GM, Ford's best model line-ups fail to attract buyers
General Motors and Ford Motor just wrapped up one of their best years for vehicle quality and critical acclaim - and one of their worst in sales.
By Bloomberg |
MICHIGAN: General Motors and Ford Motor just wrapped up one of their best years for vehicle quality and critical acclaim — and one of their worst in sales. Motor Trend magazine on Thursday ranked GM chief executive officer Rick Wagoner No. 1 on a list of 50 auto-industry influencers, ahead of Toyota Motor. Ford had the most vehicles in history selected as a “top safety pick” in 2007 by the Insurance Institute for Highway Safety.
“GM and Ford have really gotten into the game,” said analyst Jack Nerad at Irvine, California-based Kelley Blue Book. “The big question is will the American public give the domestic automakers another chance? I think the jury is still out.” A 12% sales drop for Ford in 2007 capped a seventh straight annual decline, while GM posted its eighth annual drop.
Toyota and Honda logged their 12th and 14th consecutive annual sales gains, respectively.
GM sold more than $21 billion in assets and Ford pledged collateral for everything from its plants to the trademark Blue Oval logo to raise $23.4 billion to pay for new models amid losses at the companies that totalled $14.6 billion in 2006. The cash has helped the automakers produce critically-acclaimed models like Chevrolet Malibu sedan from GM and Ford’s Edge SUV.
“They’ve done some nice things, too, to try and turn their North American businesses around,” said Pete Hastings, a fixed-income analyst at Morgan Keegan in Memphis, Tennessee, citing cuts in capacity and a new labour contract with the United Auto Workers. “They’ve also come out with some new models that are well accepted,” Hastings added in an interview with Bloomberg radio. “Trouble is the consumer is tired and under a lot of stress.”
Both Ford and GM predicted a 2007 decline as they sold fewer discounted models to rental-car companies and cut rebates to consumers in favour of lower prices. The automakers also broke with a longstanding tradition of increasing incentives when sales softened, opting instead to shutter factories. “It was certainly not a great year on the sales side, but on the structural side there was a lot of movement,” Michael Robinet, an analyst at CSM Worldwide in Northville, Michigan, said.
Five of the company’s vehicles, including the Edge and Lincoln MKX, earned a “top safety pick” designation from the Insurance Institute for Highway Safety, an Arlington, Virginia-based trade group.
Models like the Ford Taurus sedan, which Kelley rates as an affordable, good-quality vehicle, “don’t seem to be clicking with buyers,” Nerad said. “The perception of poor quality was established over a long period of time, and now they have to get people into the dealerships again,” he added.
“There’s a whole litany of reasons why customers can trust Ford,” worldwide marketing chief Jim Farley said today on a conference call. Farley, hired last year from Toyota, said his job is to erase a gap between Ford’s quality and buyers’ perceptions. “Stay tuned because that plan is coming together,” he said.
A Toyota victory is “probably going to be the end result, but GM is probably looking at the bottom line,” Robinet said. The automaker is “continuing to work the operations, globalise and make money at the bottom end.”
“They’re making a very valiant attempt,” David Cole, chairman of the Centre for Automotive Research in Ann Arbor, Michigan, said of US automakers. “They’re like the phoenix rising from the ashes. The basic issue is will the old guard fade away or change to compete with the new entrants?”
“GM and Ford have really gotten into the game,” said analyst Jack Nerad at Irvine, California-based Kelley Blue Book. “The big question is will the American public give the domestic automakers another chance? I think the jury is still out.” A 12% sales drop for Ford in 2007 capped a seventh straight annual decline, while GM posted its eighth annual drop.
Toyota and Honda logged their 12th and 14th consecutive annual sales gains, respectively.
GM sold more than $21 billion in assets and Ford pledged collateral for everything from its plants to the trademark Blue Oval logo to raise $23.4 billion to pay for new models amid losses at the companies that totalled $14.6 billion in 2006. The cash has helped the automakers produce critically-acclaimed models like Chevrolet Malibu sedan from GM and Ford’s Edge SUV.
“They’ve done some nice things, too, to try and turn their North American businesses around,” said Pete Hastings, a fixed-income analyst at Morgan Keegan in Memphis, Tennessee, citing cuts in capacity and a new labour contract with the United Auto Workers. “They’ve also come out with some new models that are well accepted,” Hastings added in an interview with Bloomberg radio. “Trouble is the consumer is tired and under a lot of stress.”
Both Ford and GM predicted a 2007 decline as they sold fewer discounted models to rental-car companies and cut rebates to consumers in favour of lower prices. The automakers also broke with a longstanding tradition of increasing incentives when sales softened, opting instead to shutter factories. “It was certainly not a great year on the sales side, but on the structural side there was a lot of movement,” Michael Robinet, an analyst at CSM Worldwide in Northville, Michigan, said.
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Succeeding in those changes means building better vehicles as well as overcoming buyers’ more-favourable views of Toyota and Honda brands, which have led US quality and safety measures for much of the last decade and dominated ratings such as those in Consumer Reports magazine. In June, Ford had four of the top 10 brands in the annual Initial Quality Study from JD Power and Associates of Westlake Village, California. A year earlier, Jaguar was the only top 10 finisher from the Dearborn, Michigan-based automaker. Five of the company’s vehicles, including the Edge and Lincoln MKX, earned a “top safety pick” designation from the Insurance Institute for Highway Safety, an Arlington, Virginia-based trade group.
Models like the Ford Taurus sedan, which Kelley rates as an affordable, good-quality vehicle, “don’t seem to be clicking with buyers,” Nerad said. “The perception of poor quality was established over a long period of time, and now they have to get people into the dealerships again,” he added.
“There’s a whole litany of reasons why customers can trust Ford,” worldwide marketing chief Jim Farley said today on a conference call. Farley, hired last year from Toyota, said his job is to erase a gap between Ford’s quality and buyers’ perceptions. “Stay tuned because that plan is coming together,” he said.
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For GM, the Chevrolet Tahoe Hybrid SUV, Malibu, Buick Enclave SUV and Cadillac CTS were also named finalists for the North America Car and Truck of the Year Awards to be announced later this month. GM won both the truck and car recognition in the journalist-run program last year. GM’s decline in the US probably will help end its 76-year reign as the world’s largest automaker, Robinet said. Toyota outsold GM in 2007’s first half before the Detroit automaker regained the global sales lead in the third quarter. A Toyota victory is “probably going to be the end result, but GM is probably looking at the bottom line,” Robinet said. The automaker is “continuing to work the operations, globalise and make money at the bottom end.”
“They’re making a very valiant attempt,” David Cole, chairman of the Centre for Automotive Research in Ann Arbor, Michigan, said of US automakers. “They’re like the phoenix rising from the ashes. The basic issue is will the old guard fade away or change to compete with the new entrants?”
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