“The sooner GM gets taken over by Toyota, the better off our country will be.”
— Tom Friedman, NY Times, May 31, 2006
There 's no doubt that the American automotive industry is in serious trouble these days, and it's not just because U.S. automakers are losing market share — and billions of dollars — to the Japanese. That single sentence from Tom Friedman's long rant against General Motors and domestic manufacturers in general points to an even bigger crisis — one based solely on misperceptions.
Friedman, who dubbed GM a “crack dealer” for offering free gas to light-truck buyers, misses a huge fact in his contention that domestic automakers are burdening U.S. consumers with gas guzzling vehicles: Japanese trucks are no better.
Sure, Honda's Civic sedan and Toyota's Camry get great gas mileage — 30 city/38 highway and 24 city/34 highway respectively, averaged out among the different engine packages. But look at their bigger vehicles and that changes radically. Honda's Odyssey minivan — its biggest vehicle — gets 20-city/25-highway on average, while Toyota's big-daddy Tundra pickup gets 15-city/18-highway. Not fuel sipping numbers by any stretch of the imagination.
Why is that important? Look at Chevrolet, for example. Its Uplander minivan gets 18-city/22-highway while its long-bed 4WD Sierra 1500 pickup gets 15-city/20-highway, making Toyota a fellow “crack dealer” too by Friedman's logic. In fact, GM builds 14 different vehicle models that get over 30 mpg on the highway; more than equal to the number of gas-sipping models Toyota and Honda produce.
The real rub, I think, is the persistent belief that American-built iron doesn't measure up. Even President Bush piled it on with his now-famous jibe in rejecting a bailout for domestic automotive manufacturers thatand GM needed to build “more appealing cars.” That stings, especially for guys like me who not only believe in American cars and trucks, but know just how far they've come in terms of quality, reliability and longevity.
I talked to George Kilroy, CEO of leasing giant PHH Arval — which manages 625,000 cars and light trucks — about this negative perception of U.S. cars. “They aren't that bad, really,” he contends. “But there's a history with them. That's why we're still seeing discounts out there — and [the discounts] are why the bulk of our fleet are still U.S. brands.” Despite the discounts, 8% of the PHH Arval fleet is foreign cars.
U.S. cars are also starting to outrank their foreign competitors in terms of quality. J.D. Power's research shows that in 2005 U.S. brands made a strong showing, with Lincoln, Buick, and Cadillac holding the number three, four, and five spot respectively, with Ford at number 12 and Chevrolet at number 13. Overall, according to J.D. Power, Ford and GM average reliability totaled 211.9 in 2005, while Japanese brands averaged 236.9. Not a bad showing at all.
But it's the baggage holding Detroit back. Kilroy and I agreed on that. Too many bad experiences with poor quality and even more wretched service seem to have turned a lot of consumers off to U.S. brands for good.
And for light trucks, U.S. brands are the only ones offering a diesel option in this segment — International's PowerStroke for Ford alongside GM's Duramax — and they are holding up well. But Toyota's Tundra, Nissan's Titan, and even Honda's Ridgeline are getting more attention on the gasoline side of the market. If they get diesel options, competition could be tighter.
The question automakers must answer is simple: Did they turn the corner with enough time left on the clock? That remains to be seen. I, for one, am betting they have — and that Friedman will have to eat a lot of crow.