problem more acute. As China's demand for oil and gas rises, the supply worldwide is taxed. Detroit car makers may bring in more revenue in China, but their home market sales are under siege.

Detroit's two cash cows, SUVs and pick-ups, and luxury cars are threatened by the trend. This last weekend, the Secretary of Energy opined that oil prices could stay at current levels for as long as three years. This is bad news for anything powered by a V-8. The margins on SUVs and luxury models help make up for the razor thin margins on entry level cars.

The industry knows that it has a problem, and that it may be long-lived. An industry expert suggested that the shift to lower priced cars may be happening already. Paul Taylor, chief economist at the National Automobile Dealers Association (Nada), said that while sales volumes remained relatively stable, "gas price increases have moved the mix to greater numbers of less profitable vehicles".--MSNBC

New SUV and pick-up models may draw in customers and halt the trend away from the V-8 for a time, but if gas moves north of $3 and stays there for several quarters, there is very little Detroit can do to market cars with poor gas mileage.

If the seasonably adjusted sales rate of vehicles in the U.S. drops much below 16.6 million a year, the entire Detroit recover is threatened. Based on current trends, that is a real possibility.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also the president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix. He can be reached at douglasamcintyre@gmail.com.

2006-04-22T05:18:00.000-07:00

Ford's Fabulous Adventure

The news of Ford's (NYSE:F) large first quarter lose and GM's (NYSE:GM) improved results for the same period (at least on the surface) pushed Ford's stock to near its 52-week low. The stock now trades at $7.38.

Ford's first quarter loss was $1.2 billion. The company had a $1.2 billion profit the year before, adding symmetry to the figures. A great deal of this loss can be attributed to plant closings and job cuts, and, therefore, may actually be good news.

The troubling issue with the quarter was the drop in overall revenue to $41.1 billion from $45.2 billion. The Associated Press described some of the core issues that lead to the poor performance: "Ford was heavily dependent on mid-size cars with lower margins, Goldman Sachs analyst Robert Barry said. Ford's SUV sales plummeted in the first quarter, with sales of the Ford Explorer down 25 percent. The company's overall U.S. sales fell 3 percent for the January-March period."

Oddly, on a global basis, vehicle unit sales rose to 1,722,000 from 1,716,000 in the quarter a year ago. But, automobile revenue declined from $39.3 billion to $37 billion. So, the yield per unit dropped significantly.

Ford Europe and the Premier Auto Group, which includes Volvo, Jaguar and Land Rover,had operating profits rise from $4 million last year to $254 million in Q1 06. But, Financial Services did worse than last year with a pre-tax profit of $744 million compared to $1.1 billion in Q1 05.

Cash and marketable securities dropped $3.2 billion to $35.9 billion. Although no one is saying that the company will eat through cash at this rate going forward, looking at the balance and burn rate is not entirely encouraging.

Word at GM was slightly more encouraging with Q1 sales rising from $47.8 billion a year ago to $52.3 billion this year. The company's loss fell from $1.3 billion to $323 million. But, after rallying almost 10% on the news, the stock gave the majority of the gain back the next day.

So, at this point the financial numbers are yesterday's news. With the issues of the Delphi strike and the UAW negotiations for both Ford and GM still ahead, the market does not appear to be giving either company a reasonable break. Ford's market cap at $13.7 billion is still a tiny percent of annual sales while Toyota trades at roughly one times it revenue (its market cap is over $191 billion).

The message of the markets is that Ford is actually worse off than it was a quarter ago. On January 25, Ford traded at $8.62.

Ford has said bankruptcy is not an option. That is hard to believe. but, if true, perhaps a merger is in the cards. Although rarely mentioned, a merger between Ford and GM, or Ford and Toyota, can no longer be considered out of the question. The general and administrative, marketing, and product development cost savings would be considerable. Another quarter or two of dropping revenue, and the expense cuts being contemplated will no longer be enough.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also the president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix. He can be reached at douglasamcintyre@gmail.com.

2006-04-17T08:48:00.000-07:00

GM's Chinese Menu

According to The Financial Press of India and several other press sources, GM's (NYSE:GM) big Chinese partner, Shanghai Automotive Industry Corporation, will go it alone in addition to its participation in its current joint venture with GM and Volkswagen. Shanghai Automotive has made it clear that it has now learned enough from its two partners to start its own design and production facilities that will have an output of 400,000 engines and 300,000 cars by 2010.

Although GM and VW have publicly wished the new venture, called SAIC Motor, their best wishes and have made it clear that they knew the Chinese would move out on their own at some point, investors have to question whether the Chinese market is about to become substantially less attractive for the troubled U.S. company.

Even though the Chinese car market is likely to grow at a rapid pace for several more years, as the local manufacturers set up their own independent operations the pie is going to be sliced into several more pieces.

According to the Chinese Association of Automobile Manufacturers, the country is expected to product six million cars, trucks and buses, in 2005, a 20% increase over 2004.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also the president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix. He can be reached at douglasamcintyre@gmail.com.

2006-04-14T07:10:00.000-07:00

GM And For Declare Victory As Their Positions Are Overrun

Maybe it is something in the water or perhaps Bob Lutz and Bill Ford's bodies have been inhabited by the spirit of General George Armstrong Custer. Lutz said that GM would see its marketshare stabilize in the low to mid twenty percent range, and indicated that bankruptcy was some kind of fairy tail dreamed up by Wall Street.He also said the investors with short positions in GM might be spreading the bad news. He must not have looked at the fine print in the deal to sell GMAC or at the GM share drop in March.

A bit earlier in the week, Bill Ford said that bankruptcy was not an option for Ford Motor. Sounds like an airline executive 30 years ago.

Taken together, these comments are an indication that Detroit is fighting back in the PR war about its future. Unfortunately, it looks like they are armed with sticks and rocks and the opposition has automatic weapons.

Lutz made the comment that he refuses to believe that there will be a labor strike at Delphi, an event that could shut GM's North American operations. His logic is that the strike would not benefit either side. So, the UAW will not us it to draw a line in the sand for the upcoming 2007 negotiations with GM, and Delphi CEO Bill Miller will get his wish that the unions will back off enough to make his company financially viable. Maybe.

The purchase of 51% of GMAC, lead by Ceberus Capital leaves an out if GM's debt rating continues to fall. In other words, they can walk away.

Media estimates of the cost to GM of a 60 day strike at Dephi range into the billions of dollars. If the UAW back down on Delphi, their hand of cards get worse when they sit down with GM and Ford. The UAW leaders know that they have to get something to take to the rank-and-file, and massive job cuts and lower wages don't fit that bill.

And, by the way, the market shares of Ford and GM keep falling,taking the breakeven point for the North American car operations of both companies lower and lower.

It's spring time in Detroit and the mood has brightened, but the managements at GM and Ford might want to brag after we all see some progress instead of risking looking foolish once again.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also the president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix. He can be reached at douglasamcintyre@gmail.com.

2006-04-05T16:37:00.000-07:00

DaimlerChrysler's New High

The contrast in the stock prices of DaimlerChrysler (NYSE:DCX), Ford (NYSE:F), and GM (NYSE:GM) could hardly be more striking. Daimler's stock has risen from a 52-week low of $38.77 to almost $60, near its high for the period, while Ford at $7.50 and GM below $20 are both near their lows. Multi-year lows we should add.

The market capitalization story tells a more grim tale. GM has an $11.3 billion market cap against 05 revenue of $192.6 billion. For has a cap of $14.1 billion against revenue last year of $177 billion. At the other end of the spectrum, Daimler's market cap is $61.1 billion with revenue comparable to Ford's at $177 billion. For comparison, Toyota's (NYSE: TM)total market value is $183 billion, but it operates on a March 31 fiscal. On that basis for the last year, Toyota's revenue was $173 billion, according to Yahoo!Finance (finance.yahoo.com).

Why the huge disparity in value? For starters, Daimler is doing better at the P&L level. In Q4 05, the company had revenue of $49.1 billion, up from $44.7 billion year earlier. Net income for the period was $1.14 billion up from $623 million in the prior year. Financial services and the Chrysler Group did particularly well.

DaimlerChrysler sold a little over 4.8 million units in 2005, slightly more than 2004. And, expectations are that unit sales will not change much this year. Consequently, the company does not expect total revenue to move up much for 2006.

All of this still begs the question of why the company's stock price has done so well. DaimlerChrylsler's answer has two pieces to it. First, the company has a program to introduce 50 new models from 2005 to 2008. If these get the kind of reception that newer models like the Chrysler 300 have received, it is a solid bet that unit sales should benefit. The second part of the answer is the DaimlerChrysler drive to improve operating efficiency. The company points to a building time of 4.2 hour per vehicle improvement from 2003 to 2004, and expects to show further progress when the numbers are out for 2005.

DaimlerChrysler has said publicly that it expects much of its growth in future years to come out of Asia. But, the same could be said for GM, Ford, and Toyota, so this can hardly be considered a key differentiating factor. According to Forbes (www.forbes.com), Chrysler's costs to carry retired employees are not as great as they are at GM or Ford. This is clearly a benefit when analysts look at the total corporate cost for each car built. A review of the DaimlerChrysler balance sheet would also indicate that it is better off than Ford or GM. But, GM's drive to divest itself of assets could substantially improve its cash position.

