By on October 13, 2010

According to our latest sales data, the Detroit Three have enjoyed something of a comeback relative to the “foreign” competition this year. And though it’s not clear how long that trend will last, the media is catching the Detroit-boosting bug again.  The NYT’s Bill Vlasic epitomizes the mood, focusing on improvements in GM and Ford’s products in a piece titled American Cars Are Getting Another Look. Between IQS score improvements and anecdotal evidence of consumer interest in Ford and GM’s “gadgets” and “value,” Vlasic’s sidekick, Art Spinella of CNW Research, forwards an interesting theory for the death of the “perception gap” (a construct he helped create, by the way):

Ford has become almost the ‘halo brand’ for G.M. and Chrysler. Because of Ford’s success, people are less resistant in general to considering all of Detroit’s products.

Well, that’s not the dumbest thing ever said about the destruction of the perception gap… but it sure is a head-scratcher. Did Nissan and Honda just spend the last several decades skating by on Toyota’s sterling reputation (RIP)? Still, it might be interesting to hear Ford’s perspective on all this.

Sure enough, Ford’s Jim Farley tells Vlasic that the bailout was basically responsible for bringing Ford’s product improvements to the public eye. In the frantic days of debate over a possible auto bailout, argues Farley, something changed.

For the first time in many years, Americans debated the value of our industry. When the crisis happened, they started to notice that we were doing things differently and our cars had gotten a lot better.

Of course it helped considerably that Ford was the one company not receiving billions in TARP money from the government. But if Ford’s image benefited from being the conspicuous exception to Detroit’s bailout binge, how are GM and possibly Chrysler piggy-backing off of Ford’s image-boost now? After all, it’s not like these firms have paid taxpayers back yet.

The answer, if there is a definitive one, may well be found in a recent piece by The Atlantic’s business and economics editor, Megan McArdle. A libertarian-oriented commentator who admits to having opposed the bailout, McArdle traveled up to Lansing to watch Buick Enclaves being built. Her epiphany reflects a shift in perspective that has slowly emerged in a number of anti-auto-bailout commentators (er, both of us):

In the end, the bailout will probably cost voters a lot of money, and worse, more money than it had to. And there are all sorts of questions about whether other companies will be tempted to seek a government bailout, or whether the cost advantage that GM gained in bankruptcy might put pressure on other manufacturers’ margins, ultimately forcing them to follow suit.

On the other hand, had the government not stepped in, the GM liquidation would arguably have deepened the recession—not tumbled us into Great Depression II, as some more-hysterical bailout supporters claimed, but raised the unemployment rate and lowered GDP somewhat. A libertarian economist of my acquaintance recently confided that he thinks the bailout has been surprisingly successful—“not necessarily a good idea, but far from the worst thing the administration has done.”

After spending a few days in Detroit, this assessment strikes me as about right. The bailout wasn’t a good idea, and it will probably cost billions. But the government wastes billions of dollars every year, because for the United States, $1 billion adds up to the equivalent of less than one venti latte per American. At least in this case, we got something in return: a functional car company, resurrected from the ashes of the old GM’s bloated carcass. Americans probably won’t notice the few extra dollars they spent on the bailout. But they may eventually be glad when another shiny new Buick Enclave rolls off the Lansing assembly line, and into their driveway.

Which goes to show how far the erstwhile anti-bailout crowd has come on the role of consumer choice. For the sake of contrast, I predicted (in the height of bailout-debate mania) that GM’s relationship with consumers wouldn’t change post-bailout because it

has singularly failed to understand that the classic American narratives of rebirth and redemption begins with a dark night of the soul– not a trip to DC to ask Santa for a multi-billion dollar bailout.

But perhaps this distinction has been lost to most Americans. After all, most of the products credited with improving GM’s overall quality were on the market by the time the bailout went through, and once invested their manufacturer, taxpayers would be more likely to consider buying them. Especially when, as McArdle notes in her piece,

Jack Baruth, a reviewer on thetruthabout cars.com, recently wrote, “[The Chevy Cruze is] well-positioned against the Civic and Corolla. I believe that it beats both of those cars in significant, measurable ways.”

