Ford has roughly $18 billion in the bank. The company’s CEO has slowed The Blue Oval’s cash burn to about a billion a month. If you take away $10 billion—the amount of float needed to keep the lights on—Crazy Henry’s mob has eight months to stop the arterial spray of red ink before contemplating C11 (or a “proper” bailout). Volvo’s sale looks like it will give them another month (about a billion). Although Ford tapped the credit markets for $1.6 billion in May, another offer may not be greeted with open arms. So let’s call Ford’s drop-deadline a year, maybe 18 months. Oh, did I mention a $5.9 billion dollar Department of Energy “retooling loan?” That’s worth another six months on our timeline. But that’s different. “Ford is the only one of the Big Three U.S. automakers that hasn’t taken government bailout money or declared bankruptcy,” NPR declares, disingenuously. “Ford is still losing $1 billion per month, but it has money in the bank and hopes to be making money by the year 2011.” The media meme in a nutshell. In an interview with publicly-funded radio, Ford’s CEO connected the dots between perceived purity and customer conquest, and hinted that yes, they did stick their noses in the taxpayer trough.
How much of Ford’s recent turnaround do you think can be attributed to people who aren’t going to buy from GM and Chrysler because of their recent bankruptcies?
About half of the market share that we are gaining is from GM and Chrysler and about half are from our Japanese competitors. We’re all very sensitive when companies use taxpayer money. In Ford’s case, consumers are not only very pleased with our cars and trucks, but they are very pleased that we did not take taxpayer money, that we are paying our loans back and we are right on our plan to move back to profitability in 2011.
Not to beat a dead horse, but Big Al makes a distinction between “taxpayer money” and “taxpayer loans,” because, I dunno, loans don’t involve cash? And if that cash burn stays at about a billion ’til 2011 well, it’s gonna be real close. Maybe Al should ditch that $25 million paycheck and stop using those jets for family travel to help out the cause.
Meanwhile, here’s a good one: “We will be absolutely competitive on every vehicle we make.” Wow! Oops, he was talking about cost structure versus the other guys. Now if he said that about every Ford vehicle’s competitive appeal . . . That would have been Edgy.
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I give ford much credit for not rolling on the chapter 11 deal by the government. I firmly believe that the company to survive this period will be the one with innovations. The first one they need (all car companies)is to literaly lighten up. These 4500-5000 pound sedans and suvs floating around won’t get good gas milege and handle well with this weight penalty. I know the exuse of the governement mandates, however, there has to be a way to make sub 4000 pound large cars and suv’s.
These automaker talk of 2011 in the same vein of “wait till you see our new models.” Hey, be solvent on today’s volume, why don’t you?
I doubt if Ford will get any bailout money in the future, if it asks. By then the GM and Chrysler fiasco will either, A. Not work and the companies will be gone (in some form), or B. Working, but the payback to the government is nonexistent, or a 100-year loan.
I’d like to see at least Ford survive, though.
Last time ford announced cash they had $21 billion in the bank and they had gone through $0.3 billion in the second quarter (the $1 billion you keep bringing up was from operations, when you included financing activities it was only $0.3 billion in three months). And if I understand correctly the DOE loans aren’t included in the $21 billion number as it is “restricted”, the available cash cannot include those funds.
Where are your numbers coming from???
Ford’s cars have gotten much too expensive. They’re great, but I’m not sure people are going to spring for ‘em at prices where money will be made. They’re damned if gas goes up and damned if it doesn’t, re: F-150 and Fiesta. I’m sure they want cheap gas, there’s money in them there trucks.
I think they’re going to have a rough go of it. They’ve still got too many models, and that albatross lincoln around their neck.
The Wildcard in this is “How long will Chrysler last?” When Chrysler croaks, then it’s a safe bet that the few customers they have will be split up between Ford and GM.
When Mulally says “taxpayer money” he means bailout money not financial incentives. Governments give out incentive money all the time for all sorts of reasons. I personally don’t like it, but I’m not going to fault Ford for taking it. Again my parents give me $5k to go to college, that’s an incentive. My parents give me $5K because I can’t pay my bills that’s a bailout. Pretty much every company in the US (and most people) have received some government money in the form of an incentive. If that’s your concern it’s not worth talking about because it applies to everyone.
