August 03, 2005

US Car Companies

If American auto producers would stop worrying about 'employee discount' schemes and start fixing themselves, then they'd be in good shape. As it stands they're pricing themselves out of business. Ford, GM and Chevy are all now in a price war. By focusing their advertising more and more on prices, they're not earning the prices they do charge. If all you're talking about is how cheap your cars are, then why shouldn't the cars be even cheaper in six months? They need to earn the prices they do charge instead of only charging less. If I just wanted a cheap car, I'd buy a Geo Metro or something.

US manufacturers have long been struggling in many car markets, including compact pickups, but now they're having trouble competing with Japanese models even in full-size pickups. Ford dominated the roads, not just in pickups but with its pickup being the most common of any car type. Now there's real competition from Japanese models.

More than that, auto manufacturers need to look long term at being freed from inflexible structures of the past. Pension agreements and union rules are burdening the airline industry and the auto industry. The Japanese have a lot of structural problems that burden them with inefficient practices, but good designs go a long way.

The US automative industry has a lot of factors in its favor, but without some creativity and flexibility, they're going to continue fighting more and more difficult price wars.


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