Certainly building cars that meet with the approval of respected independent reviewers like Jack will tend to make consumers more interested in their cars. Meanwhile, the argument that “things would have been worse” without the bailout takes a lot of the air out of lingering political opposition to GM. But with a GM IPO on the horizon, the final bill still has yet to be reckoned. And as the latest round of Volt hysteria has proved, GM still likes to use its political persecution syndrome as a PR crutch… and cudgel.

If Ford has overcome its image issues, and Chrysler is still dying by the side of the road (for now… it can’t enjoy a “perception gap” until more of its vehicles are actually better than people think they are)), GM is the dramatic figure, still struggling through the doors of perception. Depending on the value of its IPO, the amount taxpayers are finally paid back, and the path GM’s PR team treads between now and final payback, real improvements in the quality of its cars might not translate into improved market share. Certainly ham-handed attempts like “Payback-gate” won’t help. In fact, other than continuing to relentlessly improve product, GM’s biggest challenge is figuring out a way to address the bailout honestly, while taking advantage of the intellectual shift mapped by McArdle. Though consumers are learning (and liking) more about improvements in GM’s products, they’re still struggling to love The General.

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55 Comments on “Is Detroit’s “Perception Gap” Dead?...”


  • avatar
    TrailerTrash

    GM is huge.
    I am trying to think of all their models that might be helping their image.
    The Buicks?
    Maybe.  After all, there is a lot of money being spent to tell the story and I think they are at least not bad.
    The Camaro? Seems like to small an audience.
    The Cruze? It hasn’t even been sold.
    The Volt?
    The CTS?
    Silverado?
    There doesn’t seem to be very many choises in the entire GM garage to make a dent.

    • 0 avatar
      ash78

      Malibu probably accounts for 80% of it on volume alone. The fact that GM can finally build…er, import…er, re-engineer a decent midsize sedan speaks volumes to the largest part of the market.
       
      And their trucks have never really faltered in quality perception (among people who don’t have urinating Calvin bumper stickers), so at least they had that carrying them through.

    • 0 avatar
      TrailerTrash

      damn…your right!
      I forgot about the Malibu.
      And it is a very good car.
      Enough so with its numbers the effect over all is felt.

    • 0 avatar
      bd2

      GM can’t keep up w/ demand for the Equinox/Terrain, as well as their Lambda CUVs, the Acadia/Enclave/Traverse.

      The SRX has been a success for Cadillac as well.

    • 0 avatar
      th009

      After another Camry daily rental this week, I can honestly say that I’d rather drive a Malibu any day of the week.  Maybe even twice on Sundays.  I haven’t looked at any reliability data, but the Malibu drives better, and has a far better interior.  (Even the Impala interior beats the Camry, but let’s not mention the handling.)
       
      The Fusion is competitive with the Malibu, but the videogame-like instrument panel (what’s with the multicoloured gauges?) is a big turn-off for me.

    • 0 avatar
      geeber

      The Malibu is one new Detroit car that hasn’t impressed me too much…the interior looks cheap upon close examination, and does not feel terribly sturdy.

  • avatar

    “struggling to love The General”? Ed, there’s widespread and rampant, justified hatred out there my friend. this current bunch has no better chance of stopping market share from sliding than the last bunch of bobsledders.

  • avatar
    obbop

    Stick to pickles, Vlasic.

  • avatar

    Second tier Japanese manufacturers absolutely benefitted from Toyota’s reputation.
    I’ve personally been in favor of the GM bailout, and feel that it has gone better than expected so far. At this point I’m even willing to give Chrysler the benefit of the doubt.
    That said, I do fear that GM will too readily pretend that the whole thing never should have happened, that it wasn’t really needed, and even that it never actually did happen. As discussed in my review of Ingrassia’s Crash Course, I don’t think that they’ve undergone the needed cultural revolution.
    To check how various cars are actually doing in reliability:
    http://www.truedelta.com/car-reliability.php

    • 0 avatar
      ajla

      Second tier Japanese manufacturers absolutely benefitted from Toyota’s reputation.
       