DaimlerChryler's premium stock price is based, at least in part, on the fact that it has a hot hand in new product introductions, especially in its Chrylsler line. The Mercedes unit did poorly on the operating income line last year, but the cars are still considered among the gold standards for luxury. Wall Street clearly believes that Mercedes can be fixed. Daimler's commercial vehicle and finance units have also done well and lend a supporting financial role to the car business due to their fairly steady stream of income.

Daimler is not immune from the issues that plague the car industry. Toyota is still the juggernaut that everyone else must beat, or, at least, hold at bay.

Under the circumstances, the Daimler stock has done unusually well. But, until it breaks from the pack and is mentioned more often in the same breath as Toyota, the stock is unlikely to rise above $60.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also the president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix. He has been chief executive of FutureSource, LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.

2006-04-03T13:44:00.000-07:00

What The Car Companies Could Learn From Politics

Ford and GM posted fairly sharp sales declines for March. No one seemed surprised.

One would think that the U.S. car companies would do everything they could to market their products. But, they don't.

An article on the front page of the April 2 edition of The New York Times (www.nytimes.com) pointed out how much the internet has changed the lives of the people who run for public office. It is now a world of websites, podcasts, e-mails, and viral videos. And, all of this has changed the landscape of politics in less than two years. The blog has as much to do with driving voter impressions as TV and radio had just a short time ago.

If I were going to buy a Ford, I would check the Ford website (www.ford.com). Take a look. The site is as much about the company's heritage and good works as it is about buying a car. If you navigate over to the Lincoln site, it is basic Web 101. Watch a TV ad online, search for a dealer, get a price.

The GM (www.gm.com) site is even more basic.

The automobile companies have the opportunity to work with new market tools that are part of the internet culture. It is a trend that has already transformed the way that people get elected, watch movies, and communicate. Why can't we find the head of the Buick division in a chat room?

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine which was on the Adweek 10 Hottest Magazine list in two separate years. He was also the president of Switchboard.com, which, at the time, was the 10th most visited site on the internet, according to MediaMetrix. He has been on the boards of TheStreet.com and Edgar Online. He can be reached at douglasamcintyre@gmail.com.

2006-03-30T10:07:00.000-08:00

Could GM Be Closed By The Summer?

Word has come from the UAW that it believes Dephi (DPHIQ.PK) will ask the bankruptcy court to void its labor contracts. According to the Associated Press, Judge Robert Drain has scheduled a hearing on May 8 to hear the Delphi motion.

If the matter goes this far, and neither the UAW or Delphi blink, the International Union of Electronics Workers and UAW will almost certainly strike, idling GM's (NYSE:GM) critical parts supply chain. This is clearly not out of the question because the UAW has already indicated that the Delphi wage proposal won't fly.

Delphi is likely to stick to its guns here. It probably has little choice financially. I cannot live with the current labor structure.

No one has said exactly what the GM backlog of critical parts might be to keep its factories open. But, if the judge voids that contract, and this has happened in other industries, the unions could walk out in the early part of the summer.

How far behind would a shut-down of GM plants be?

Douglas A. McIntyre is the former Editor-in-Chief of Financial World Magazine which covered the automotive industry extensively. The magazine was named to the AdWeek 10 Hottest Magazines list in two separate years. He was also the president of Switchboard.com when it was the 10th most visited website in the world, according to MediaMetrix.

2006-03-29T04:01:00.000-08:00

Can GM Make It With A 20% Share

It has been widely reported that GM (NYSE:GM) sales analyst Paul Ballew stated that GM's domestic share dropped to 24% in March. A year ago, this figure stood at 27%. He also mentioned that GM will keep lowering prices to try to reverse the decline.

But, even if GM can cut annual costs by $2 billion or $3 billion dollars, is there a point where even that level of restructuring will not return the company to profitability? Part of the answer may be in GM's huge 10-K filed yesterday.

GM's share of the U.S. market was 28% in 2003, 27.2% in 2004, and 25.9% in 2005. Share obviously differs across vehicle type. In the luxury market, GM's share last year was 16.3%. In pick-ups, it was 36.3%.

Ford's share of the U.S. market was 18.2% last year. Could GM fall that low?

As GM's share dropped from 2004 to 2005, revenue in their North American operations went from $114.5 billion to $104.8 billion. So, on a fairly gross calculation, a point of share in North American is worth about $4.2 billion. Doing the same calculation using Ford's (NYSE:F) 2005 18.2% share stated in their 10-K which yielded North American revenue of $80.6 billion, confirms the value of a share point. The number based on the Ford ratio is $4.4 billion.

If GM's share continues to drop at 1.5% a year, two years from now, North American revenue will stand at about $96 billion. This does not take into account GM's ability to cut or raise prices, or a significant change in product and pricing mix that might alter the value of a share point.

But, the message is clear. On revenue of $114.5 billion, GM North America had a net margin of $1.4 billion in 2004. With revenue at $104.8 in 2005, net margin was a negative $8.2 billion. The breakeven was around $112.5 billion.

If GM's share moves toward 20% to 21%, the cuts cannot come fast enough. A North American business at $96 billion, would lose over $16 billion on the 2005 cost base, and that is too much to make up.

Douglas A. McIntyre is the former Editor-in-Chief of Financial World Magazine. He was also president of Switchboard.com when it was the 10th most visited site on the web according to MediaMetrix. He has been on the board of Edgar Online and TheStreet.com.

2006-03-27T04:55:00.000-08:00

Automotive Competition: Is China The Next Japan?

Chinese automotive manufacturers Geely and Chery have begun to show their cars at the auto shows and are starting to make the rounds of U.S. dealers. According to MSNBC (www.msnbc.com), Malcolm Bricklin, who helped Subaru and Yugo get footholds in America, is working with Chery to line up retail outlets.

No one seems worried. Maybe the American automotive industry should not be. Maybe the Chinese automotive threat is still too far off.

The Chinese automotive industry is growing at an astonishing pace. According to the People's Daily, in February, China produced over 528,000 cars and sold 480,000. The Chinese Ministry of Commerce says both figures are increases of more than 50% over the same period a year earlier.

Granted, GM (NYSE:GM), Ford (NYSE:F), Toyota (NYSE:TM), Honda (NYSE:HMC) and others are doing well in China along side the local manufacturers. And, they should. In the U.S. there are more cars that households. In China, there is still only about one vehicle for every 100 households.

The demand for cars and light trucks in China over the next decade will drive down production costs and raise unit sales in a way the industry has not seen since the early part of the 20th Century in the U.S.

It would be foolish to think that the Chinese will not be aggressive exporters as their manufacturing cost efficiencies rise with unit sales.

It's a good bet that U.S. consumers will be driving Chinese-made cars in the next two or three years. The question is, will these new models go the way of the Yugo, or will they take share the way Subaru and others have?

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He has also been president of Switchboard.com, which was at the time the 10th most visited site on the web, according to MediaMetrix. He has also been on the boards of TheStreet.com and Edgar Online.

2006-03-23T09:38:00.000-08:00

Taking The Big Three To School

GM has done very little to solve its most important problem by selling off a part of GMAC and cutting at deal with the UAW.

This is the most important conclusion of a wide-ranging conversation today with Gerald C. Meyers, Professor, Ross School of Business at the University of Michigan. His views on the automotive industry are widely followed by the media and the car companies themselves.

Professor Meyers' take on GM's (NYSE:GM) news that it was getting $9 billion from the sale of part of GMAC and had also come to an agreement with the UAW on worker buyouts is that they are a good first step. But, that is all they are. He views these developments as "holding actions."

His primary concern remains the top line at GM. Without improvement there, the sales of assets and UAW agreements only buy a little more time. "In my mind, the primary problems going forward are revenue and share. These developments do nothing to address that," he told us.

He does not seem optimistic that the revenue problem will be addressed soon. In his mind, the products GM has now are the same ones they had a week ago and will have a week from now. The new GMT 900 platform for pick-ups and SUVs may help GM for awhile. But, the opening of the new Toyota plant in San Antonio where the Tundra full sized pick-ups will be produced is "a frontal assault on GM's most profitable products, their pick-ups."

Professor Meyers' great concern is that GM products are not exciting. As he said, the "Lutz effect" of introducing outstanding new products under GM's design chief, Bob Lutz, has not taken hold. Unless or until it does, he remains skeptical about a major improvement in GM's fortures.

Turning to Ford (NYSE:F), Professor Meyers views the company's prospects as worse than GM's. "The actions of Ford are not visible," he says. His view of the Ford product line is that it is even less exciting than GM's. As he looks at Ford, his most important observation is that the company is not even keeping loyal, repeat buyers. "The fall-off in Ford's share is worse than GM's. At 15% or 16% share, Ford should find a level of customer loyalty, but it is not there," he added.

Professor Meyers likes the Chrysler (NYSE:DCX) product line and thinks it is exciting to a relatively significant portion of the car buying public. He believes that Chrysler will have to "run like hell with limited engineering and design resources", but he thinks that there are enough buyers who want the Chrysler products to keep up current volume.

On the subject of bankruptcy, Professor Meyers believes that, while it may be an alternative that business professors and financiers would consider sensible, the car companies themselves will do whatever they can to avoid it. The reasons for this is that it would create a marketing and dealer relationship nightmare that could not be managed. Customers who buy cars and plan to keep them for several years do not want to think that the manufacturer may not be around. Dealers who spend large sums on their showrooms and marketing do not want to do business with a company that cannot keep product coming. Even a careful, prepackaged Chapter 11, that improves the chances of more and better products, creates the need for an education process about finance and bankruptcy law for both customers and dealers that is beyond the capacity of the car companies.