As RNC has pointed out Ford is not losing 1 billion a month. Ford is losing about $300 million. If the economy turns around that number will be a huge profit. That’s why Ford’s stock is through the roof. Not just what Mulally is doing, but the market’s expectation of a turnaround.
Thanks to the Scrappage Scheme in the US Ford may actually have positive net cash flow or even (drumroll) a profit in this quarter.
IIRC the Escape, F150 and possibly the Focus were on the C4C list along with the usual suspects from Toyonda.
Now once the latest hit of Government cheese runs out its back to the 8-10M SAAR.
The fact remains that we still have way too much production and no where near enough demand to support all of these car companies.
Because of the bailouts for the weak ones, one or two strong players will exit the US market and shift their investments to other parts of the world where they can get positive ROI.
The bailouts didn’t fix the weak companies, but they will drive away the strong ones. Ford has no reason to exit the US market, so it should win market share as those who can leave the market run for the hills.
So my question for the best & brightest… Who is most likely to leave the US market in the next 3-5 years?
Ford did not take government company or declare chapter 11 because the Ford family refuses to give up control of the company. Look how the stock is organized.
They are gaining market share, apparantly the increase in price is being offset by the increase in value. What they aren’t willing to do is to compete with GM and Chrysler in the suicidal game of volume over profits and price over quality anymore. It seems that Ford finally understands that it isn’t competing with GM, it’s Toyota (Trotman tried and tried to do this, seems that Mullally has finally been able to).
And no Ford has been lobbying for some time for increased gas taxes (increased prices) to stabilize the market.
All i hear is how Ford products are to expensive. But they are priced with all the other companys. Why should the Fusion be priced thousands cheaper then the Accord,Camry when it is just as good a car? Actually maybe even a little better. The only way to keep value and resale up is not to dump them for thousands less. They shouldn’t have to now that quality is as good as anybody elses.
Ford CUT its burn rate from $3B in Q1 to LESS THAN $1B in Q2 ($300M per month) and continues to cut its burn rate and reduce costs by billions!
So the $18B in the bank should last Ford several years!
When you mension the $5.9 DOE loan Ford got, don’t forget to mension Nissan and Tesla also got money.
The statement made in the NPR clip isn’t that Ford hasn’t taken government money, its that Ford hasn’t taken a bailout, and hasn’t _had_ to take government money overall, which is a very important distinction.
GM and Chrysler had to take the money to remain solvent, and even then failed to do so. Ford remained solvent without having to take the money, and didn’t have to take the 5.9 DOE money either, but it would have been foolish to pass it up. The DOE money is tied directly to retooling and prepping for more efficient vehicles that CAFE is now requiring, and can’t be used for general expenses. Yes, that means more general purpose cash is freed up, but if Ford’s competitors were also taking the DOE loans, it wouldn’t make good business sense to ignore them.
About half of the market share that we are gaining is from GM and Chrysler and about half are from our Japanese competitors.
I’d like to see some evidence of these conquest sales.
NulloMundo
If you recall, the terms of the Department of Energy loans dictated that the factories involved have to be U.S.-based and older than twenty years.
Oh dear. That little proviso excluded Honda, Hyundai, Mercedes and VW. Only two transplants qualify for the loan: Nissan (Smyrna plant built in 1983) and Toyota (NUMMI in ‘84 and Georgetown Kentucky in ‘86).
Toyota won’t take the money because they’re not stupid. Haven’t been for quite some time, in fact.
Even so, domestic supporters have railed on about tilted playing fields (import restrictions and foreign government subsidies) for years. HOW IS THIS FAIR? What does the age of the factory have to do with anything, really? I’m curious: how is this NOT a bailout? Back door perhaps, but a bailout nonetheless.
Anyway, remember when the Bush administration was looking around feverishly for billions to prop-up Chrysler and GM, despite the companies having failed the viability test and scarfed billions in “bridge loans” without even belching? Only AFTER the feds couldn’t speed-up the DOE loans did a direct bailout hit the fan.
So, in a way, there are two bailouts. And Ford got theirs. As will GM, which has already figured the loans into their cash projections—despite the fact that the loans haven’t been “properly” awarded.
You do know, of course, that the DOE loans have a five-year deferment. FIVE YEARS without payments or interest accrued. $5.9 billion at zero percent interest and no payments until 2014. It doesn’t get much better than that. Or worse, if you believe in free and fair competition.