      +1

    • 0 avatar
      niky

      I agree with this. The mantra for the longest time has been: “Anything Japanese over anything American.” Even if it is “merely” a Nissan or an Isuzu or a Mitsubishi…
       
       

    • 0 avatar
      John Horner

      “Second tier Japanese manufacturers absolutely benefitted from Toyota’s reputation.”
      Absolutely correct. Two decades ago many US buyers came the conclusion “Japan=good, US=bad”. They then went out and bought Isuzu, Mitsubishi, Suzuki and Diahatsu products only to discover that it wasn’t quite so simple as just considering the nation of origin!

    • 0 avatar
      TrailerTrash

      Michael, I have never been in favor of the government picking industires over others to succeed.
      This grinds at my belief of equal protection under the law.
      But EVEN if it’s wrongly justified, how can it be allowed what union contract give-backs for these bankrupted and now government involved companies have advantages over these that did not get the concessions?
      Not just here, it is even worse in the banking bailout madness. Banks having played the big part in this crisis get bailed while smaller banks are deemed to small to help.
      Madness,
      Simply madness.

  • avatar
    ajla

    Did Nissan and Honda just spend the last several decades skating by on Toyota’s sterling reputation (RIP)?
     
    yes.
     
    Just like how many European manufacturers/vehicles benefit from BMW’s sporting credentials.

    • 0 avatar
      joeaverage

      I don’t know what else you want a Honda to do. I drive a 207K mile Honda with one failure – the radiator. Previous Hondas have gone on to last up to 325K miles. I think they are doing a fine job of making their own reputation for reliability.

  • avatar
    gslippy

    Megan McArdle’s quote “…because for the United States, $1 billion adds up to the equivalent of less than one venti latte per American” is misleading.
     
    The GM bailout cost over 50 “venti lattes” per American, or really about 150 of them per taxpayer.

  • avatar
    gslippy

    Ford has become almost the ‘halo brand’ for G.M. and Chrysler. Because of Ford’s success, people are less resistant in general to considering all of Detroit’s products.
     
    This theory has merit, although GM’s steadily declining market share shown in the accompanying image doesn’t support it.

  • avatar
    bomberpete

    Second tier Japanese manufacturers absolutely benefitted from Toyota’s reputation.
    +2 – I can tell you from experience that Mitsubishis were sold as “Japanese-brand” cars and trucks, which was code for Toyota/Honda, aimed mainly to people who didn’t trust the Big Three and couldn’t afford/get credit from Toyota or Honda.
     
     

  • avatar
    aspade

    Even a venti latte is pretty expensive when you put it on the credit card and make the minimum payment forever.
     

  • avatar
    jacob_coulter

    I would argue though that the overwhelming majority of Japanese cars do have Toyota-like quality, it’s not merely a “halo” effect.
    Honda, Subaru, Nissan, Lexus, Infiniti, Isuzu, Acura,  etc. have a consistent record of quality above the Big 3.  You can check a Consumer Reports for the last 20 years where they rank brands and GM and Chrysler are usually at the bottom of that list in terms of quality.  Ford has done better in the last few years, but it’ still not above the majority of “Japanese” brands.
    The brands that are in the “gray area” are probably Mazda and Mitsubishi (DSM), and I believe a big reason for that is their use of UAW labor in their American factories.
    That doesn’t mean every car follows this pattern, but if you look at all the data, there’s a clear trend with respect to which brands have a better record for quality.  It’s clear to me that Japanese manufacturing places a larger priority on quality, and that is why consumers have a better perception of their products.

    • 0 avatar
      bd2

      Otoh, Ford’s initial quality record for the past couple of years has trumped that of Toyota, etc.

      Mitsu’s and to a lesser extent, Mazda’s, inferior quality/reliability has less to do w/ their use of UAW labor and more to do w/ their overall corporate handling of quality.

      Mitsu, in particular, has a bad reputation for quality/reliability in JAPAN due to cover-ups of faulty components which had led to injuries/deaths.

      Also, it’s no coincidence that Hyundai’s and Kia’s reliability started to rise when they stopped using Mitsu (Hyundai) and Mazda (Kia) sourced components.

      Also, for the past 5+ years, Nissan has been fairly middling w/ regard to reliability.