Perhaps Ford and GM need to worry about creating exciting cars more than they need to worry about cutting costs.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also the president of Switchboard when it was the 10th most visited site on the internet, according to MediaMetrix. He has been chief executive of FutureSource, LLC and On2 Technologies, Inc. In the past, he has served on the boards of Edgar Online and TheStreet.com.

2006-03-23T06:26:00.000-08:00

GM Get Some Breaks

With the news that a group lead by Kohlberg Kravis and Goldman Sachs bought 78% of GMAC Commercial Holding Corporation, and the proposed worker buyout coming from the UAW/Delphi talks, it appears that GM (NYSE:GM) may have finally been dealt some good cards.

The yield from the GMAC deal, including repayment of inter-company loans, will total $9 billion. If enough workers take the news buyout packages GM has offered, the company actually may be on its way to having a cost structure that matches revenue.

There are still several hands to be played, but the news of the last 24 hours has been good.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine.

2006-03-21T08:33:00.000-08:00

A View That GM Could Turn Quickly, For The Better

In a conversation with Dr. David E. Cole, Chairman, the Center for Automotive Research (http://www.cargroup.org/carhome.asp), he made the point that naysayers about GM have overlooked several important issues. He view stands out as more logical and sanguine than many, and deserves a close look.

His case is relatively simple. First, the UAW has learned from the restructuring of other industries like airlines and newspapers, and, therefore, is highly engaged in the conversations about GM's future and financial health. His belief is that there is a great fear, especially among older union members, that retirement benefits could be eliminated or substantially reduced in a bankruptcy.

Dr. Cole also believes that the current, legitimate talk about Chapter 11 at GM has provided the UAW with a great incentive to change what they will settle on in the next round of negotitations with GM. In essence, his view is that this makes the crisis at least partially good news. He also sees the UAW elections in June as a mandate for a more reasonable approach toward GM's problems.

Cole clearly admires the approach that GM management is taking by working with the UAW to attempt to find a solution. His admiration of the management is a minority view, but, if the Delphi negotiations end well, perceptions may start to change. Cole clearly believes that the outcome of the Delphi three-way negotiation with the UAW and GM will end well and will also end very soon.

Cole's view of the inner workings of GM stands out as something one rarely reads about in the media or securities analyst reports about the company. He makes a strong case for the fact that GM is operationally in better shape than it has been at almost any time in its history. He points to plant productivity, die making costs, and plant flexibility as major markers of a somewhat hidden turnaround inside GM and would rank it with the Japanes and ahead of other U.S. manufacturers on these counts.

Based on this great improvement in operational efficiency, he sees the real possibility of a Nissan-style resurrection at GM, and not just a slow steady improvement, if the company and unions can come to reasonable terms.

If Cole is right, GM could end up being one of the great restructurings in U.S. business history.

Douglas A. McIntyre is former Editor-in-Chief and Publisher of Financial World Magazine. He has also been president of Switchboard.com

2006-03-21T06:34:00.000-08:00

If I Could Only Own One Car.

I really need two cars, one for driving myself around, and one to use when I have several people or cargo.

Looking over all the choices for the second, larger car, all of the SUVs, minivans, wagons and pick-ups, the choice was not terribly hard.

I want a Jeep Grand Cherokee SRT8. At $40,000, I would take it ahead of the Porsche Cayenne, BMW X5 with the 4.8L V-8 engine, the Range Rover Sport, or Mercedes ML500 or G55 AMG.

For starters, it's as good if not better than any of the import SUVs, and the price is about 50% of the average sticker on these other vehicles.

With a 420 horsepower Hemi and five speed AutoStick, it's as fast as any SUV on the road. It comes with electronic stability electronics and traction control for handling. With the Brembo brakes, it will stop 60 to 0 in about 125 feet.

The Jeep SRT8 comes with all of the good stuff like navigation system and rear-seat entertainment system. It holds five adults nicely, if they can take the acceleration. Edmund's (www.edmunds.com) gives it a 9.1 Consumer Rating, which is the very high end of that scale.

All in all, for a performance SUV, you can't touch the Jeep Grand Cherokee SRT8 at twice the price.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He was also president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix.

2006-03-18T04:11:00.000-08:00

SUV R.I.P.

Recent news from JD Power (www.jdpower.com) says that 53% of luxury SUV buyers who traded in their cars since November did not buy another luxury SUV. Most bought cars or smaller SUVs. This led the New York Times (www.nytimes.com) to opine that we may be seeing the sunset of the big, fancy SUV. If so, the big SUV did not have had much of a life span.

The big Toyota, Infiniti, and Lexus SUVs still seem to be doing fairly well. The question is why? They carry premium prices. It is interesting that the article in the New York Times mentioned the U.S. SUVs and Mercedes, but nothing about Japanese imports. Perhaps this is because they are the exception that makes the case. For whatever reason, it is a careless omission.

Edmunds (www.edmunds.com) lists no incentives for the Infiniti Q56. Ditto the Lexus GX470. The list of incentives for the Lincoln Navigator is fairly long. The list for the 2006 Escalade, both incentives and zero percent financing, is breathtaking. Edmunds even shows an incentive for the 2007 Escalade, although it is based on an invoice date that is likely to affect few if any of the 2007 models.

Cadillac and Lincoln will both bring new, large luxury SUVs to market. The fate of these may determine whether FM and Ford continue to make a huge marketing and manufacturing commitment to vehicles like this. If they can sell well side-by-side with the Japanese counterparts, the answer should be "yes".

Douglas A. McIntyre is the former Editor-in-Chief of Financial World Magazine and was president of Switchboard.com when it was the 10th most visited site on the internet, according to MediaMetrix.

2006-03-16T06:37:00.000-08:00

Ford Rolls "Snake Eyes"

JP Morgan today cut Ford's stock to underweight. The bank's primary concern is that the high-end Ford SUVs are not doing well and that GM is about to launch a new pick-up platform that could challenge the aging Ford F-150.

The message to Ford is clearly that if they do not upgrade their own big SUVs and trucks, they are going to get their clock cleaned.

2006-03-16T03:56:00.000-08:00

GM Gets It Done In China

According to the new RL Polk data on automobile registrations in China during 2005, the market for new cars grew 19% to 3.8 million new vehicle registrations.

GM's share of the market was 14.2% of new sales, followed by VW at 13.3%.

This is certainly an indication that, under circumstances where all of the major manufacturers are fighting aggressively for share, GM can do well.

http://usa.polk.com/News/LatestNews/2006_0315_CHINA.htm

2006-03-15T06:25:00.000-08:00

The UAW At The "OK Corral"

Ron Gettlefinger, the UAW President, told the Detroit News (www.detnews.com) yesterday that "everything is up in the air" in the negotiations with Delphi. He also said that he would not be bound by Delphi's March 30, 2006 deadline. At that point, Delphi clearly plans to have portions of the union contracts voided by the bankruptcy court in the hopes of reducing costs. This, in turn, is likely to lead to a strike.

You would think that the UAW would learn some lessons from the unions that represented airline workers during those bankruptcies, the newspaper industry restructuring of the 1980s, and the failure of unions for cities and transit authorities to get anything done by striking. The unions felt they could hold onto their tremendous benefits, but events like the strike on the Washington Post and Oakland Press twenty-five years ago only hastened the decline of union power.

This is a game of chicken the UAW cannot and will not win. The automobile parts companies and GM and Ford themselves cannot afford another round of business as usual.

Note to the UAW. It's over. Time to bargain for something realistic.

2006-03-14T08:00:00.000-08:00

The Standard & Poor's Take On GM And Ford

Today, Standard & Poor's (www.standardandpoors.com) did its conference call on GM and Ford and issued its new CreditWeek report on the global automotive industry. I listened to the call live.

The outlook for the industry was at near and medium term.

The first point was that the car market is saturated and cars are lasting longer. Share is, therefore, the key. So is price leverage. The cars need to be more expensive and more profitable. Oil prices have hurt this move because the more expensive cars tend to be less fuel efficient.

S&P has a fairly gloomy view of GM and Ford North American operations. Their opinion is that consumers still perceive GM and Ford cars as having poor quality, whether this is true or not. The Delphi situation is clearly a major concern, as is the possibility that Tower Automotive workers could go on strike. An interruption of parts from either or both of these suppliers could cripple any turnaround effort.

S&P sees retail sales dropping slightly for 2006 in North America.

S&P sees GM and Ford losing more share this year and also see margins dropping on high end cars like SUVs.

JD Power (www.jdpower.com) was also on the call. They made the point that their research shows that the quality of U.S. cars is quite good. The quality of service for cars by Big Three dealers should help U.S. manufacturers hold their 60% share of the market. Dealer service satisfaction may be the tipping point for keeping share. U.S. luxury brands score particularly well in these rankings. Powers concluded that if they can keep an edge in this arena, the Big Three can keep a North American share between 55% and 60%.

S&P believes that GM is actively looking at selling a portion of GMAC. They believe this as positive as long as the process continues.

On the negative side, GM and Ford may lose leverage with suppliers like Dana and Tower. There is no room for these suppliers to "give back" on the price of their products when negotiating with the automakers. Net net, this is not good news for the U.S. car companies.

