perceive them as lagging behind Japanese autos in quality and durability. GM
and Ford factories
also have long lagged behind the best rival Japanese factories in productivity.
Meanwhile, the
companies pay more per vehicle than their foreign rivals, because of the high
costs of their North American work forces.
Now the two auto giants are under enormous pressure to find a way to rebuild
SUV profits or
quickly develop models in other segments that can replace the margins they once
enjoyed on
SUVs. GM and Ford have mapped out starkly different plans for recovery.
Ford's plan depends on breaking away from the Hollywood blockbuster business
mode. To
offset lower SUV margins, the company hopes to cut its development costs enough
to make
respectable profits on a new generation of cars and crossovers. The company
concluded a few
years ago that demand for truck-based SUVs had peaked.
We couldn't have everything riding on just a few products, Mr. Ford said in a
recent
conference call with reporters. We had to change our cost structure so that we
didn't lose
money on the smaller [vehicles] The overall blend, when you add up the
total Ford lineup,
should deliver us very good profitability.
By contrast, GM is betting SUV sales will rebound next year. The company
recently delayed
work on a line of rear-wheel-drive cars. Instead said it will divert engineers
and money to
speeding up the launch early next year of redesigned versions of its largest
SUVs. GM officials
say these new versions of the Suburban and Yukon will offer improved gas
mileage and a less
truck-like ride.
In a recent interview, GM Chairman and CEO G. Richard Wagoner acknowledged the
SUV
segment won't grow as fast as it did in the past. But he said GM expects demand
to remain fairly
strong, despite higher fuel prices. Buyers of GM's large SUVs, he said, tend to
have higher
incomes and these people don't indicate that at current levels of gasoline
prices they are going
to significantly change their behavior.
A GM spokesman said yesterday that the company also plans to launch 14 new
crossover models
between now and the 2009 model year.
Complicating the challenge for GM and Ford: The growing crossover market, which
is almost as
large as the traditional SUV market, is dominated by Japanese and European auto
makers. As
those companies saw Detroit raking in profits with SUVs, they had no fast way
to get in on the
action, because they lacked high-volume truck-making operations in the U.S.
Instead, companies
like Honda and BMW AG, built SUVs on the foundations of the cars or minivans
they already
made.
Honda's successful Acura MDX crossover is derived from the company's Odyssey
minivan, for
example. Because they don't have the heavy steel frame of truck-based SUVs,
crossovers tend to
ride more comfortably and get better gas mileage.
Meanwhile, crossover vehicles like the Honda Pilot or Toyota's Highlander and
Lexus RX330
and Nissan Motor Corp.'s Murano are selling well with far smaller rebates than
Detroit's SUVs.
Write to Neal Boudette at [EMAIL PROTECTED] and Joseph B. White at
[EMAIL PROTECTED]
-Original Message-
From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] Behalf Of Christoph Reuss
Sent: Monday, July 18, 2005 9:34 PM
To: futurework@fes.uwaterloo.ca
Subject: RE: [Futurework] some really big questions
Harry Pollard wrote:
The car industry doesn't prefer to sell 12-20 mpg rolling
fortresses because they (and their buddies in the oil
industry) can make much higher profits that way.
It can sell only what people want - otherwise they go broke.
On the contrary... the profit margin for SUVs is up to $15,000 per car,
compared to a few hundred bucks for a normal car. So much money for
such cheapo and unsafe trash. That's why all car manufacturers jumped
on the SUV bandwagon -- not to go broke! (Market competition, you know.)
There are even Porsche SUVs -- basically an oxymoron, one would have thought.
It's called the market.
Yeah, eh. Guess what's the purpose of advertising ?
Image is everything. Lemmings buy what the ads are pushing.
As gas prices rise, the consumer is beginning to look
askance at the behemoths. So, the car industry will have to
sell smaller or more economical cars.
The SUV arms race on the roads will prevent that. A few SUVs on
the roads are enough -- and people will grab for the ever-bigger
calibres of rolling fortresses, for fear of being crushed.
As for gas prices, the empire will see to it that they won't rise too much.
That's what all the fuss since Gulf War I is about.
Chris
SpamWall: Mail to this addy is deleted unread unless it contains the keyword
igve.
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