    • 0 avatar
      jacob_coulter

      According to Consumer Reports, Ford was nowhere NEAR the total quality of Toyota, it placed in 11th place of the major automakers, while Toyota placed 3rd:
      http://www.consumerreports.org/cro/cars/new-cars/buying-advice/who-makes-the-best-cars/overview/
       

    • 0 avatar
      geeber

      I don’t doubt that Ford’s overall quality has improved – our 2005 Focus SE has given us no major problems with over 110,000 miles of hard use on the odometer – but I don’t place much stock in initial quality ratings.

    • 0 avatar
      FJ20ET

      Toyota, Honda, Nissan, and (yes) Mitsubishi all make solid cars. Mitsu’s are a good buy. The negative rep from the DSM’s(while deserved) has made their offerings very cheap. You can get a pretty solid car for not that much money from Mitsu, especially if it is used. Mitsubishi mishandling of the last 15 years has caused them much grief. To think, they used to be the #3 car manufactuer in Japan, and had a huge presence in most of asia.

      Mazdas, Suzukis, Subarus, and Isuzus were always second-rate automobiles, even in their own market. They are not particulary reliable cars.

    • 0 avatar
      niky

      Wait… Mazda? Second-rate compared to Nissan and Mitsubishi? In Warranty Direct’s 2007 study, they were leagues ahead of the two.
      http://paultan.org/2007/01/31/warranty-direct-reliability-league-table-2007/
      (Warranty Direct’s table is based on actual mechanical problems and repairs claimed… not via write-in survey without clarification, as is CR… in their current survey, Mazda is 6th, right ahead of Nissan)
      Given, Mazda has some clunkers. The peculiar needs of the rotary-engined cars. Bad bushings and mounts. Ford-sourced automatics. That Ford-sourced V6. But they’re not any worse than Honda, Mitsubishi or Nissan when you’re talking about bread-and-butter models.

    • 0 avatar
      FJ20ET

      niky, I should have said this was due to personal experience with the cars. Most of the car’s(and my friends) have been over 15 years old. Old Mazda’s do not hold up all that well in relation to Mitsu’s and especially not Up to the Japanese big 3. They aren’t that reliable, have poor electrical systems, and have severe corrosion issues.Most  of those problems are not due Ford’s partial ownership. Subaru’s rust really badly as well and are always leaking oil and popping head gaskets, even on older models. Suzuki’s were always cheap, nasty cars of questionable quality. They should stick to Kei-vehicles and bikes. Isuzu is the world’s best(imho) diesel manufactuer, their cars were basically japanese GM’s(The Piazza/Impulse was awesome, though) and have long since ceased making cars.

    • 0 avatar
      niky

      15 years ago… yes… this is a fair complaint (mind you, I used to own a POS 626…). But then, I wouldn’t give Mitsubishi or Hondas of old a free pass… as Hondas we knew had worse rust problems… and Mitsubishis? Suspensions have always been suspect… and certain Galants are infamous for dropping ball-joints.

      Every time we get a sensor failure on a Mazda, we curse Mitsubishi… because many older Mazdas use electronics (I’ve counted several three-diamond logos under the hood of my car) from the Mitsubishi parts bin… which ensures that they will fail over time.

    • 0 avatar
      joeaverage

      bd2 – who cares about initial quality? That’s covered by the warranty. Let’s talk about 200K miles. That’s when the quality (or lack of) really shows. I don’t care if the car needs repairs a few times under warranty. it’s when the car is on my nickel that is really important to me.

  • avatar

    It’s hardly dead. Ford and — to a far lesser extent — Fiasler may have won over some hearts and minds, but I don’t see droves of Toyota drivers suddenly coming blindly over to the US-branded side. Buying a Detroit/UAW-built vehicle remains a dicey proposition for many.
     
    As usual, it’s Government Motors that has the most to worry about. Over the next year, GM will be faced with the true brunt of a marketplace that is either a) indifferent to its existence, or b) openly wants GM to fail. Face it — pretty much anyone who really wanted a Camaro, Malibu, Regal (sure… they’re gathering dust on Buick lots) et al probably has one by now.

    In fact, I’d wager there are at least as many American car buyers out there who would consider a Hyundai, than a Chevy…

  • avatar
    Ion

    I’d say that Nissan has definitly tagged on to Honda and Toyota’s high perception.