[This pdf transcript of a DOE public hearing on the loan terms is most informative.]
compy386
I agree.
Let it go bankrupt.
I for one would like it to do so.
What I DON’T LIKE, is any bailout!
That’s the problem.
Bankruptcy in itself can be a great tool when it comes to shedding bad contracts and debt.
Just ask GM or ChryFiat!
Ask United Air.
RF, please help me understand.
When you keep mentioning the retooling money, did others get such aid?
Don’t others, including foreign companies, get aid all the time in other forms or names?
If so, why keep harping on this particular aid?
Next, this seems to be looking at a “snapshot” in time.
Is this taking into account any sales successes or increases (and decreases)?
This is a totally fluid situation, right?
Maybe, just maybe, the new vehicles like the Fiesta, Focus, etc, will make major changes to the picture and do so pretty quickly.
This is not to say it can’t all go sour. It may well do so.
But there are a lot of things not seen.
Remember, this sight had no mention of the Porsche financial situation until it suddenly burst upon the scene last month.
Oh dear. That excluded Toyota (save the NUMMI plant),
Wrong – Toyota was eligible to use the funds, I don’t recall Tesla haveing a 20 year old factory???
Only AFTER the feds couldn’t speed-up the DOE loans did a direct bailout hit the fan.
Wrong – Only after congress refused to allow (i.e., change the bill authorizing the loans in the first place)
Speaking of Toyota – http://money.cnn.com/2009/03/03/autos/toyota_govt_loan.reut/
jalopnik.com/…/toyota-is-the-new-gm-japanese-automaker-asks-government-for-loans
Honda –
Honda Seeks Tokyo Loan for U.S. Operations – WSJ.com
online.wsj.com/article/SB123616606827228383.html
Subaru and Mitsu –
http://www.autoobserver.com/…/subaru-and-mitsubishi-among-japanese-makers-seeking-government-loans.html
Mazda –
http://www.detnews.com/…/Mazda+will+seek+government+loans
But we wouldn’t call them requesting a government loan a bailout would we??? Just leveling the playing field
Robert – The location and age of the factories absolutely make a difference. Giving money to retool non-US factories would cause a huge public backlash about the outsourcing of jobs. The age is important to give automakers an incentive to modernize and keep old factories open instead of closing them down in favor of newer more efficient ones that would cost less to overhaul. Bringing the old factories up to speed keeps entire towns and communities from crumbling due to the sudden loss of the areas largest employer.
Yes, perhaps the time line was jiggered such that Toyota, Honda, Hyundai, et al. couldn’t partake, but the Japanese, Korean, Chinese, German, and every other auto-making nation’s governments already give preferential treatment and money to their native industry, for us not to do the same would put our companies at a competitive disadvantage.
Whether you like it or not, we do have a vested interest in our domestic industry, and in the long term it is much better for the US to have domestically owned companies vs all foreign owned transplants.
Robert,
I think I’m right in saying that the DOE loans are earmarked for retooling factories to produce fuel efficient cars. The Bailout, involved GM and Chrysler being given shedloads of money just to keep the lights on, followed by even more money to allow re-structuring. The DOE loans wouldn’t have saved GM or Chrysler because aside from there not being enough money in the pot, re-tooling was way down on GM and Chrysler’s cashflow needs.
Call me niave, but the difference between the DOE loans and The Bailout is that the DOE loans help modernise American factories that are currently ill equipped for 35mpg CAFE legislation while the The Bailout puts GM and Chrysler in government control. I know which one I’d be more pissed off about.
NulloModo:
So I guess you were against the government sending stimulus money south of the border, to pay for cars built in Mexico. Canada too? Or does our vested interest in the domestics extend to Mexican and Canadian jobs?
As for modernizing old factories, is that really the most efficient way of building cars? You know, if you removed our tax money from the equation? While my heart goes out to workers who’ve lost their livelihood at older plants, wouldn’t it better to spend the DOE money on ground-up, environmentally friendly facilities? You know, if we were trying maximize our return rather than kiss UAW ass.
As for your “two wrongs make a right” argument, bullshit. In terms of tilting the playing field, these DOE loans are WAY out there.
