United States Automakers

I remember four years ago when I was looking for my first new car once I started my career and had a decent income.  My first thought was immediately to look at foreign cars.  This was partially due to the publicly perceived “poor quality” of American cars.  Chiefly, however, this was due to me thinking that American cars were out-dated, uncomfortable to drive, and generally simply not a product I wanted to buy.  At that time if I had to rank them, I would have put Chrysler as the worst (crappy quality *and* I didn’t like them), GM in the middle (ok quality, but very uncomfortable to drive and just not fun), and Ford at the top (of the shit heap… better vehicle design overall, but still crappy quality).

It was at about this time that the US carmakers figured out that they needed to fix their business.  They were all losing money hand over foot and sales volume didn’t make up for crappy profit margins.  So what did they do?

Chrysler did nothing.  They got new management and new ownership, but the company pretty much stayed the same.  They couldn’t re-negotiate with the union workers and they couldn’t increase the quality of their vehicles.  Their quality stayed the same, they introduced a few new models but people didn’t buy chrysler because they love chrysler, they bought it because it was cheap.  If they had raised prices noone would buy because there’s nothing about a chrysler vehicle that makes you say “damn I want that” except maybe their specialty sports cars which have a tiny customer base.

GM tried to turn around its image without changing its cost structure.  They added new “features” to cars and tried to become on par with other manufacturers in terms of MPG and other supposed purchase triggers.  Still, nothing stands out about GM cars and people go to them as a cost-effective alternative to “better” manufacturers.  With low prices, advanced features, and very high manufacturing costs, GM just didn’t know how to make money.  They still don’t.

Enter Ford.  Ford figured it out.  They changed *everything*.  They dropped all the shitty models that didn’t work, completely re-designed the ones that did, and introduced vehicles that their american competitors didn’t have answers to.  They managed to make high quality vehicles with plenty of “features” and at the same time figured out how to lower their manufacturing costs.  They are posed this year to break even *without government help* and start to be profitable again by FY2011.

What does this tell us?  It tells us that Chrysler and GM should be left to fail.  These companies don’t know how to make money.  Chrysler has nothing to offer, let them die.  GM has the Volt technology which is fantastic.  Let Ford (or some foreign company) buy that off of them to offset some of their debt and LET THEM DIE.  New companies can spring up from the ashes; other companies can swoop in and buy up the assets.  People still need cars, so the economy will fill the void, but let the companies we know as GM and Chrysler DIE a nice easy death without mortgaging them with extreme amounts of taxpayer dollars.  Ford has figured it out, they *deserve* to win and they didn’t need help.  As a very loud and proud Hyundai owner, my next car will probably be a Ford.