  • avatar
    bd2

    While ultimately, its the quality of the overall product, as well as reliability, that sells vehicles (see the new Jeep Grand Cherokee), Ford has gotten a lot of positive press over past year and a half, and such positive coverage could entail prospective buyers to look not only at what Ford has to offer,  but take a look at what GM (and to a lesser extent Chrysler).

    Also, liberterian commentator, Megan McArdle, underestimates what the liquidation of GM and Chrysler would have done to the economy.

    Whle maybe not The Great Depression II, the end of GM and Chrysler as operating entities would have crippled what remains of the US manufacturing sector (as the Chinese have learned, the auto industry is a key component in having a vibrant economy), since it would have also likely brought Ford to its knees, and turned what was already a deep recession that much deeper.

    W/ GM and Chrysler gone, their suppliers, which also often supply Ford, would have needed their own bailout, and failing that Ford would have been in a precarious position as to obtaining parts.

    I certainly am not happy about the bailouts, both to the auto industry and the banks, but it was necessary to stem the flow (so to speak); at least the auto bailout was handled better than the bailout to Wall St. and the big commercial banks.

    • 0 avatar
      Zackman

      Unfortunately, for all the idealistic nonsense of having a “level playing field”, there has never been one. It’s corporate profits and shareholder/stockholder benefits above all else, here. Perhaps that’s hyperbole, but look at the facts: for all imported goods that used to be made here, have the costs gone down significantly? They may not be as expensive as they might have been, but management always gets their cut first.

      Just a random thought…

    • 0 avatar
      geozinger

      “W/ GM and Chrysler gone, their suppliers, which also often supply Ford, would have needed their own bailout, and failing that Ford would have been in a precarious position as to obtaining parts.”
       
      Add to that list all of the companies that produce in the US. Living in supplier country (W. Michigan), we supply everybody. If the supplier chain would have gone down, no one would be producing anything. With so many plants doing JIT, the effects would have been felt immediately. Depending upon how many cargo 747s any particular company could afford to fly in parts on, would determine who could get back up and running. I would guess a matter of weeks, not days.
       
      The layoff multiplier is much stronger than the employment multiplier, although the events of the last couple of years should be a clear reminder of that fact. Even if assembly plants could get up and running quickly, I doubt very much it would be at previous capacity, and the resulting shock wave from the initial shut down would still wreak havoc on the logistics and supply chains, until the situation normalized.
       
      I still think we dodged a bullet.

  • avatar
    golden2husky

    While I didn’t really approve of the bailouts, I have a feeling that most people’s memories will be pretty short.  Yes there are those who state that never again will a GM product grace their driveway but I would bet the farm that they were not likely to buy GM anyway.
     
    One of the major reasons that the “gap” is shrinking is for two simple reasons.  One, real product quality has improved significantly.  The collapse of the industry may have given people a reason to actually compare products and they discovered that there are quite a few class competitive vehicles.  Sadly, class leading is rare, but even being competitive is likely to be a surprise to those who habitually bought Japanese blindly.  Two, the Japanese product is not as good as it used to be and the media issues with Toyota only increased that perception (there’s that word again).  While Toyota still is king with the red dot sluts, domestic brands have improved to the point that somebody used to the reliability afforded by their 2003 Toyota is likely to be satisfied with the reliability of numerous domestics.

    The part that is needed for this “renaissance” to last is for customer service to improve.  Letting millions of owners eat the cost of intake manifold gasket failures won’t cut it anymore.  And the jury is still out on long term reliability.  Of course there are those who will insist anything D3 is going to be crap, yet they seem to have no problem with grenading engines in their Porsches, but of course nobody poster here would fit that profile…

  • avatar
    don1967

    When millions of people desperately want to believe something, they will find a way to believe it.  And they will name a poster boy for their cause, which in this case is clearly Ford… the company that can suddenly do no wrong despite doing not a heckuva lot right.
     
    Ford is not so much the halo brand supporting the rest of Detroit as it is the temporary beneficiary of Detroit’s downfall.  It is the last stop for American loyalists, before the bus arrives at a Hyundai dealership.