And lastly, the transplants ARE our domestic auto industry. They account for more than half of all U.S. production. Perhaps you’d like to explain why the owners’ nationality (in Chrysler’s case controlled by an Italian company) makes any difference to U.S. jobs and the U.S. economy?
it’s an old argument. but relevant.
Paulie Walnut:
Back up. The feds are giving specific automakers interest-free (for five years), twenty-five year loans to comply with federal regulations. Does that sound right to you? If the feds decided a trucking company has to meet a new regulation, will they give THEM a loan to cover the cost? I know! If they raise my taxes they can give me a 25-year loan to cover my expenses too.
The DOE loans were dressed-up in a green mantle just like cash for clunkers. If you think the DOE loans were designed to heal the planet, yes, you are naive.
Robert Farago: If you recall, the terms of the Department of Energy loans dictated that the factories involved have to be U.S.-based and older than twenty years.
Oh dear. That little proviso excluded Honda, Hyundai, Mercedes and VW. Only two transplants qualify for the loan: Nissan (Smyrna plant built in 1983) and Toyota (NUMMI in ‘84 and Georgetown Kentucky in ‘86).
I believe that Honda’s Marysville, Ohio, plant was built in the late 1970s to assemble motorcycles. It began building Accords in the early 1980s, so it would have been eligible under that criteria, too.
Robert Farago: As for modernizing old factories, is that really the most efficient way of building cars?
I would imagine that it depends on the red tape and environmental regulations that cover the construction of new plants. Plus, aren’t companies responsible for the clean-up of abandoned plants? Wouldn’t that figure in to the cost of a new plant as well?
And note that virtually every NEW plant seems to come with generous tax abatements and surrounding infrastructure upgrades (paid for the by the state).
RF – Your thoughts on all of the Japanese automakers receiving loans? Is that they’re just different b/c they are not Ford? I mean what is the critera here that doesn’t deal in the reality that every major japanese automaker has received/requested government loans?
additionally the japanese supplier base as well
http://www.azcentral.com/…/20081104biz-toyotawoes04-ON.html
“If you take away $10 billion—the amount of float needed to keep the lights on…”
I’d love to know how you arrived at that figure.
Moonlighting in the A/P department in Deerborn?
Vorenus
Jerry York used this number when warning of GM’s C11. I’ve seen it around and about the autoblogosphere, in various business articles from reputable sources.
Do you have any reason to believe its less?
rnc and others:
Government loans to automakers are not my cup of the, whether in Japan or America or Zimbabwe. I know the arguments for government intervention in “key” industrial areas, but I don’t accept them. The fact that GM is now a nationalized automaker shows the logical end point of tit-for-tat subsidies.
***I give ford much credit for not rolling on the chapter 11 deal by the government. I firmly believe that the company to survive this period will be the one with innovations.***
Pluuuuh-leeeze. The only reason why Ford is not on the mad dash to C.11 is the hefty portfolio of the Ford family’s Class B shares.
RF –
Thats not the point here. The point is that you (TTAC) blast Ford for taking a government loan (for retooling and R&D specifically) and give the japanese a free pass, especially in regards to the companies mentioned above the loans can be used how they wish.
In terms of required Float – If Ford is 2/3 the size of GM and GM required $10b (per J. York) then it would make sense that Ford would require 2/3 of that amount or $6.67 Billion (and has Ford has been much better managed on the “Administrative” side (size of workforce required to accomplish equivalent task) in comparison to GM), it would make sense that the amount may be less than that. Vorenus is correct with out the specific information from Ford your number is nothing but a (not thought out) guess.
And GM was an insolvent automaker (and I don’t mean equity on the BS, I mean the ability to operate w/o government intervention) Ford is not, they are apples to oranges at this point. So in terms of the loans, Ford is only doing what all of thier major competitors in the US market (see post above about Japanese companies and loans) are doing, taking loans from thier national government and Ford’s loans actually have restrictions attached.
Well, we’re not reminded of the government loans Toyota, Honda, Subaru, Nissan, and Mitsu take in every post about them is all. What a surprise, the world doesn’t operate according to Austrian “Economics!” Shocking, I know!
