And right behind the start line is Toyota, loading a shotgun………

That is my Quote of the day!!!!
Great Post!

Most of the world was a mess; Europe in ruins, Asia a mess, Africa is Africa. The only country that wasn’t a bombed out wreck was America, and so time were good; no serious competition around while they rebuilt. So we made all kinds of arrangements that were great at the time, but were predicated on there NEVER being any competition. The competition came, and the death of the unionized industries by slow strangulation is the result today because nobody wanted to be the first to jump off the gravy train.

So I think its a historical problem, but not one that an American car company founded today would have, as long as it fought off the UAW with flamethrowers and mustard gas.

Good point. What innovative designs are coming out of Ford NA? None and that’s the elephant in the room nobody wants to talk about.

The problem is not that GM or Ford or Chysler are bad car companies but the fact that GM, Ford, and Chysler are ALL bad automakers.

Is this a company problem or a country problem?

BTW – to repeat a question I posed on an earlier post – what makes anyones think that GMs Ch11 plan will be any more successful than all their earlier plans?

” My question, and maybe it has been addressed before and I missed it, is why can they be world-class in Europe and Third-class in NA? What are the cultural/corporate/market issues which have resulted in this paradox? I don’t see ToMoCo or Honda having the same problem, or anyone else for that matter. What is it unique about Ford which gives rise to such a product perception gap between NA and Ford of Europe? If anyone can answer the question here or link some articles explaining why, I’d like to know what ya’ll think…”

Mark…While I may not understand the financial side as shown above, I am well aware of the answer to the question you are asking…The SIMPLE answer is ‘Not Invented Here Mentality’ on the part of Ford NA…Look it’s like this…If a Ford NA manager, director, VP admits that the Euro-Ford product is a ‘better solution’ for the US Market than the solution you and your stateside team has come up with…then why do you and your team need to exist? It’s simple protection of one’s turf…so long as Ford NA can convince Ford Corporate that ‘we’ in the US understand the US Market better and can create a product better tailored for said US Market than our cousins in Europe, they will be granted a budget, staff, buildings, people…a little empire to run-and people in Ford NA love their little empires and darned well do not want to give them up and admit that sometimes, the overseas product is the ‘better answer’ to the question of ‘what product in our worldwide lineup is best suited for today’s US Market?’

The LESS SIMPLE answer is that in both GM and Ford, the overseas divisions are run and structured more like independent companies…Toyota, Honda, VW, BMW are run more like one large company with branches all over the world. For example, Holden, Opel and even SGM are expected to stand on their own for engineering, design, budget etc, thus they have a lot of different platforms…whereas for example, VW/Audi has very few platforms that they build a LOT of different cars off of for differing markets…people like Lutz and Mulally are trying to change these independent structures and make their world-wide operations sync together better. Let’s hope so.

Well…people like Mulally don’t see things the ‘old way’ …thus he is shaking things up and it looks like for the better…painful for some yes, but a healthy Ford with less employees is a lot better for all Ford folks than No Ford At All. Go Alan Go!!

Aside from the fact that European prices are quoted with the taxes included, the issue is simple — Americans insist on paying less for cars.

The American market is more price competitive, and everybody who does business in the US has to charge less. That’s especially true for Ford, whose brand gets no respect in the US that can’t even charge for their cars as much as Honda or Toyota, let alone BMW.

That makes importing Mondeos, etc. a losing proposition. It makes no sense to pay for high European labor and component costs, only to sell them in the US for a fraction of the price.

They’re better off selling those cars in Europe for money, and finding a cheaper product suitable to us. The key is that it has to be something that we would want, instead of the alternatives from the transplants that we tend to prefer. Making cheap second-rate product is not an option.

cpmanx :
August 14th, 2008 at 12:12 am
As many people have pointed out in TTAC, a direct conversion of Euro prices to US prices is misleading; it has nothing to do with how cars are actually priced here. A case in point: A VW Golf 1.6FSI retails for about 16,000 pounds in the UK. So that means a US Rabbit should cost about $30,000. Clearly VW could never sell that car here–yet they do, and the company is clearly not losing $15,000 on each sale.