    • 0 avatar
      John Horner

      ” … despite doing not a heckuva lot right. “
      The Mustang, Fusion, F150, Edge, Transit Connect and Fiesta have all been done very right.

    • 0 avatar
      geeber

      John Horner is right…all of those vehicles are nicely engineered and designed vehicles. In some cases – Mustang, Fusion, Fiesta – the Ford vehicle is also considerably better looking than its direct foreign competitors.

  • avatar
    John Horner

    Another factor is that Toyota and Honda have had their share of quality lapses in recent years. Sludged engines (certain Toyotas), astronomical transmission failure rates (certain Hondas) and the Toyota’s multiple walks of shame over this past year or so have pulled back the curtain and exposed The Wizard.
    That said, Ford and GM have indeed significantly improved their products. There are still some really weak models in their portfolios, but the dogs are being put down one by one.
     

    • 0 avatar
      bomberpete

      John, I think you’re 100% right but I next time try a better analogy. Putting down a living being  is a much more difficult experience than canceling a crappy car that sells badly.
       

  • avatar
    VanillaDude

    This is about perception. I am old enough to completely remember a time when anything Japanese was considered superior to anything American. That perception is finally coming to an end, and should have died years ago. Auto buyers would tell their neighbors that they were buying a “Japanese car”, not a brand. Toyota and Honda definately opened the door of the US market for other Japanese brands. Their success sparked renewed interest from other makes.

    Ford has a halo right now. GM is benefitting from it. I don’t see Chrysler benefitting yet, and I suspect there are a few folks like me who are not impressed with the idea of having a Fiat-anything, regardless of a Mopar label appearing on the fender. Chrysler went downhill a lot longer in many catagories since their 1996 market peak.

    As to the bail-out, I always considered the situation a no-win one for the US. We spent over $700,000 per union job for GM and Chrysler. There is no way we will ever get that back. What we did get however, is a bail-out for a vital American industry. The bail-out was handled badly. The Congressional hearings were like a 45 car pile-up in a fog bank. Instead of handling their impending bankruptsies with any foresight, GM and Chrysler waited until they had their owners locking up the doors. Consequentially, the entire image displayed throughout this time was one of massive managerial incompetence that will not be soon forgotten. The fact that these companies had been ran so badly, and for so long, in an industry this vital, was unnerving to Americans who cared to watch. GM’s massive clusterf&#k will keep me from buying anything they offer in the future. Ford is the only brand for me today, which actually keeps my life rather simple now. Thankfully, they are building great vehicles.

    So, regarding perception, things have turned around hopefully. It is about time American auto buyers recognize the importance of having their motor vehicles built by American companies. Cars ranked low on the recommendation systems out there, still last long enough for you to pay them off. Having the latest high tech vehicle is chasing your tail, just as Old Detroit used to do it back when there were annual model changes, and you lose when you play their game.

    Be more interesting than your car and you will discover it’s proper priority within your life.

    • 0 avatar
      bomberpete

      +1 Vanilla Dude. Very well said.

    • 0 avatar
      Amendment X

      “I don’t see Chrysler benefitting yet, and I suspect there are a few folks like me who are not impressed with the idea of having a Fiat-anything, regardless of a Mopar label appearing on the fender.”
       
      I dislike Fiat’s ownership as well, but I GUARANTEE you that the vast majority of Americans do not know Chrysler is Italian-owned. I have spoken to countless “average consumers” about Fiat’s ownership of Chrysler and they look at me and ask, “What’s a Fiat?” The average consumer doesn’t even know Honda makes Acura, Toyota makes Lexus, and Nissan makes Infiniti.

    • 0 avatar
      joeaverage

      And it goes the other way. Detroit needs to appeal to us traditional import buyers. I recognize the importance of buying American made products but I also lived through an era where Detroit said F*** the consumer they’ll buy what we make. As long as Detroit doesn’t make compelling small cars that last like the competition then I’ll look elsewhere. Ford has got it mostly right. GM has had some products that were really Opels that ticked off the right boxes for me. Their Daewoos haven’t been anything I’ve aspired to own. The Cruze might be the first – but still – are these small GM’s really American products or are they Korean products sold at American dealerships? Same with the Opels (which I usually really like).
      This leads us down the path to where I ask is a Honda built in Alabama with American workers and a good helping of American parts more or less than a Chevy built in Mexico with Mexican labor and parts from all over including communist China?
      These are corporations building cars so the stockholders can live anywhere – here, Europe or Asia or Russia or Africa. What’s American anymore?