I’ll also point out (again) that the only reason “transplants” are “transplants”, the only reason you can use that name with a straight face, is because of Reagan’s tariffs and import quotas. Yup, government intervention. A successful example, but government intervention in the economy all the same. Without the big government intervention of Reagan’s tariffs and quotas, Toyota and Co. would have never built assembly plants here in the numbers they did. Period.
As for Canada and Mexico, Canada is essentially the same economy as the United States. Economically speaking, it is the 51st state, always was, but doubly so after NAFTA.
Mexico? They’re rapidly moving towards the same position, and factories down there reduces immigration pressure. If you don’t like it, you should want to abolish NAFTA. Until then, we’re very much tied to our neighbors economically. It is also better to have low-cost factories in a friendly and relatively (for the third world) democratic country like Mexico rather than a at best lukewarm authoritarian rival like China.
Robert,
My memory might be a bit fuzzy about this but as far as I remember, truck companies do now face higher costs for purchasing new trucks from about 2006 or so because of tighter emissions regulations. However, as Mexican trucks are banned from crossing into the States, American truckers (and their equally regulated Canadian cousins) can pass the costs associated with the new regulations onto their captive market. As long as the Mexicans are kept out, the government can regulate away and the customer will have no choice other than to pick up the tab.
My point is, governments are clumsy things. It’s very characteristic of them to institute a poorly designed regulation and then throw money at any unintended consequences than to do the job properly in the first place. This is how CAFE and the DOE loans came about.
I can’t believe that the government saw way back in 2007 that Ford were in trouble and would need an ingeniously disguised bailout. It all seems too…clever.
Also, while I can understand someone who lived through the ’70s and ’80s being upset with Detroit, anyone rooting for their failure is a nihilist. It might feel good to see the company that sold you your crappy Vega or Pinto crash and burn, but you’re cutting off your nose to spite your face. It would be disaster for the whole country.
I live in a state with no unions, and really no industry period anymore to speak of (unless you count the military/arms industry) and can understand that the shockwave would be felt even here.
I’ll also point out (again) that the only reason “transplants” are “transplants”, the only reason you can use that name with a straight face, is because of Reagan’s tariffs and import quotas. Yup, government intervention. A successful example, but government intervention in the economy all the same. Without the big government intervention of Reagan’s tariffs and quotas, Toyota and Co. would have never built assembly plants here in the numbers they did. Period.
I beg to disagree. While import quotas may have had something to do with it (btw, Toyota and Nissan never built small pickups here when there was a 25% tariff, they just shipped them with the beds unassembled), the desire to get political leverage vs Detroit (automakers + UAW) is what drove the transplant facilities to be located primarily in the South. We saw that political leverage on display in the congressional debates over bailing out Chrysler and GM. Sen. Corker represents the interests of Nissan and Sen. Shelby is the senator from Mercedes/Honda/Hyundai.
Even more fundamental is that since the time of Isaac Singer, it’s always made sense to build factories where you sell product rather than to export.
It’s interesting that the boat that ships Priuses to the US generates more pollution and greenhouse gases than those hybrids will prevent.
Honda has quite a few facilities in Ohio. The south offered them sweetheart tax deals and cheap-ass land, that had a whole lot more to do with where they were located than the presence of unions did. The Honda factories are in uber union-friendly Ohio but they seem to do just fine.
There may have been a few assembly plants w/out the tariffs and quotas, but the reason they exist here in large numbers is because of government intervention and protectionism. You can think it is just a coincidence that Japan Inc. started building auto assembly plants here right after Reagan introduced tariffs and import quotas, but it isn’t.
HA! Tell that to Wal-Mart’s suppliers, where everything says MADE IN CHINA.
Robert – no, I’m not against using stimulus money in the Mexican or Canadian factories of American automakers. What is good for Canada and Mexico is good for the US as Canada spends a lot of money on US goods and services while a healthy mexican economy will help curb illegal immigration as well as create more demand for US produced goods.
In the end though, what matters is that even if the cars are built in Canada, Mexico, or Turkey, Ford is a US based company so the profits from the sale come back here and pay US tax revenue.
Jerry York used this number when warning of GM’s C11. I’ve seen it around and about the autoblogosphere, in various business articles from reputable sources.
Do you have any reason to believe its less?
Thanks, and no, I have no reason to believe it’s less (or more), but without a source, it *seemed* pretty darn random.
“Maybe Al should ditch that $25 million paycheck and stop using those jets for family travel to help out the cause.”