What is the perfect storm that could put either GM or Ford into Chapter 11? If there is no improvement during 2006 in financial performance, staying our of bankruptcy court could be very difficult. A Delphi stike could also be the factor that pushes them to the brink, especially GM.

2006-03-13T11:30:00.000-08:00

If I Could Only Own One Car...

I pretty much need two cars, one for myself, a coupe or sports four-door, and a four-wheel drive SUV to get everyone else around.

I've been out of college for over 25 years, so I am not a likely candidate for a small two-door car. I have looked at a lot of sedans, but never found what I would really want to own until recently.

The Cadillac CTS-V is an astounding car. Just to start, the car will get to sixty miles per hour is about 4.8 seconds. And, it has a six speed manual. An automatic would be a travesty on a car like this. The 400 horsepower should be married to a stick. (http://www.cadillac.com/cadillacjsp/model/po_overview.jsp?model=ctsv)

The car comes with virtually everything standard. All-speed traction control. StabiliTrak four-channel stability control. Head curtain airbags. GPS-based navigation system. Bose sound system. Brembo breaks.

I would rather own this than an M-5 (I had one in the early 90s), any of the comparable AMG sedans or an "R" series Jaguar.

Ask the Cadillac folks if they would add four-wheel drive next year.

2006-03-12T06:24:00.000-08:00

Tower Automotive, Foreshadowing?

Late in the week, word came down from the bankruptcy court in New York that the judge would give Tower and its unions more time to negotiate what would happen to the union contract (mostly the UAW) and potential reductions in wages and health and retirement benefits. Tower has about 3,000 workers, and it would appear that they are ready to strike rather than see their compensation packages cut.

The Detroit Free Press (www.freep.com) made the point that the UAW may want to see a Tower strike to demonstrate to the Big Three that they can cripple their manufacturing by striking bankrupt parts suppliers. Perhaps this will make the GM think twice about trying to cut compensation for Delphi workers when those hearings get closer to resolution.

If Tower gives in, it's a bad precedent. The road of strikes versus UAW concessions of worker compensation leads inexorably to potential Chapter 11 at both Ford and GM. Unless both sides begin to get the formula for settling this right very, very soon.

2006-03-11T16:52:00.000-08:00

Ford Fusion, Opps.

According to Ford, "the Fusion is armed with the latest safety technology...So you can concentrate on the drive." Well, not according to the Insurance Institute for Highway Safety. The Fusion got an "acceptable" rating on its front crash test. Most other midsized cars tested got the higher "good" rating. Ford asked for a retest. I am sure that the IIHS made a mistake on the first one.

What's worse, the Fusion got a "poor" rating on the side impact test, apparently because the side airbags are an option and not standard equipment. To add insult to injury, the rear crash test results were "marginal" for the Ford Fusion.

Even the Hyundai Sonota did better. How embarrasing. Make the side airbags standard. It's the right thing to do.

2006-03-11T05:42:00.000-08:00

Reviewing The Major Auto Websites (Part IV)

autos.aol.com
autos.msn.com

AOLAutos. One And A Half Stars
MSNAutos. Three Stars

AOL and MSN have to be addressed at auto research sites because of the huge volume of traffic that there parent sites (www.aol.com) and (www.msn.com). Ergo, they have a substantial influence on the car buying public.

These AOL really has no soul, no center. The new car section at AOL Autos is powered by Edmunds (www.edmunds.com) and the used car section by Autotrader.com (www.autotrader.com) and EbayMotors (www.motors.ebay.com). There is also Kelly Blue Book (www.kbb.com) for good measure.

The best section of the AOLAuto site is the videos. AOL has made a big move to multimedia at all the sections of their sites, and this is no exception. Seeing a car in action has some substantial benefits. It certainly helps sell handling and sex appeal. This growing part of AOL Autos, which probably has sixty videos now on cars, car shows, and "how to" videos is very good.

The "news" section for AOLAutos is from Autoblog.com (www.autoblog.com). It is a decent site, but given the access AOL has to news feeds, not nearly enough.

It's a shame AOL Autos did not make more effort here. They probably get more visitors than most car sites, but they have done nothing with content to capitalize on turning this into an outstanding resource.

MSNAutos shows what a large content aggregator like MSN.com can do if they want to spend the effort. They have hired their own journalists, and the reviews that produce are good. In addition to the MSNAuto staff, the new car reviews are supplemented by information from Consumer Reports (www.consumerreports.org). Each car has a rating from the MSN "Experts" and also ratings from consumers, so along with the Consumer Reports data, the user gets a wealth of information on each vehicle.

If you elect to sign up for Microsoft Passport, you can use it to store all of you car research in one place. This allows you to store research on up to ten cars, and go back to it later on you PC. It's very convenient if you return to the site to research several models.

There is also a section called "My Car". You can sign up here with your make, model, and mileage. This part of MSNAuto will send you e-mails when it is time to change your oil, send maps of traffic problems near your home address, and tell you gas prices at stations nearby. This is an amazing use of Microsoft technology, and deserves acknowledgement for innovation and ease-of-use.

The News section not only has information from the latest car shows, it also has automobile news from MSN sister company MSNBC, and this makes it one of the best car news sections around.

MSNAuto (autos.msn.com) is an outstanding marriage of good, solid car research and the kind of technology the internet can bring to marketing and maintaining cars.

Well done.

Douglas McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine, where he also wrote the automobile reviews. He was president of Switchboard.com when it was the 10th most visited site in the world, according to MediaMetrix.

2006-03-10T05:42:00.000-08:00

Chrysler SRT, What American Cars Should Be.

One of the things I look for in all companies is whether they can do things right over and over. A lot of companies can get things right with a product once, maybe twice. But, a pattern of designing and building excellent products is another story.

Chrylser has put together a portfolio of almost a dozen SRT vehicles from cars to SUVs and pick-ups. These vehicle get outstanding reviews. RoadandTrack.com (www.roadandtrack.com) called the Crossfire SRT-6 "an enjoyable, delightfully quick package for a sports car that retains its Chrylsler luxury features." visitors to Edmunds.com (www.edmunds.com) gives the Jeep Grand Cherokee SRT-8 a 9.3 consumer rating, one of the highest numbers for any vehicle at Edmunds. The Money Magazine (money.cnn.com)review of the 300 SRT-8 is so good Chrysler couldn't have made it up. "The over-the-top SRT-8 version uses a 6.1 liter, 425 horsepower Hemi to make life miserable for high-performance BMWs and Benzes that cost roughly double its $42,695 price."

The SRT series also cover a very broad spectrum of potential driver needs. You need a wagon, they have a Magnum. A Jeep for SUV lovers. Mid-range coupe, the Crossfire. All out sports car, the Viper. Four door family sedan, the 300C.

The genius of all of this is not in the individual cars, although they are impressive and I would be happy to own any one of them. The real intelligence is in the brand building. SRT has models across a broad spectrum. A lot of people will come in and buy a model below the SRT, perhaps due to price or practicality. But, SRT is the buzz, it's the car love affair, it's the dream of having the fastest car on the block. And, it sits as this beautiful umbrella over the rest of the models in the Chrysler, Jeep and Dodge lines.

2006-03-09T06:59:00.000-08:00

Delphi, GM and the UAW Are Close To A Deal, Not

It appears that news that the GM bailout of the Delphi UAW workers was premature. The UAW is now saying that the meetings are simply "routine". Delphi is threatening to go to the courts on March 31 to get the union contracts cancelled.

None of this is good news for GM. It could be left holding the bag for all of the healthcare costs for Delphi, which is into the billions of dollars.

However, it could be worse. If the UAW strikes Delphi and shuts it down, the shutdown of GM's plants is not fair behind. And, that would throw a massive wrench into the GM restructuring plan.

2006-03-07T12:25:00.000-08:00

GM Board Meeting: Let's Raise Some More Money So We Can Lose It

GM's board met yesterday. They probably discussed the sale of their stake in Suzuki for $2 billion and their ongoing discussion with Delphi, which could have an expensive conclusion. GM has already filed paperwork saying its obligations to UAW members at the parts manufacturer could approach $11 billion.

Of course, another item on the agenda is the spin-off of GMAC, one of the few parts of GM that actually works financially.

There is a perverse logic at work here. Why not sell a successful part of your business so you can use the money to cover loses in a part of the business that does not work.

Wouldn't it make more sense to move the company to the "right size" through Chapter 11, assuming the UAW has no real interest in the kind of cost structure that will turn GM, especially its North American operations, profitable?

GM can liquidate everything it has. But, until the problems of the core business are successfully addressed, it won't matter.

2006-03-07T11:57:00.000-08:00

GM Retirees, The Line Starts Here.

According to a report in today's Detroit New (www.detnews.com), GM retirees gathered in U.S. District Court yesterday to challenge the UAW agreement with General Motors to cut the benefits of retired worked to the tune of a $1 billion savings. Since the retirees did not vote and current UAW workers did, the court gets to have the final say.

The deal calls for retirees to pay a piece of their own healthcare costs. The former hourly workers believe they were promised free healthcare for life.

Well, the line starts at the back of the room, or maybe out on the street since so many people want a chunk of the GM revenue.

I think we can safely say now, that this is not going to work. GM can sell its part of Suzuki and a part of GMAC. It buys time, but not a solution.

