Jeremiah 29:11

Looks like it will take American boldness to beat the asian car manufacturers


Market, outlook, 'revolution' from CEO who knows

Bob Golfen
The Arizona Republic
Sept. 23, 2006 12:00 AM

Mike Jackson, CEO of AutoNation, the largest U.S. auto retailer, was in Phoenix recently to meet with the employees of the corporation's 15 Arizona dealerships.

The corporation, based in Fort Lauderdale, Fla., has 270 dealerships in the United States and nearly $20 billion in annual revenue.

Jackson offered his views about the automotive marketplace and the outlook for the 2007 model year.



What's changed for U.S. auto sales?

"The American consumer has more choices than ever before. They're king and queen today.

"We've gone from offering on our showroom floors six or seven years ago about 700 distinct models to 1,500 today from the same seven vehicle manufacturers. Where models used to be in production for seven, eight, nine years, now they're changed every three or four years. So it's been a product revolution in both configuration and innovation.

"It's really the product revolution that has kept the industry in the high 16 million sales range for seven straight years."



Is General Motors doomed?

"The world looks different today for GM than it did a year ago, and a year from now, it may look very different again. My sense is we're in a period of transition. I think they're going to make it the rest of the way. The new generation of trucks is outstanding.

"Chevrolet is one of the great brands in America, period. It sells everything from the (South) Korean Aveo to the Corvette and everything in between. It's an unbelievable brand."



How about Ford?

"Ford was conservative in its design at the same point that consumers had more choices than ever. They missed that shift in the marketplace where . . . in order to stand out in a very big Miss Universe contest, you'd better use bold design to stand out.

"They're a little late coming to the party, but products like the Fusion and the Edge have really resonated with consumers."



What's happening with sport utility vehicles?

"The impact on sport utility vehicles is very much created by the arrival of crossover SUVs. It's simply a better concept for most people. You get the ride, comfort and handling of a car, easier to get in and out of, a more refined fit and finish.

"The coolness factor of SUVs has gone away. People who need a sport utility will continue to buy it. If you don't need that ruggedness, off-road capability, that towing capability, you're going to buy a crossover."



Pickup-truck sales have faded. What's happening there?

"Pickup trucks and their decline are directly affected by adversity in the economy. This is the workhorse of America, and declining sales is an indication of stress in the economy. Everybody knows there will be a slowdown in housing, and all these construction people are saying, 'It's time to play it safe.' People can postpone."



Compact-car sales are on the rise. Is that just because of higher gasoline prices?

"You have exciting new concepts in small cars. From 10 years ago, econoboxes have gone from an ugly, noisy cheap disposable to the very sophisticated, refined products of today, and at the right price point.

"Look at the transformation of the (Dodge) Neon to the Caliber. Better solutions to meet consumer needs are what resonate."



Many people in their 20s and 30s are mistrustful of U.S. brands, preferring products from Asia and Europe. How can the domestic brands change those views?

"It's all about product. If you can design product that's bold enough and strikes an emotional chord, you can get young people back. What's a vehicle that's done that? Chrysler 300. It was just a product that broke through and people said, 'I just have to have it.'

"Mustan

RLSH700

The interesting thing is if you take a look at the rate of consumer loyalty to brands. It is practically gone, around 10% of the U.S. population is loyal to a brand.

It is going to take more than boldness to beat the Japanese. The U.S. manufactures need to try to benchmark the Japanese in the mid-sized, compact, car-based SUVs, and other markets that they are doing better than the U.S. manufactures are doing. They should continue to make the large car and muscle car segments bold. Then they can have the best of both worlds.

Jeremiah 29:11

Having a good looking and a reliable car would go a longs way toward customer loyalty.

RLSH700

It would help, but it appears to be a trend sadly. I don't understand why people aren't loyal to their brands. I stick with my brands regardless of what happens. "If it isn't broke, don't fix it."

awsure

Loyalty only goes so far. Unless you constantly try to get better, innovate, and produce what people want you do not deserve loyalty. Unfortunately, that's where the big three find themselves. When I worked at Alamo (~15 yrs ago) we rented the Camry and Maxima alongside the Oldsmobile Ciera and Buick Century. Hopefully it's not too late for them to right the ship but they have a difficult task ahead. I appreciate & value loyalty but it must be earned and re-earned every day in the marketplace.