Isn’t Al the CEO that said he would work for a dollar a year till Ford got on their feet?
Durwood:
He was the one who said he wouldn’t work for a dollar a year. “I’m alright thanks,” if I recall correctly.
No he never said that, when asked by congress he said that he “was good where he was at”.
Theres a reason CEO’s get paid what they get paid, at alot of organizations they contribute more than you could ever imagine, I know alot of people want to believe that they aren’t required but they are (and there are good ones and bad ones and great ones and crooks). Since we are talking about Ford, when Trottman left Ford was the most profitable automaker in the world with $25b in the bank (generated by free cash flow) and gaining market share (with the best selling vehicle in 6 out of 10 catagories), it took Nassar less than 4 years to destroy that through shear neglect and lack of focus. That is the importance of a CEO.
And as Bill Ford said, “Mullally wasn’t his first choice (Ghosn was), but he was the right choice”.
What he has accomplished in this environment is amazing, I don’t think you would find alot of people who would disagree.
BDB: Without the big government intervention of Reagan’s tariffs and quotas, Toyota and Co. would have never built assembly plants here in the numbers they did. Period.
That’s debatable. The Japanese – particularly Toyota and Honda – have been very good at taking the long view. When an auto manufacturer wants to become a dominant player in a local market, it makes sense to build vehicles in that market. That is why GM and Ford have long had subsidiaries in Europe, South America and Australia. Toyota, Honda and Nissan have always intended to become big players in the U.S.
The quotas also backfired, as they encouraged Toyota, Honda and Nissan to move upmarket. If they were faced with limitations on what they could sell here, they might as well maximize the profit from each sale.
Within a decade of the quotas’ adoption, Toyota, Honda and Nissan were all credible players in the near-luxury and luxury segments.
BDB: Also, while I can understand someone who lived through the ’70s and ’80s being upset with Detroit, anyone rooting for their failure is a nihilist. It might feel good to see the company that sold you your crappy Vega or Pinto crash and burn, but you’re cutting off your nose to spite your face.
The problem is that Detroit was still pumping out some crappy stuff in the 1990s and early 2000s. Ford Tauruses, Mercury Sables and Ford Windstars with grenading transmissions and 3.8 V-6s featuring faulty head gaskets; Cadillac Northstars that died around 100,000 miles; Chrysler products with too many maladies to mention in one post. The 1990s and early 2000s weren’t that long ago.
My friend bought one of the first Olds Intrigues sold in this area. It was a beautiful car, and I considered buying one myself. Unfortunately, when we went to look at it in the company parking lot, it wouldn’t start and had to be towed away on the flatbed.
The car was less than a week old.
That was typical of her ownership experience with that car. And research on sites such as Edmunds.com showed that she wasn’t alone. Of course, GM further helped her out by canning the entire Olds Division and killing whatever resale value the car had left by the time she went to sell it.
BDB: The Honda factories are in uber union-friendly Ohio but they seem to do just fine.
Yes, but they are still non-union factories.
@geeber–
How about the Toyota engine sludge issues or the Honda airbags filled with shrapnel grenades, or the rusting out Toyota trucks, all of which are happening in the present day?
Would you really take the current bloated, numb, boring Camry over a Fusion or Malibu?
Japanese cars peaked in the ’90s and they’ve been coasting downhill ever since. The only Japanese marque with any character or interesting cars left is Mazda. A Toyota or Honda is fast becoming (with the younger generation especially) something your mom or dad drives. The exact same thing that happened to Oldsmobile and Buick with them.
Do you know why Ford, for example, builds the Fusion/Milan/MKZ in Mexico? Because if they do that they can sell them tariff-free in all of Latin America, as well as the USA thanks to NAFTA. I’m not familiar with Europe or Australia but I would be shocked if that wasn’t the case also.
Mexico? They’re rapidly moving towards the same position, and factories down there reduces immigration pressure.
No, factories in Mexico have not slowed illegal immigration. According to FAIR, there were 8.7mm illegals in the US in 2000. They estimate 10-12mm in 2005. Reduction?
Others guestimate that since we have no guestbook to sign at the border, real illegal immigration numbers hover around 20mm. It behooves the government to lowball this number, lest they tee off other knuckle dragging conservatives such as myself.