What there retirees want is just the beginning of what the current UAW members fear. GM will ask for similar concessions from them. They can stop worrying about it. It's going to happen.

If the members of the UAW, past and present, don't begin to think in real financial terms about the future of GM, they are going to end up with much less than they bargined for. There is only so much to go around.

2006-03-06T07:12:00.000-08:00

Will Detroit Have To Raise Prices?

In the current issue of Newsweek, Allan Sloan, on of the most astute business writers around, makes the case that the problem that GM has in its competition with Toyota is not just one of cost. It also results from not being able to charge as much for a GM car as a Toyota. http://www.msnbc.msn.com/id/11569587/site/newsweek/

That's pretty tough math. Sloan's numbers for legacy costs of pensions and healthcare may not be exactly right, but based on other estimates from financial institutions, let's say the deficit is over $2,000 in Toyota's favor. That's a very big gap for every car. And, Sloan's more important point is that GM gets, on average, $1,500 less than Toyota per car sold in the U.S.

This makes the problem Detroit has more than twice as tough. The UAW has not walked into any of the car companies and offered to cut the pension and healthcare costs enough to solve the cost problem. Getting parity with Toyota on that side could be a long and very hard fight.

And, it leads to a strange conclusion. If you loss money on most of the cars you sell, why not raise prices? The obvious answer is that sales will drop. It is an answer both obvious, and, most likely, true. However, perhaps that is the only way the Detroit car companies get "right sized" to use consulting jargon. There is no reason to believe that overall cars sales are going to rise rapidly in the next few years. The economy is pretty good now. In addition, a lot of car reviewers and consumers think Detroit's cars are pretty good products.

To some extent, these issues go hand-in-hand with the omnipresent specter of a Chapter 11 filing by one of the big Detroit car companies. If you want to see if you can survive, price your products at a level where you can make money. Frightening, but perhaps the only real answer to the Rubik's Cube puzzle of whether GM and Ford can ever operate as profitable, standalone businesses again.

2006-03-04T09:46:00.000-08:00

Reviewing The Major Car Websites (Pat III)
The Think Person's Sites, Maybe
www.intellichoice.com
www.consumerreports.org

These two websites are for hardcore research. They are not for hanging out in online forums, getting news, or finding out what roads might be fun to drive.

Intellichoice.com (www.intellichoice.com) One And A Half Stars. This is an extremely annoying site to use. Everytime you try to go to a new page they want you to take their survey. I guess they need the data. The Intellichoice claim to fame is the Best Overall Value rating, which is the result of the index they use for every cars. This is a "total cost of ownership" metric, and it is valuable. But, it's a one trick pony. It allows you to look at cost of maintenance, repairs, fuel, financing and insurance. Intellichoice.com assigns this value to over 1,700 vehicles, according to their description of the process. The "cost of ownership" covers the first five years of owning each vehicle.

The car reviews are short, too short, but fairly good descriptions of each model. The navigation bar allows you to compare any model to the "best in class" in that category based on the "total cost of ownership".

The Advice section at Intellichoice.com is one of the few high points. The articles on things like buying versus leasing, insurance, and selling a car are useful. Several sites like Motortrend.com (www.motortrend.com) and Automobilemag.com (www.automonilemag.com) link to the Intellichoice.com site to bolster their own car research services. And,this is the best use for Intellichoice.com, as a second opinion for buying a car. It is not much of a car research site on its own.

Consumerreports.org (www.consumerreports.org) Three Stars. Let me state my bias at the beginning. I think that the way that consumerreports.org and its sister magazine handle research on cars and trucks is flawed. Their Reliability Rating based on their testing, their huge annual survey of consumers and crash test data is segregated from their Owner Satisfaction ratings, which are based on whether someone would buy the same car again. There is no real attempt on the part of Consumerreports.org to reconcile these. And, it's a mistake that causes unnecessary confusion and makes deciding how to use these ranking harder than it should be.

Consumerreports.org is the high and the mighty of vehicle research, based, at least on their own description of how they go about rating cars and trucks. They buy their cars from dealers. No free loaners from the car companies. They have their own test track, and a large in-house staff of testers. They test each car for four months and 6,000 miles. Their annual reliability survey, last done in spring 2005, and the basis of their current ratings, covers over 1,000,000 vehicles with feedback from consumers who subscribe their magazine or use their website. There may be some built-in bias among these subscribers since the sample is a bit self-selecting, but let's leave that to statistics experts and shrinks.

They do such a good job, I don't know how they live with themselves.

Moving to the site itself, the new car research section is excellent. There really isn't a better one around. The written descriptions of the cars are good. Some of the road tests are a little old. But, the real strength of the section is its comprehensiveness. The reliability data on cars that have been around for more than a year goes back as much as eight years. Impressive. And, it covers fifteen categories from paint and trim to the ignition.

The Test Track data is equally complete. Emergency handling. Turning circle. Luggage capacity. Front seat comfort. Add another 20 or 30 categories to that and you have the best list of test data available on vehicles anywhere.

To top all this off, each vehicle has data on crash and rollover tests.

In addition, consumers are allowed to add to these tests online by putting in their own comments and experiences. There are apparently thousands of these reviews, and the ones I looked at were generally very thoughtful.

The News and Trends site at Consumerreports.org is better than most, and some of the features like "Do Incentives Equal A Good Deal?" are insightful beyond what you will find at most car sites.

The Consumerreports.org Bottom Line Price, and other features on how to buy a car and negotiate the best deal have been researched and presented very well. I don't know that I would want to be a car salesman if you come through the door armed with all of the Consumer Reports data.

The interaction between the Consumerreports.org editors and testers and the readers at this site is excellent. The cars companies should adopt something like this themselves for their customers. You can ask questions of the Consumerreports.org experts directly and by name. They are not hiding behind some veil of anonymity. Whoever handles the online work at the big cars companies should have a look at this.

Aside from my misgivings about some of the approaches taken by Comsumerreports.org, this the best pure car research available.

2006-03-03T11:37:00.000-08:00

Dana, Delphi and GM.

Today Dana Corporation, the auto parts supplier, followed Delphi into bankruptcy. With Detroit squeezing them for lower parts prices and high labor costs, it was probably inevitable.

This raises the issue, once again, of whether GM will go to Chapter 11, either for strategic reasons, or because it is forced to. Bank of American Securities has puts the odds of a GM bankruptcy at 30%. Standard & Poors continues to cut the ratings on the GM debt.

Jim Cramer, the Wall Street commentator, wrote in New York Magazine recently that he believed that GM would declare Chapter 11 in 2006.

At this point, GM must look at bankruptcy as a strategic alternative. They have nearly $19 billion in cash on hand, so if the Chapter 11 filing can be used to drop pension, healthcare and other labor costs, it needs to be on the table. The company's CEO has said it is not. That's a mistake, if it is true.

The airline industry has used Chapter 11 to its benefit in several cases. If GM is going to use it as a strategic weapon, they have to do it while they still have a lot of cash on hand.

It would be tough for the common shareholders, but with the stock trading at 6% of the revenue per share, the GM shares are already telling us that bankruptcy is a very real option.

GM's chance to do this on their own, and not have it forced on them by circumstances, will not last for more than another few quarters. I hope someone at GM headquarters is working on it.

2006-03-03T03:35:00.000-08:00

What's Wrong With Consumer Reports?

It is hard to fault the size of the database for the Consumer Reports Top Picks (www.consumerreports.org) annual awards, which came out yesterday. Data is gathered from their readers on over a million cars. They look at government crash test data as well. And, we all know they have their own staff of experts, their own track and buy the cars instead of getting them for free from the car companies.

So, do I believe the results are a good indicator for what car to buy. Not really.

Tucked away in the Consumer Reports data, and not part of the headlines about the Japanese sweep of the Top Picks list is the "Most Satisfying To Own" list. The Prius and the Corvette where at the top of that list, with over 90% of the people owning them saying they would buy them again. Is that as important as "reliability"? You bet. Consumer Reports doesn't trumpet this list all over the way the do their Top Picks. Too bad. I would rather own a car where 90% of people say they would buy it again.

Did the Japanese sweep the Top Picks list? Yes.

But, have a look at the "Most Satisfying To Own". Mustang, Corvette, Chrysler 300C, Dodge Magnum.

There has to be a way to combine the reliability and satisfaction ratings. And, this is the Achilles heel of the Consumer Reports method. It is not the way the data is gathered. It is the way it is integrated and presented.

Other rankings, like the Car and Drive 10 Best (www.caranddriver.com) at least try to factors these issues in. Consumer Reports just lets it slide.

2006-03-01T13:05:00.000-08:00

Is Kerkorian Right About GM?

Almost two months ago, Kirk Kerkorian sent one of his advisors, Jerome York, to Detroit to make a public presentation about what GM should do to get itself going in the right direction. York is former CFO of both Chrysler and IBM, so he has some bona fides when it comes to talking on the subjects of costs and turnarounds.

The car companies just announced their February sales. GM and Ford were down. Chrysler's parent and the major Japanese manufacturers were up.

Two months have passed, and what does GM have to say? Not enough.

GM did appear to take some of the advice. It cut the dividend. It restructure health and pension programs. It cut some salaries. But, according to a Merrill Lynch auto analyst, John Murchy, who was quoted at www.msnbc.com there will be "no imminent material concessions" from the UAW until the current labor contracts expire in September 2007.

