The Real Challenge for American Car Manufacturers
It seems that most people have yet to notice, but American car companies are back. Well, not necessarily back financially, but for the most part, they’re back to building world class vehicles. Certainly, there are few cars waiting for their refresh or to be dumped and many cars and even brands have simply been removed from the scene. The new stuff coming out of Detroit, though, is really very good and, for the most part, cheaper than anything shipped to US shores.
As it turns out, though, building new world class cars was the easy part for the American manufacturers. Projecting that reality to the buying public, however, is going to take a very long time. And long-term thinking is just not an American business strength.
A couple of weeks ago, I was meeting with a couple of young entrepreneurs who were both planning new car purchases to accommodate their expanding families. I asked what cars they were looking at. Their answers . . . Honda, Toyota and Nissan SUVs with a BMW or Audi as a long shot. I asked if they had considered an American car. I got blank stares. I said that there were some really nice new small SUVs offered by Chevrolet and Ford. More blank stares. I told them that I had purchased one earlier in the year. Polite, but uninterested body language. I said that the gas mileage was great, it had more interior room than its competition, the safety ratings were the same as the cars they mentioned and after 11,000 hard city miles, the car was tight and solid. Maybe some slight interest, but I may have been imagining it. I then said that the car cost about $5,000 less than its direct Japanese competition and was $10,000 to $15,000 less than its German competition. They responded, “yeah, I’ll have to look into that,” and went to discussing the Japanese and German cars.
I have to assume that if the American companies continue to produce great cars at lower prices, eventually, the buyers will come. Clearly, the companies are going to have to be patient, though. When Lexus entered the US market, no one thought that anyone would buy a high-priced, “luxury” Toyota. At first, few did. Toyota knew this – they knew that it would take a very long time to be considered an equal with the worlds’ best vehicles in that class. The costs must have been tremendous, but they stuck with their plan and we all know the outcome. The American auto manufacturers will need similar planning, patience and stick-to-itiveness.
Keep pumping out great cars at good prices, Detroit. Eventually, the buyers will come.
Note: there is some indication that the tide is already turning. According to the cars.com blog, KickingTires, Buick is currently outselling all luxury brands in the US except BMW (they are forecasted to beat BMW too by year’s end) with only four cars in their lineup and 73% year-over-year unit sales growth in February.