Meanwhile, here’s the toll illegal immigration has from the ultra right wing LA Times:
http://www.latimes.com/news/local/la-me-tobar4-2009aug04,0,4752970.column
And that’s why Mulally will never work for a buck a year.
BDB,
Those are relatively localized problems, and generally, the Japanese have moved faster to fix them after they reared their ugly heads.
The Toyota sludge issue affected a very small percentage of engines – meanwhile, Ford installed the 3.8 V-6 in numerous vehicles, and for years it was guaranteed to have head-gasket problems. Same with the transmissions in Tauruses and Windstars.
GM’s faulty intake manifold gaskets affected several several V-6s installed in many of its most popular vehicles.
And the Northstar V-8’s problems went uncorrected for over a decade.
The sad part is that these flaws ruined what were otherwise decent vehicles (particularly the Fords).
BDB: Would you really take the current bloated, numb, boring Camry over a Fusion or Malibu?
No, I never liked the Camry, but I also don’t argue with success. People buy it because of its reputation. I also don’t like the Malibu, though. The Fusion is very sharp, and we are giving it serious consideration as our next car.
BDB: A Toyota or Honda is fast becoming (with the younger generation especially) something your mom or dad drives. The exact same thing that happened to Oldsmobile and Buick with them.
Toyota, yes, I believe that it has a real concern with this issue, as I see lots of old people driving them.
Honda, not so much, thanks to the Fit, Civic and Civic Si, which do not appeal to older people.
BDB: Because if they do that they can sell them tariff-free in all of Latin America, as well as the USA thanks to NAFTA. I’m not familiar with Europe or Australia but I would be shocked if that wasn’t the case also.
GM and Ford have had their European and Australian facilities since before World War II, if I recall correctly. I don’t know what tariffs had to do with it, but Henry Ford I, in particular, was quite aggressive in building factories in other countries. At one point, Ford was working with the Soviets to construct an automobile factory there (I believe that Model As may have even been built there briefly).
Eight years for the shrapnel airbags. Eight years.
I’d bet most Honda enthusiasts prefer the late ’90s Civic to any of those.
That will only get them so far. Ditto with the Accord and Altima. Remember when the Olds Cutlass Supreme was the best selling car in North America? That’s the position the Camcords are in now, and they’re headed down the exact same path of coasting on reputation, cutting on quality, and the blanding/bloating of their cars.
If the domestics don’t get an advantage from that in the coming decade, the Koreans sure as hell will.
Durwood:
Why should the Fusion be priced thousands cheaper then the Accord,Camry when it is just as good a car?
Because it’s a Ford. You cannot charge Toyota and Honda money for a Ford…no matter how many electronic gimmicks it has or how “blingy” the grille is. Ford does not have the reputation that Toyota and Honda…and even Hyundai do.
Ford is priced WAY out of their league…and the fancy Fords…Lincoln…are even worse.
rnc:
RF – Your thoughts on all of the Japanese automakers receiving loans? Is that they’re just different b/c they are not Ford?
YES IT’S DIFFERENT BECAUSE THEY’RE NOT FORD!
Do we live in Japan? Are those (Toyota, Honda, Nissan, etc) American companies?
NO!!!!!!!!! So who cares what the Japanese does with THEIR taxpayer money. But when it comes to Ford and the others…then we can have a say. Yes it may sound a bit hypocritical…but it isn’t.
It’s like what you tell kids…don’t worry what everyone else is doing…you just worry about yourself.
P71_CrownVic:
Nissan’s taken American taxpayer’s money also through their share of the DOE loans.
BDB: Eight years for the shrapnel airbags. Eight years.
Air bags only deploy in accidents, and most people do not have accidents in their cars (thank goodness).
Meanwhile, head gaskets on the Ford 3.8 V-6 were failing regularly in normal use, and scores of people were complaining about fragile transmissions on Tauruses, Sables and Windstars.
I like Ford, we are happy with our 2005 Focus and we are considering a Ford for our next vehicle. But, as a Ford fan, I realize that during the 1990s, Ford built too many clunkers, and those clunkers played a large part in the firm’s current precarious situation. Pointing out the few Toyota engines affected by sludge, or the few times an air bag deployed in a Honda product with bad results, isn’t going to change this.