Not mentioned at all was the option of closing at least two GM brands, one of them being Saab.

It is very tough to argue that GM doesn't have too many brands. Saab is an odd fit. According to www.businessweek.com, the brand only sells 130,000 units and loses money. It doesn't belong. Close it. Or, talk to the private equity firms. Jerome York knows them all. There are several large ones in Sweden. Just because GM cannot make money on Saab doesn't mean someone else who restructures it can't. Then take a very hard look at combining a couple of other brands.

GM has a future, and it could be a bright one. The company still has mammoth revenue, but anyone who can add and subtract knows that the costs are too high. And, the clock is ticking.

2006-03-01T10:20:00.000-08:00

Reviewing The Major Car Websites (Part II)
The Car Magazine Sites
www.autombilemag.com
www.caranddriver.com
www.motortrend.com
www.roadandtrack.com

by Douglas A. McIntyre. McIntyre was the Editor-in-Chief and Publisher of Financial World Magazine, which had a paid circulation of 500,000. He also wrote the car review column for the magazine. He was also the president of Switchboard.com, the online directory, which, at the time, was the 10th most visited website in the world, according to MediaMetrix.

Four of the major car research sites are run by the Big Four car magazines.

Automobilemag.com (www.automobilemag.com) Three And A Half Stars. As the websites from the car mags go, top billing goes to automobilmag.com (www.automobilemag.com). The way the navigation bar works across the top of the site makes it very easy to move from one section to the next. I don't love them giving nearly equal billing to Intellichoice (www.intellichoice.com) in the car review section, but their own reviews are comprehensive, detailed, easy-to-read, and well illustrated. They do a good job of highlighting reviews of new cars.

As a matter of fact, they have an entire section on New Cars with reviews of over 100 models for 2006. If you are looking for the latest offering from any of the brands, they have put it all in one place. Again, they make it easy to find what the user needs.

One of my favorite features of automobilemag.com is the Future Cars section with sneak previews of 2006 and 2007 offerings. For people who hate going out and buying a car, only to find out it is about to be replaced by a new version with nicer bells and whistles, this section is a must. It's a nice place to learn more about cars like the new SVT Shelby Mustang.

The section called Test Data distinguishes what automobilemag.com does from several other websites. You can go to this section and compare braking distance, acceleration, weight, price and other features all on one list. It's a CliffsNotes of road test data, and it's very useful.

The Great Drives Section should be at all car sites. It takes you through some of the best roads where you can drive your favorite car. Not many other places will test the car and the roads for you.

On the disappointing side, the News section is very thin. In a world where you can get news feeds by subject from companies like Google (www.google.com) and a number of other sources, this section ought to be rich with content. It isn't.

The Reader Panel section is a place to sign up to be e-mailed their surveys. It's not terribly impressive and strikes me as a good way to get my e-mail address. They need to add some forums so people can really talk back.

On balance, automobilemag.com is a very good site, and is the best of those run by the car magazines. The magazine and the site are owned by Primedia.

Caranddriver.com (www.caranddriver.com) Three Stars. Road and Track and Car and Driver are owned by the same company, Hachette Filipachi Media. But, the caranddriver.com website is the better of the two.

The navigation for the site is slick and well designed. The navigation bar across the top drops down sub-categories as you scroll across it.

The Buyer's Guide is front and center on the homepage, and once you get into the reviews there are some very strong features. The "Research Toolkit" for vehicles has a link to Kelly Bluebook(www.kbb.com)for an additional take on pricing. The Reviews, Road Tests and Features section is well populated with articles on each car or truck. The User Road Tests, which are drawn from comments from site visitors is a particular helpful feature, and you can submit your own review. Caranddriver.com is building a real community here and these people are doing a good job of helping each other make buying decisions.

The section on Comparison Tests is an essential part of any car research site and the one at caranddriver.com is particularly good. If you are looking at two or three cars within the same category, it would be hard to find a better set of feature articles. As was true with automobilemag.com, the News section is poorly done. With the ocean of news on the car industry and car performance, a section like this should be overflowing.

The Automotive Glossary is one of my favorite sections of the caranddriver.com site. There are several dozen terms defined here, from "central differential" to "lateral link". If you are not a mechanic, and you want to understand car jargon, this section is the best I have found.

I am a sucker for the 10 Best Cars feature and always have been. The benchmarking of the winners tell you a lot about what makes a great car or truck. This could almost be a website on its own.

The Best Driving Roads in America is a nice addition, not unlike the one found at autombilemag.com.

The Forums in the Community section of the site are widely used by readers to exchange information and ideas. You get posts written by the occasional nut job, but there are several hundred thousand comments (posts), and they are generally useful for buying and maintaining cars.

Caranddriver.com is a solid effort, but a bit short of what I would expect from a magazine that has a paid circulation of 1.3 million and over 10 million readers, making it the largest car magazine in the country.

Motortrend.com (www.motortrend.com) Two And A Half Stars. Now, here is a site with a lot of good information that is so hard to navigate that it makes your hair hurt. The homepage of the site looks like it was put together by a fifth grade art class.
At least you can tell that motortrend.com likes auto shows, because that is most of what you see at the top of the page, but, for people researching cars, I don't know that this is terribly helpful.

The content at the site, once you drill past the difficulty finding it, is fine but derivative. Most of it is simply content you can find at other, better built sites.

Motortrend.com links to Intellichoice (www.intellichoice.com) as if their own reviews, which are quite good in the magazine, were not adequate. The Road Test section is above average.

The motortrend.com site does have some nice pluses. The section on Games, where you can check out things like driving simulators, is very good. The News section is one of the better ones around. There is a lot there if you are interested in trends in the industry and with brands.

The Forums are set up fine for conversation, but it does not look like they get much traffic, so it is hard to say how useful they are.

Motortrend.com delivers an adequate, but not much above average experience if you are doing car research online.

RoadandTrack.com (www.roadandtrack.com) Two Stars. If you like photos of cars, this is the site for you. The homepage is dominated by photo links. Roadandtrack.com is not a bad car site, it just isn't a very good one.

The number of Road Tests is too small. So are the number of Comparison Tests. The Long Term Test section is an excellent feature and looks at cars over several thousand miles of testing, but again, the section is very light on content. The News section is weak, except for the Daily Auto Insider, which is one of the best news features I have found at a car research site. The news is relevant and well-written.

If you like racing, roadandtrack.com is the site for you. The site has sections on Nascar, IRL, Formula 1 and more. Maybe they should just make this into a site on racing news.

The Buyers Guide is merely adequate and has articles going back as far as 2003. I don't see the point of keeping stuff this old. It's just content padding.

The roadandtrack.com Forums are well enough done, but don't get a lot of traffic. No pun.

Unfortunately, with the Hachette Filipachi resources, you would think these guys could field as good a site as their sister publication, caranddriver.com. But, they didn't.

2006-03-01T06:26:00.000-08:00

Detroit Management Needs To Get Online

by Douglas A. McIntyre. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine, which had a paid circulation of 500,000. He also wrote the auto reviews for the magazine. He was later President of Switchboard.com, the online directory, and, at the time, the 10th most visited website in the world according to MediaMetrix.

Depending on whose numbers you believe, between 65% and 85% of new and used car buyers use the internet to research their choices before buying. In 2000, the number was 27%. Put the term "car research" into Google (www.google.com) and you get and you get 215 million results. That's right, 215 million.

Detroit thinks it is online because all of the companies and brands have fancy websites. But, it is not enough, not by a long shot.

The internet is now a realm of interactivity. Blogging. Two-way instant messaging. Chat rooms. Webcasts.

At the GM (www.gm.com), Ford (www.ford.com) and Chryler (www.chrysler.com) websites and all the brand sites they point to, you can get pictures, videos, payment calculators, and you can even build your own car. But, so what? I can do that at a lot of other car sites as well.

The American car companies have to use the cutting edge of the web. Their designers and marketing executives should be blogging. They should have a team of people who monitor car chat rooms and message posting sections, at least the large ones. They should be in a position to respond.

How about a web cast when they launch a new model, with instant messaging so real, actual buyers can send in questions to be answered then and there?

Car buying and car opinion making has moved to the internet. Your brands are being built or destroyed there. It's time to get in the game, the way it is being play right now.

2006-02-28T01:37:00.000-08:00

Reviewing the Major Car Websites (Part 1)

This will be an evaluation of the major automobile websites. These are the sites most people look to for independent information about cars. The company and product websites like www.ford.com are not a part of this evaluation. We will look at those later. The websites geared to buying and selling cars like www.autobytel.com and www.cars.com are also being left for a later review.

Here, we are going to look at the sites that influence opinions about cars, and, consequently, have an influence on buying. According to JD Power (www.jdpower.com), 64% of car shoppers used the internet to gather information when shopping for a new car.

Each site will be evaluated on: 1) content, 2) navigation/ease of use, and 3)quality of research. Each site will be rated one to four stars based on these elements.

The contenders are www.caranddriver.com, www.roadandtrack.com, www.motortrend.com, www.edmunds.com, www.intellichoice.com, www.automobilemag.com, www.consumerreports.org, www.autos.msn.com, and www.autos.yahoo.com.

