GM, Ford's Best Model Lineup in Years Fails Again to Win Buyers
http://www.bloomberg.com/apps/news?pid=20601109&sid=aHKjnUQhQcbY&refer=home
Jan. 3 (Bloomberg) -- General Motors Corp. and Ford Motor Co. just
wrapped up one of their best years for vehicle quality and critical
acclaim -- and one of their worst in sales.
Motor Trend magazine yesterday ranked GM Chief Executive Officer Rick
Wagoner No. 1 on a list of 50 auto-industry influencers, ahead of Toyota
Motor Corp. Chairman Fujio Cho, and earlier named the Cadillac CTS as
car of the year. 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.''
Today's U.S. sales reports underscored the struggles at the biggest U.S.
automakers. A 12 percent sales drop for Ford in 2007 capped a seventh
straight annual decline, while GM posted its eighth annual drop. Toyota
and Honda Motor Co. 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
totaled $14.6 billion in 2006.
The cash has helped the automakers produce critically acclaimed models
such as the Chevrolet Malibu sedan from GM and Ford's Edge sport-utility
vehicle.
``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 labor contract with the United Auto Workers.
`Tired'
``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 favor 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 in an interview
on Bloomberg radio.
Succeeding in those changes means building better vehicles as well as
overcoming buyers' more-favorable views of Toyota and Honda brands,
which have led U.S. quality and safety measures for much of the last
decade and dominated ratings such as those in Consumer Reports magazine.
Top Brands
In June, Ford had four of the top 10 brands in the annual Initial
Quality Study from J.D. Power & 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'
``Stay tuned because that plan is coming together,'' he said.
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 U.S. 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, globalize and make money at the
bottom end.''
``They're making a very valiant attempt,'' David Cole, chairman of the
Center for Automotive Research in Ann Arbor, Michigan, said of U.S.
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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