The F-Series, Explorer and Ranger were great, but people who bought a Sable, Taurus or Windstar (and lots of them did) were not guaranteed a vehicle with the same level of durability as the firm’s trucks and SUVs. And as for GM…
BDB: I’d bet most Honda enthusiasts prefer the late ’90s Civic to any of those.
I visit the Temple of Vtec site regularly, and the Honda enthusiasts there seem to like the Fit and Civic. (The real area of concern with them is Acura.)
And what keeps the Civic viable are the large number of people in their 20s, 30s and 40s who are buying it to commute to work, shopping centers or day trips. It’s a versatile car that has a good quality reputation and doesn’t look like stodgy.
If you are worried about a car getting a reputation as the 21st century Valiant or Dart – reliable, boring and bought largely by older people – I’d suggest focusing on the Corolla.
BDB: That will only get them so far. Ditto with the Accord and Altima. Remember when the Olds Cutlass Supreme was the best selling car in North America? That’s the position the Camcords are in now, and they’re headed down the exact same path of coasting on reputation, cutting on quality, and the blanding/bloating of their cars.
The rear-wheel-drive Olds Cutlass Supreme was actually quite popular to the very end. If I recall correctly, it was still one of the best-selling cars as late as 1986.
The problem was that GM replaced it in 1988 with a very unreliable front-wheel-drive version, and the line-up didn’t feature a four-door sedan until a year or so later, even though buyers were migrating to four-doors at that time. (The Taurus/Sable didn’t even offer a coupe, and were still a huge success.)
The Cutlass was always somewhat bland. That is one reason why it was popular. It
offered “affordable luxury” in a reasonably sized package with styling that was attractive to middle America.
It faltered because GM replaced it with a much more unreliable version that was initially only available in a bodystyle that many buyers no longer wanted. The buyers didn’t necessarily walk away from GM as much as GM walked away from its market. I don’t see Toyota making that mistake.
P71_CrownVic – you are wrong again. Ford prices its vehicles according to all the competition and what the customer is prepared to pay. And it is working as Ford gains market share AND increases transaction prices across the whole line up.
Please stick to facts and leave rhetoric out of this.
geeber–
The Accord and Camry are going to falter within the next five years because they keep getting bigger and blander with lower quality. The Japanese are becoming what they replaced (Detroit circa 1972).
The current Accord is worse than the last Accord, ditto the current Camry which is just a shadow of the mid-90s Camry. That isn’t a good sign, and you can’t keep that up based on reputation forever, especially among Gen-Y who will begin buying the lionshare of family vehicles in the next decade.
Ford has a real chance there. If they capitalize on it beginning with the Fiesta and the next-gen Focus they will be in a great position. Ditto Hyundai, who is arguably there already.
A revitalized GM can do the same if they get their crap together (i’d give them a 60/40 chance weighted towards not getting their stuff together), even if they will no longer be #1 in North America.
BDB :
August 18th, 2009 at 12:26 pm
A Toyota or Honda is fast becoming (with the younger generation especially) something your mom or dad drives. The exact same thing that happened to Oldsmobile and Buick with them.
I’d bet most Honda enthusiasts prefer the late ’90s Civic to any of those.
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Your statement actually supports what geeber said.
If a 90s Civic buyer (i.e. mom and dad by now) doesn’t like the new Civic/Fit, then the new Honda compacts are not becoming something your mom or dad drives.
The problem with your argument is you switched your context. When you complain about Honda being too “mom and dad”, you speak as if your are a young guy. But when you talk about how wonderful the good old 90s Civics were, you inevitably cast yourself as an old enthusiast.
WSN–
I’m in my mid-20s, but I know enough about cars to know that the current Honda Civic is bloated and overweight compared to its late ’90s equivalent, and the older Honda enthusiasts I know make the same complaint.
What I’m saying is that even the cars that Toyonda aims at the younger demographic are being bought by old people. Look at Scion, for example.
BDB :
August 18th, 2009 at 1:13 pm
The Accord and Camry are going to falter within the next five years because they keep getting bigger and blander with lower quality. The Japanese are becoming what they replaced (Detroit circa 1972).
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The Accord and Camry (and Civic and Corolla) got bigger and bigger for the past 30 years. Yet their sales went up. It seems their marketing guys make better predictions than you do.