Edmunds.com (www.edumunds.com) Four Stars. First, I find this site the easiest to use. When I was head of switchboard.com, I found that there was no replacing simple navigation. Edmunds.com is intuitive, and that means almost anyone can use it. You don't have to spend eight hours online everyday or have a technology background to make this site work for you.

The Edmunds.com content is organized well. Both by vehicle type and price bracket.The Review and Specs section is one of the great strengths of the Edmunds.com site. Simple "pros" and "cons" on each vehicle and a list of awards, if any. The Consumer and Editor rankings of each model as a huge benefit. The fact that the consumer view does not always agree with the Edmunds.com editors shows that they have the guts to allow other views, some of them opposing. The reviews by consumers can be very illuminating. The True Market Value pricing report is a brilliant feature. It is geared to show what people are actually paying for a vehicle with options specified by the user in the geographic area where the buyer lives. This feature is one you have to use if you are buying a new or used car. It even includes incentives and rebates. In terms of "quality of research", this is as good a feature as I found at any car site.

The Edmunds.com Tips and Advice section is solid if unspectacular. It covers ways to sell your car and maintenance. It also has a couple of blogs.

Edmunds.com has a forum. I think this is a must for a strong car site. It allows people visiting the site to post opinions and ask one another questions. It gives the user the chance to discuss what he wants to discuss, not just what the site editors want to cover. The Edmunds.com forums are easy to use and well-populated. This second issue is very important. The larger forums at Edmunds.com have several thousand posts. At some small sites, you only get a few people, and you end up in a forum talking to yourself.

The last section of note is the Inside Line section. Here you get the latest scoop on the big auto shows, new cars, new features, and news about the industry.

All in all, www.edmunds.com is the best car research site on the web, and wins our comparison. Edmunds is privately held and based in California. According to them, they get about 350,000 visitors a day.

2006-02-23T11:12:00.000-08:00

Detroit Supercars, Not Everyone Wants A Porsche

The Lincoln Town Car, how could it possibly be a Supercar? If you have a look at the Wikipedia article on the Town Car, you would be surprised at how strong the brand is. In 2005, the Lincoln division had the highest customer satisfaction of any brand in JD Powers. But, that could be from other cars in the line-up. According to Forbes (www.forbes.com) and Edmunds (www.edmunds.com), it has the most interior space of any sedan under $200,000. Pretty good. It gets the governments highest safety rating, all five stars. Not bad.

Two-thirds of buyers are repeat buyers, and 60% do not even consider another luxury car.

Wow.

So, here is the sleepy old car, first produced in 1981, and it is the leading seller in the Lincoln line according to Ford. It gets solid, if unspectacular reviews. It's roomy, has a big V-8 and is safe to drive. And, people who own it once tend to own it again.

All this sounds boring, but it gets to the heart of how car companies make money, and that is why the Lincoln Town Car makes the Detroit Supercar list.

This car is built to be roomy and comfortable. People who buy it tend to be older, if you eliminate the significant sales to limo companies. These owners don't want a car that does zero to 60 in five seconds. They are not going to be doing much hard cornering. No off-roading.

The Lincoln Town Car is a great example of automotive manufacturing and marketing, precisely because it gives the customer exactly what he wants. And, it uses this to be the flagship of its brand and sets a steady pace for unit sales year in and year out.

The car press is mad about speed, handling, and technology. The Lincoln Town Car is not likely to grace the cover of Car and Driver of Road and Track. But, should Ford care? Absolutely not.

So, here's to building a quality product, that works well, is safe and sound, and has the simple genius of bringing buyers back over and over again.

2006-02-22T04:47:00.000-08:00

Will Toyota overwhelm GM?

Fortune and its online counterpart money.cnn.com recently ran articles assuming that because Toyota has built a significant lead in hybrids this will allow it to "dominate the industry for years to come". In journalism school they try to teach that making overly broad statements that you can't possibly defend with facts is a bad idea.

First, the same article points out that the hybrid engineering adds about $3,000 to the cost of a car. It takes a lot of driving to get that back.

Beyond that, if you look at the literature about oil reserves, there isn't much evidence that anyone will have to have a hybrid soon. In an article at the BBC website (news.bbc.co.uk), on of their business reporters, Will Smale, makes the point that with new technology and the discovery of new reserves we have decades of oil left in the ground. He quotes Chris Hayes of Cambrian Group as saying"we have potentially got another 100 years of old production."

Will hybrids or cars that don't run on gas at all be necessary in the future? You bet.

Is Toyota a formidable competitor for all the American car companies? Absolutely.

But, let's not confuse their lead in a technology that is fairly expensive for the consumer and where the large demand may be decades away with the real issues of the cost of building cars and creating quality products for the market.

2006-02-21T12:31:00.000-08:00

Detroit Supercars.

The Ford F-150. Forbes Magazine (www.forbes.com) made the point a couple of years ago that the F-150 had been the top selling vehicle in America for twenty-two years because of our country's love of size and cargo utility. But, that sort of misses the point. At least about the Ford F-150.

The F-150 certainly has the benefit of being a pickup, so you can use it like a car or a truck. It is not the most expensive car on the lot. But, it is the best pickup.

The current version is the Car and Driver (www.caranddriver.com) Pickup of the year. The praise is loud. The point are well taken. This pickup has five models and three cab configurations. Car and Driver wants us to know that part of the reason the F-150 made the list is the number of engine options and drivetrain options. The F-150 has what we admired in the Chrysler 300 in spades. It can be configured hundreds of ways and fit budgets from $20,000 to nearly $40,000.

Still, I don't think they have their fingers on it. The F-150 gets an unusually high 9.1 consumer rating at Edmunds (www.edmunds.com). In other words, when it comes to the buyers, it walks on water. It has received the NHTSA (www.nhtsa.dot.gov) 5 Star front crash rating. Twice. So, it is as safe as Fort Knox.

It is still something more. Put Ford F-150 into the search box at Yahoo! (www.yahoo.com) You get almost 5.3 million results. Do it at Google www.google.com). You get back 5.6 million. This is what marketers and reviewers are missing. The F-150 has a virtual cult following. Like Mustangs and Corvettes do, but it's a truck. There is an entire industry built around this pickup that has nothing to do with Ford.

Look at the results. Message boards, by the hundreds. Question and answer forums about the F-150. People doing modifying and customizing. Used F-150s for sale. Parts. Repair tips.

There are thousands, if not tens of thousand of people online talking about, selling, blogging, repairing, and praising their Ford F-150 pickups.

Now, this was going on before the internet. People would have used enthusiast magazines, special repair manuals, newspapers on customizing, the phone, or two tin cans with a string. The internet has simply made the huge communities behind these pickups easier to see and easier to follow.

The Ford F-150 is not just a Detroit Supercar because it has been the king of unit sales for so long. It makes the list because people love it.

2006-02-21T11:37:00.000-08:00

Detroit Supercars

The Corvette (www.corvette.com) has to be on this list. It has very little in common with the attributes that make the Ford Mustang or Chrysler 300 important cars. The Chevrolet Corvette does not come in a number of versions. It does not have an entry level product and a fully loaded product.

What is it is pure Detroit. A modern miracle of design. A rocket on four wheels. A car that competes will with cars two or three times its cost. It's a phenom.

Unlike our first two Detroit Supercars, the Corvette is not for people on a budget, unless they plan to devote most of it to their automobile. It's $45,000 to get into one of these, and for the new 505-hp version, closer to $65,000. You can get it with a heads up display and paddle shifters. The works.

Like the Mustang, this car has had a number of lives. It was introduced in 1953. Ten years later the Sting Ray version came out. According to Chevrolet, they are now on version number six. Over that period the car has been on the Car and Drive Ten Best list a total of eleven times (www.caranddriver.com).

So, what is it? The Chevy Corvette doesn't sell hundreds of thousands of units a year. What is does it, it elevates the brand. And, that is critical and something Detroit needs desperately right now.

When people see a Corvette, the see one of the world's great sports cars. We could link to scores of reviews over the years to prove it, but there is no need. People already know that the Corvette is a model of engineering and speed. It has been for decades. And, it's a Chevy. Next to the Cobalts, the Impalas and the Malibus, there's the Corvette. Some of the same family blood. Some of the genius for style and speed, moves into the other models by osmosis. The brands gets elevated.

If all this great car does for GM and Chevy is get people to think of the Corvette when they look at another car in the line-up, then the Corvette has carried all its weight and then some.

And, that's before people drive one.

2006-02-20T09:05:00.000-08:00

Detroit Supercars

"There are no second acts in American lives..." F. Scott Fitzgerald

According to the web blog "History of Mustang Performance", Ford announced when the first commercial for the car would run and 29 million people watched it. They sold 22,000 Mustangs the next day. The car was introduced to the public at the 1964 New York World's Fair. Wikipedia calls it the most successful product launch in the history of the industry (http://en.wikipedia.org/wiki/Ford_Mustang). And, its godfather was none other than Lee Iacocca.

This is a car that by my count has gone through six generations. It has been modified by some of the most talented engineers in car history, including the Ford SVT group and Shelby. The base horsepower of the car has run from well under 200-hp in the last 70s and early 80s, to 300 plus in its early incarnations and also in the car you can buy today.

The first two years in production, Ford built nearly 1.3 million Mustangs, and the car still sells about 150,000 units per annum. The car has been sold as a coupe, a convertible, an economy car and a muscle car. With an automatic or with a manual transmission. It has graced more "Ten Best" lists than you can could and was on the Car and Drive list again this year, taking honors as "Best Muscle Car".