RLSH700

I know where your coming from. The Olds Ciera is one of the biggest tasteless, uglyest, most boring, undesirable pieces of junk I have ever had the displeasure to drive. Don't get me started I still have a lot of hatred built up against that stupid maroon Junkmobile Ciera. The difference is I won't drive junk.

The Big Three during that time had plenty of cars that were more desireable than those two pieces of... okay I'll move on. You just avoid the cheaper, inferior models and get the ones that are actually worth having. For example, I would never buy any of the Stratus sedans due to I question the reliability, that is why I have an Intrepid instead. The Intrepid is a much better vehicle than the Stratus is. The W-body cars are better than the Ciera and Century. The Taurus used to be somewhat good before they benchmarked the design against a catfish.

The thing is overall domestic cars are getting better all the time. The Fusion (even though I think it looks too much like the Tempo) is a big improvement over the Taurus. The G6 is a huge improvement over the Grand Am. The Grand Prix is getting faster and has nicer interior everytime you turn around. The upcoming Avenger sedan and new Sebring sedan is a huge improvement over the previous models, so much better that I might consider getting one as a beater, it is getting to be as nice as the Intrepid. The Charger sedan (despite the fact that I wish it was a coupe) is really a nice car. I still have it on my list. The interior of the new Caliber is way better than the Neon (but I hate everything else about it). The new Saturn Aura is a huge improvement over the shotty L-series. The Caravan is way better than the earily 90s model.

Also the Japanese are not all they are made out to be. The 97-2001 or 2002 Camry's and many other cars from their line-up have oil sludge problems. The new Camry's had to have their transmissions recalled due to reliability problems and I have read the Avalon has had its share of transmission issues as well. According to msn, the mid-90s Camrys had problems with just about every system. Honda has had its share of transmission problems and A/C issues, and their engines haven't beeen exactly flawless. Nissan has had issues with their I4 line in their cars, as well as electrical, transmission, and drive-train issues with some of their SUVs and trucks.

The European manufactures have huge quality issues these days. Also the interior that they are offering is pathetic. Chrysler's leather in the Pacifica, 300C, and several other models is nicer than the junk they are putting in their Mercedes models. It feels rough and stiff, something I would expect from Pontiac. The fit and finish of some of these cars that I sat in at the St. Louis autoshow was just disgraceful, even for Chevrolet standards and that isn't saying much.

awsure

I agree that U.S. automakers are turning the corner and getting better (heck...Challenger is a great example of that). Ongoing competitive pressure has forced them to produce a great product people want. The landscape has changed...there will never be a Big Three again. Probably be at least 8-10 major mid market producers along with a fair measure of niche vehicle producers selling low volume-high margin stuff. I think you'll find the smarter companies remove the focus off from market share to a degree and concentrate on delivering highly sought after products at better margins. Alot of positive signs of life from domestic automakers for sure...hopefully they can remain viable as a couple of them have major financial issues to overcome in the next couple years.

RLSH700

I agree that the Challenger is definitely a sign of improvement. I disagree that there will be 8-10 major mid market producers. I think it will be at most five. GM, Ford, DCX, Toyota, Honda. Nissan I think is either going to merge with GM, or they are going to go down the toilet. They are ruining the things that made them popular. They are putting all their eggs in one basket with those stupid CVTs. They don't offer any real advantages. They sound good on paper and that is it. The new Altima looks too much like the old model, and it looks a little weird with making it smaller. They don't have a model that will compete in fuel economy. The Maxima looks the same and also has a stupid CVT. The Titan and Pathfinder Armada has some serious reliability issues. Their I4 line is screwed up. Nissan I think is going to go the way of Mitsubishi (was once popular but now struggling to survive).

Mazda offers a good line-up, the thing though is Ford holds a huge stake in them. BMW I don't think is going to be that competitive because all they make are luxury cars and I doubts MG is really going to fulfill a full car line-up. VW has been having problems for years due to their terrible reliability in all of their companies and divisions. Who is really left after this?

I think the Big Three are turning themselves around, granted I think I could do a better job at it. Between the japanese and the U.S. manufactures, I would actually rather be in the U.S. manufactures shoes because I believe they are going to turn around and I believe Toyota's days of heading towards #1 are limited.