Like I wrote, please enlighten me, I want to understand how such a wide gulf between these two price points translates into profits in both markets? You reference a $17,000 Rabbbit that sells as a Golf in England for 16,000 Pounds which translates into $30,000 US. So is the $15,000 difference made up of taxation and fees we don’t have here in the states or is it that the lower US Market price is being subsidized by the higher retail price in other markets? Or are the Brits getting the shaft to the tune of 7500 Pounds?

Again…anyone who can explain this, I want to understand- I’m not an economist, so type slowly so I can understand ‘the numbers’!!

I have been a TTAC reader for many months, and have read repeatedly in this series, and everyone seems to acknowledge, that Ford in Europe builds world-class vehicles.

My question, and maybe it has been addressed before and I missed it, is why can they be world-class in Europe and Third-class in NA? What are the cultural/corporate/market issues which have resulted in this paradox? I don’t see ToMoCo or Honda having the same problem, or anyone else for that matter. What is it unique about Ford which gives rise to such a product perception gap between NA and Ford of Europe? If anyone can answer the question here or link some articles explaining why, I’d like to know what ya’ll think…

Please just don’t fall back on the tired rhetoric of legacy and union labor costs…..US plants are more efficient than Europes, by most measurements I’ve seen, and according to Stu, the gap between the price for NA Ford’s and European Fords more than covers the legacy labor cost gap. So, why?

First the Jeep cherokee is not a truck based suv ala durango, and tahoe. It is a uni-body midling sized vehicle that was said to drive like a car. The big gig was that it used fuel like a pickup sized body on frame suv.

Chrysler like the others has to get the weight out, and this won’t come cheap. What do they need something like a subaru forester (the new one) with a four cylinder lot’s of space and less than 4000 lbs empty weight. Chrysler has no good frame to build this on so here goes another billion plus the developement time (that they may not have even if they got the money).

Now on the plus side a commenter talks about the Ford Galaxy minivan. I rented one two years ago in Germany. It is almost as big as a full sized American van but from there is gets better. It drives wonderfully on curved mountainous roads and the turbo diesel kept on pulling with 4 adults and two kids in the car.

Also after my over 500 miles odyssey, the tank was at 1/4 and probably did clsoe to thirty mpg. Would that sell here? I think so and Ford doesn’t have to design it from scratch. So again Ford has stuff that works right now in the old country, can they federalize it and get it here soon?

I think they have a better chance than Chrysler who has no overseas products of their own.

Killing the F100 makes sense IF they are keeping the Ranger. At $30K for a F150 and $15K for a Ranger there’s room for another model but after putting all that money on the hood to move iron F150’s are going out the door at $18K. Even at $13K there’s no room between the Ranger and the 150 for another model, especially one built on the same platform as the F150. Sorry, no joy.

The big deal is what does GM do? Will they have enough resources to redesign the Silverado in 2 years now that Ford and Chryco have redone their trucks?

Can anyone tell me, if 2 co. get a competitve advantage in the market through C11, can the third get the same relief? Doesn’t seem fair if Ford has the play by the old rules by themselves.

Ford should go back to building honest work trucks. Killing the F-100 was a dumb idea. Basic trucks (including a replacement for the Ranger) designed simply around the concept of hauling things from place to place.

As many people have pointed out in TTAC, a direct conversion of Euro prices to US prices is misleading; it has nothing to do with how cars are actually priced here. A case in point: A VW Golf 1.6FSI retails for about 16,000 pounds in the UK. So that means a US Rabbit should cost about $30,000. Clearly VW could never sell that car here–yet they do, and the company is clearly not losing $15,000 on each sale.

Also note that Ford has no intention of importing Euro models. The vehicles will all be assembled in North America, with the exception of the Turkish Transit Connect.

I think the Ford plan makes a ton of sense. For years I cringed at the company’s haphazard product planning, antique engineering, glacial reaction times. It’s exciting to see that one of the US automakers finally seems to have woken up. I just hope it has happened in time.

With that said, even if they suddenly had those vehicles in the showrooms tomorrow, I don’t believe they can turn a profit on these vehicles. Why? Ford is not a premium brand in this country, even with Lincoln and Volvo as possible premium brands in their stable, I just do not imagine that they will be able to charge a comparable price to what those vehicles command in Europe. As for bringing the European models in as Mercuries? Right…Mercury is a nearly invisible brand…again I just don’t see that working.