  • avatar
    geeber

    The final chapter in this saga hasn’t been written…if anything, I see too much of an old Detroit sin on display. Namely, declaring a touchdown when the ball is only at the 10 yard line.

    No doubt the vehicles are getting better, but let’s be realistic – to get people out of a Toyota and into a Chevy, the Chevy has to either be measurably superior to the Toyota, or offer something that the Toyota doesn’t offer. Being as good as the Toyota isn’t enough. If the Chevy is only as good as the Toyota, most people are going to stick with the Toyota, which has a much better reputation.

    So far, even with the Cruze, I’m not seeing this. No doubt the Cruze will impress someone who suffered with a Saturn Ion or Chevrolet Cobalt, but is it really good enough to get people out of a Corolla or Civic?

    I would also argue that GM, in particular, suffers from a credibility gap. How many times have we heard that this new vehicle or vehicles will regain lost market share while besting those pesky foreigners in everything from reliability to performance? I’ve been hearing that one since the mid-1980s.

    • 0 avatar
      c5karl

      >> to get people out of a Toyota and into a Chevy, the Chevy has to either be measurably superior to the Toyota, or offer something that the Toyota doesn’t offer.

      Correct. This is a big part of Ford’s recent success that I think has been underplayed.

      When every car is reliable (as most now are), you’ve got to surprise and delight your customers to get noticed.

      That’s what Ford is doing with SYNC and the MyFord gizmos. Ford is even managing to move the prehistoric and fugly Focus to young buyers because of SYNC. Sure, Ford’s pushing the current Focus out to fleets, but it’s also getting a lot more retail sales that it would seem to deserve.

    • 0 avatar
      joeaverage

      Credibility-gap is EXACTLY right! Perfect term for it.

  • avatar
    bomberpete

    Geeber’s right. I’m sick of hearing “the good stuff’s just around the corner” and all the high-fiving while the other team still has the ball. That’s why the GM IPO is a cynical abomination.

  • avatar
    philadlj

    Jack’s quote about the Cruze beating Civic and Corolla in “significant, measurable ways” is all well and good, but when McArdle uses it she leaves out the fact that both of those models are long in the tooth, and when they are refreshed or redesigned, the onus will be on Chevy to continually improve the Cruze through yearly updates, something Ford seems to understand, but Chevy is notorious for letting fruit rot on the vine (Cobalt, Malibu, Impala, HHR).

    McArdle also fails to mention that even though the vast majority of the bailout came from U.S. taxpayers, Cruze is not an “All-American” car, something else Jack pointed out in his review. This is a simple fact: our tax dollars were handed to GM, who then handed them to Koreans, Mexicans, and Chinese to develop the Cruze. Worse still, Americans are the last to benefit from the fruits of this global labor: the Cruze has been around a long time, just not here.

    That fact won’t sit well for millions of Americans. They may not understand that GM believes it can be stronger, leaner, and more profitable for future shareholders as a global company, and isn’t going to turn back from that strategy, and that they used the rest of the globe to iron out the kinks in the Cruze before releasing it here, but that may be little comfort to some.

  • avatar
    ciddyguy

    I’ve said this I think here once before but I’ll say it again, I have my doubts still about GM, especially with the word of offering an IPO, but with caveats like we are still working out the booking system or some such and so far I’ve not seen any real measurable change in the corporate mentality within GM as to how they handle day to day business. It’s those kinds of perceptions that have me on the fence about buying from them, even if they ARE improving their products, and believe you me, just because a given car is more reliable than before, if it still can’t handle decently, offer what I need (a hatchback, small wagon etc) and so forth, it won’t do me much good and I have no use for 4 door sedans anyway.
     