The story of the Ford Mustang seems much different than for other Detroit Supercars like the Chrysler 300. The Chrysler is fairly new, although there was a model by the same name many, many years ago. The Mustang has been in constant production for 40 years which makes it a rare breed.

But, let's look beneath the years in production numbers and see if the Ford Mustang has anything in common with other great cars.

First and foremost, it is fun to drive, a must as a "great car" attribute. My father owned at '65 Mustang and I have driven every generation of this car since I got a license. When they took away some of the horsepower, the car lost its appeal for me, but the current version is as much fun at the models from the mid 1960s.

The car has models for different drivers and wallets. You can get a Mustang for $19,000, or you can spring for the high-end $30,000 Mustang GT Premium Convertible. Go inexpensive. Go performance. Go coupe. Go rag-top. They are even about to introduce a new Shelby model (http://www.svt.ford.com/gt500/index.html), and it won't be cheap.

In the car business, 40 years in several lifetimes. The Mustang has been changed enough so that without the signature horse on back, you might not be able to tell one generation Mustang from another. But, Ford kept the innovation coming with the goal of having a fun to drive, affordable sports car. Did they do better some years than others? Yes. Is the current Mustang a worthy grandchild of the early versions. For muscle and affordability, then, yes, again.

2006-02-19T15:27:00.000-08:00

Detroit Supercars

Can American car manufacturers still make a car that is a home run in styling, price, cost of operation, options and sales volume? The answer is "yes", so we are going to take a look at a few of these and see what lessons are to be learned from the ways that the "supercars" are built and marketed.

The first American car on this list is the Chrysler 300. Intellichoice has name it "Best Overall Value-Large Cars" for 2005. Among other things, this analysis looks at ownership costs like fuel, repairs, financing costs and insurance fees. These costs have to be "significantly lower than expected compared to that of the peer models" (www.intellichoice.com) So, the Chrysler is a winner from a financial and maintenance standpoint.

The Chrysler 300 was also name the Most Significant Car of the Year for 2005 by Edmunds www.edmunds.com) Why did they like it? First, it is different, as they said "unabashedly non-traditional in both its style and its substance." What is more, it has been built to appeal across a broad spectrum of buyers. You can get a base model with a V6, and it offers several steps from there all the way up to a loaded version with a 425-hp Hemi. At the low end, the car costs a little over $23,000, and the Hemi version Chrysler 300C SRT-8 goes for over $40,000. You can even get a version of the 300 with all wheel drive.

By the way, the Chrysler 300 also was named one of Car and Driver's Ten Best Cars of the Year for 2006, grabbing the top honors in the "Best Full Sized Sedan" category (www.caranddriver.com). The reviewer raves about the car. If that is not enough, Motortrend
named the Chrysler 300 their 2005 Car of the Year (www.motortrend.com).

Of course, none of this matters if the car is not a sales and financial success. The Chrysler 300 sold 12,476 units in January 2006 according to John Neff's Autoblog. That's approaching 10 percent of all the units Chrysler sold in that month.

The story gets better. The Chrysler 300 was designed by a guy born into a Haitian family and raised in Montreal. According to the Toronto Star (www.thestar.com), Ralph Giles is only 36 years old, and not only masterminded the 300, but is the brains behind the Dodge Magnum wagon and Dodge Charger as well. One man, in a huge company, transforming the model line because he has the talent and management with the guts to bet on what he could accomplish.

Maybe there's a lesson here.

2006-02-19T12:55:00.000-08:00

Is there a bias against American cars?

Roger Simmermaker has made an excellent case that the American media is biased against cars made by U.S. manufacturers in both his online Monthly Tune Up, and his site www.howtobuyamerican.com. But, his is a minority view. JD Powers tends to rank American cars fairly high, with three of the top five spots going to U.S. companies with Lincoln, Buick and Cadillac running just behind Lexus but ahead of Infiniti in the coveted Vehicle Dependability Survey.

Turn to Consumer Reports (www.consumerreports.org), and you can quite another picture. When they released their Most Reliable Cars list in late 2004, one American car was on the list, the Pontiac Grand Prix. The Buick Regal made it, but manufacturing of the vehicle had been discontinued. Lexus, Toyota, Infiniti and Honda dominated the list. Interestingly, BMW, Mercedes, Volvo and Jaquar made the list of "least reliable" cars more than any other manufacturers. Odd. Well, yes. But, it does appear that it depends on who is counting the votes.

Take a quick look at Edmunds (www.edmunds.com), arguably the best car site on the internet. They run a section called "Editors' Most Wanted Vehicles". You will run into plenty of American cars here. First, they gave the Pontiac Solstice the award for 2006 Most Significant Vehicle of the Year. Given all the new models that came out in '06, that is very high praise. The Dodge Charger made the sedan list, and BMW and Audi dominate the balance of that section. The same BMW that gets ripped by Consumer Reports and the same Audi that gets banged in the JD Powers survey. Weird.

Moving to the wagon section of the Edmunds editors' list, the Dodge Magnum makes it, but Audi makes this list as well. Better tell the guys at JD Powers. In the coupe category, the Mustang and Corvette make it, but so does the BWM 6 Series. In the SUV category, the Ford Explorer and Mercury Mountaineer get on the list, and so do Nissan, Toyota, Lexus and BMW. All in all, the American car holds its own with the Edmunds editorial staff.

So, why all the headlines about the death of the American car? Part of it may have to do with the way the car manufacturers are viewed independent of the quality of their products.

First, the demise of the companies and the demise of the cars themselves is not the same thing. The cost to build American cars is higher. Dr Peter Morici of the Business School at the University of Maryland published an excellent article on this topic at FinFax (www.finfax.com), an Irish business site of all places. He made the point that GM China had little problem competing with the likes of Toyota on the mainland, but the North American cost structure creates too much drag for GM to compete in the U.S. Does it mean GM does not make good, or even great cars? No, but it may mean that it doesn't have the financial structure to make them at a profit.

A survey of 140 global automotive executives conducted by the accounting and consulting firm KPMG Canada and released in January 2006 (www.kpmg.ca) found that 58% of those surveyed were growing pessimistic about the prospect of North American brands competing globally. A year earlier, the number had only been 45%.

This clearly creates a mixed message with the press. If the company is in trouble, maybe it is because the products are no good. And, maybe not.

American car manufacturers have the opportunity to "disconnect" the negative message driven by the labor costs and their pension costs from the message about the quality of their brands. It is a form of silo marketing, and it works well in a lot of other industries. For example, do people stop buying software from Microsoft because the federal government, the European Union, and a number of companies have sued it for monopolistic practices? If so, it happens rarely.

The bias against American cars and in favor of Asian cars may exist in the media, but there is also ample evidence that a number of American vehicles are viewed very, very well. Part of the problem is that headlines about a company can get confused with headlines about the company's products. That can be fixed. Does it solve all the problems of marketing American cars? No, but it's a start.

2006-02-19T09:12:00.000-08:00

In Praise of The American Car

I grew up in Detroit, well, Pontiac actually. We would never have thought of buying a car that was made outside the U.S. We owned Mustangs, and American Motors Javelin, Pontiac Bonnevilles, Ford Explorers, and my father drove Cadillacs for twenty years. When he decided to get a truck to haul around his boat, he bought a Ford F-150 pick-up.

When I was in high school, the Pontiac world headquarters was two miles away. The people who lived in Flint, Bay City, Ypsilanti, Dearborn, and Detroit itself were proud to own American cars. This was not just because we lived in the shadows of the divisional headquarters of GM, Ford, Chrysler and American Motors, or because most of our friends were employed by one of the car companies. It was because the cars were good.

This series of articles is about the American car. It is not an apologia, because so many of these vehicles are so good that they do not need one. But, it is about the cars themselves, driving them, testing them, looking at the quality surveys, and getting the comments of car owners themselves. I have been in the magazine business and have test driven cars and reviewed them. Car brands go in and out of vogue. Mercedes were considered the best cars in the world, and then their customer satisfaction started to fall. They had to play catch-up. Audi had a cult following as the best four-wheel drive vehicles in the world. It took them years to recover from the "60 Minutes" piece. Now, an A8 is one of the most prized vehicles in the world.

Take a look at the 2005 JD Powers Vehicle Dependability Survey (www.jdpowers.com). Lincoln, Buick, Cadillac, Ford, Mercury, and Chevy all rank above average. Below average, you find Mazda, Subaru, Nissan, Mitsubishi, Suzuki, and Izuzu. The scores for some of these cars are genuinely awful. In a recent article at www.cnn.com, Michael Quincy, the head of car content at Consumer Reports (www.consumerreports.org), a publication that appears to loath American automobiles, said that the quality of Ford and GM cars has improved greatly over the years.

Take a look at the Car and Driver(www.caranddriver.com) 2006 Ten Best Cars: Corvette, Mustang, and Chrysler 300. And, the Car and Drive Best Luxury Sport Utility Vehicles: Cadillac SRX, three years in a row. Best Pickup: Ford F-150.

Reputations rise and fall, and not always based on objective reality. It took David McCullough's biography of Harry Truman to put the former president back on history's pedestal.

So, we begin with the premise that there is no more wrong with the American car than the European or Japanese car, and there is a great deal right with it. The focus of this blog is to build upon that premise.