For example, the Ford Galaxy MPV nicely equipped is 29,200 Euros which converts into $43,550. Uh-huh…for a mid-size MPV/Minivan. For comparison, according to the MSRP, a Lexus RX 350 AWD SUV retails for $39,100 and with options goes up from there… A BMW X3 4X4 SUV starts at $38,600-now the odds are the dealer will add on another $5000 or so in options, but still for comparison purposes, the FWD Galaxy MPV at $43,550 is no match in the cache’ department for the $40,000 Lexus or the $39,000 BMW. I imagine that most Americans, spending their own money-remember leasing is going away folks, no more giveaway sweet leasing deals to move the pricey high-dollar metal anymore-people will be buying more and leasing less soon and given the choice between a Ford MPV versus a nice, reliable Lexus or BMW with excellent resale values and a lot more cache’, I really doubt if too many Americans will spend their own money for the Ford…I just don’t see it. Maybe you and I yes, but we are enthusiasts, the vast majority of Americans are not, and if they DO know ‘a little something about cars’, they would probably be attracted to the BMW or Lexus, again for the cache’ value…Not too mention if they are shopping for a minivan the Chrysler minivans which have the great Stow&Go seats which the Galaxy does not are also less money, more room etc…Plus you have the Honda Odyssey, Toyota Venza, Sienna, Buick Enclave, Hyundai Entourage all very good offerings in the people-mover segment and most would seem to be less expensive than the Galaxy…so IF Ford wants to sell the Galaxy and other Euro-Fords here, they will have to lower the retail price to be competitive with some other offerings in the Galaxy’s segment and others that may be cross-shopped. If you lower the price too far, you wipe out any chance of a profits, so on the face of it, it seems like losing proposition.

Keep in mind too that the Euro-Fords are priced where they should be based upon their content-they are really nice vehicles because Ford quite simply puts more content in them and they have been working hard over the decades to maintain a marketing position that allows them to build such vehicles and sell them and such prices-you cannot simply build for example, the Galaxy in the US for less money-not gonna happen…If you want the Galaxy to have all the same ’stuff’ it has in Europe, you are going to have to charge the $40,000+ just to pay for the content…there are no free lunches on this deal…if you decontent the vehicles then you are right back to the same problem…non-competitive NA offerings that do not have the same value as ToyoHondHyunNissCo products…not too mention the aforementioned Lexus and BMW at around the same price as our $43,000 Ford Galaxy…

The dollar to Euro exchange just KILLS the whole notion of importing Euro-Fords…why do you think BMW, Mercedes, Alfa, FIAT, and others are currently scurrying about the US South looking for a place to build a plant?!? Because compared to Western Europe, the US is a low-cost country right now. Now-IF Ford thinks they can just suddenly start assembling Euro-Fords here, that might not work either as most of their supply chain for these vehicles is overseas and so most of your parts costs are still in Euros not dollars. So maybe you build the parts over there and ship them over here for final assembly? Same problem now compounded by expensive shipping costs. You could conceivably have US suppliers build your parts here and assemble the vehicles here too but that would take 2-4 years to tool up, source, sequence, convert old plants etc. I don’t know all the details, but I have to admit that from my feeble understanding of their plan, I just don’t see how they can expect to charge a premium BMW/Lexus price for a not-well-regarded Ford nameplate over here and expect to sell a lot of vehicles. I also don’t easily see how IF they lower the retail prices to more closely meet US consumers expectations for what a Ford automobile should sell for in this market today, how are going to make money on the Euro-Ford line over here ?!?! Somebody enlighten me…

As much as I would like to see those great vehicles in the European Ford line-up selling over here asap, I just not certain that they can make any money on them.

Respect for the Fred Tuttle reference. Although in the movie “Man with a Plan”, he won his senate race after spending $16 on his campaign.

http://en.wikipedia.org/wiki/Fred_Tuttle

Anyone think Ford can pull off a similar feat?

Amen brother. Just design a well built $15,000+ smallish 4-banger car that doesn’t look like a beer can with a bowtie.

It’s like…my brain has created a screen name all on it’s own…

Could not have said it better my man!