    I’ve also said, based on what Ford’s been doing (and I’m NOT a Ford fan to begin with) of late, they have the best chance of survival, but as has been said previously in this thread, if GM and/or Chrysler go down, Ford is in peril too for they are ALL interdependent on one another in some way through the parts supply chain.
     
    And let’s not forget many of us still drive cars that are 5, 10, 15, 20 or more years old and we still need parts to keep them running and if the parts chain dries up because of the big 3 going down, what then? Not that I see the supply chain drying up but the ripple effect would be enormous one way or the other and not in a good way.
     
    In the end, I see Ford being more or less on top as far as the domestic companies are concerned with perhaps Chrysler next if they really show gains in sales etc through fresh, well designed models and perhaps GM dragging along behind if they keep doing shenanigans like they seem to still be doing, but ALL three will have to face the competition from the likes of Honda, Toyota, VW and perhaps Fiat if they show promise so in the end, to compete, they need to up their game and make cars people will WANT to buy, but changing minds is not easy as we all know.
     
    In the end, the proof is in the pudding when people see a reason to cross shop a company as it has a car they’re interested in and it in turns turns out to be very good and has proven to be reliable OVER THE LONG HAUL.
     
     

    • 0 avatar
      bomberpete

      Excellent, ciddyguy. In the car business, good product is key, but it’s not enough. Reputations are made or recovered over the long haul. In this regard, GM has an even longer way to go than Chrysler.
       
      Steve Rattner’s “Overhaul” may be a weasel’s exercise in self-preservation, but the chapter “Harry Wilson’s War” is fascinating. It deals with Team Auto’s Harry Wilson (currently the GOP comptroller candidate in NY State) and his frustrating efforts to instill financial discipline and planning within GM’s culture. This is while Ray Young was still its clueless CFO.
       
      Those attitudes still seem prevalent among GM’s management, and the premature IPO reflects it. They still just don’t get it. I suppose that doesn’t matter to the big boys who make the money no matter what.
       
       

    • 0 avatar
      joeaverage

      +1 ciddyguy. I’m in the same camp where useless sedans are concerned. I need a hatch or wagon b/c I carry things besides just people. I carried a MIG welder across town today and some wood. All in my little old CUV. Don’t need a pickup. I just laid the seats down in about 40 seconds. Now on the way home I’ll put the seats up and carry the family with me.

      I want to replace this CUV with a true wagon next time. That’s what I wanted to buy 11 years ago but there wasn’t one to be had from the brands I trusted.

  • avatar
    holydonut

    When I speak with people who do not believe in the perception gap, it’s usually because their semantic definition of a “perception gap” is too narrow.  As such, they believe it’s an equal playing ground because a sensible person doing research would find comparable products. They tend to focus on some vague metrics involving quality and reliability. But there are a large number of sensible people who will not include American automakers in a search.

    It’s not due to perception so much as an indication of the Detroit’s brands. The brands are so damaged that these customers don’t even acknowledge Detroit as an automotive option.
     
    Basically the Detroit 3 have completely destroyed whatever equity it once had in a vast number of buyers.  They’re facing an uphill climb to get market share due to the fact that there are so many people who would NEVER buy a domestic product due to brand alone.  Screw perception… it’s a deeply rooted belief that buying American is ignorant, shameful, and a sign of weakness.
     

    My work parking lot (300+ cars) has one domestic vehicle owned by an employee.  Mine.  Delivery and facilities vehicles do not count.
     

    I used to work for a Detroit automaker so I often pose the question to people on why they insist on buying Japanese/German.  Responses rarely talk about perception – it’s simply that the Detroit automakers have no brand equity.  My favorite responses so far.
     
    – I make too much money to buy American
    – I don’t want people to think I’m an idiot
    – Never crossed my mind; do they even make cars anymore?
    – But I can buy a BMW – and I did buy a BMW

  • avatar

    This is a joke. All Detroit has done to be competitive is import the same foreign technology that beat them in the first place. We now have German Buicks, Korean compacts, and even Aussie RWD cars coming to Detroit’s rescue. I believe by 2015 there will not be one American car built upon a US engineered platform. Even the Corvette will probably move to a Holden platform. Let the big three rot.

  • avatar

    It’s not that people think better of GM – It’s that people think alot less of the asian competitors.


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