Can General Motors (NYSE: GM) and Ford (NYSE: F) make a good car? After years of claiming that they can't make money with passenger cars, American automakers are finally taking the car market seriously. The fat years of making glorified pickup trucks tricked out with leather seats and premium sound systems -- better known as SUVs -- are now over, and Detroit finds itself in a bit of a pickle. The Americans may have ignored the basics of making well-designed cars, not gas-guzzling trucks, for so long that they may not be able to catch up with the leaders, Toyota (NYSE: TM) and Honda (NYSE: HMC).The problem is that foreign automakers now have an enormous lead in design and manufacturing expertise when it comes to passenger cars. The Toyota Camry and the Honda Accord have long been the leading sedans in the U.S., and for good reason. They are roomy, comfortable, very well designed and made, and reasonably efficient. Their surprisingly powerful yet nearly silent engines last for hundreds of thousands of miles, which helps maintain resale values. And they are profitable: Toyota reportedly clears $1,000 per Camry, and with 400,000 Camry sedans sold last year in the U.S., that's a good chunk of change that any car company would be happy with.
Nevertheless, the competition for sedan sales is heating up. As The Wall Street Journal reports, GM is pushing the Chevrolet Malibu as an American alternative to the Camry and the Accord. Ford, too, is entering the fray, changing the name of the Ford 500 to the Taurus in an effort to recapture the glory of that hallowed name. (I think this shows just how desperate Ford is, given that the Taurus' glory days were in the 1980s and that the car sold so poorly in recent years that it was terminated.)
But it may be too late. As John Casesa, a former Wall Street auto analyst, says in the Journal piece, "The ship has sailed in the midsize sedan segment . . . Camry and Accord are now established titans in that part of the market." Even worse, Detroit may not be able to rule the second tier under Toyota and Honda. Other foreign manufactures, including Nissan and Hyundai, are making very good cars these days. Starting at under $18,000, Hyundai's Sonata sedan is a particularly strong alternative to the Camry and the Accord. So there isn't much room for the Malibu and the Taurus. It looks like Detroit may pay the price for ignoring cars so long for many years to come.
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
Reader Comments (Page 1 of 1)
8-30-2007 @ 5:07PM
james Oswald said...
well well the bashing goes on . our countries auto co.'s build as good as and even better than asian co.'s in many cases . you have forgotten the early attempts by asia with junk and they moved past that now you can't see what the domestic co.'s have done and they did it with unions fighting them at every turn . america has given all of us a wonderful life , not asia . they are doing everything they can to destroy our domestic companys and much of the public get in bed with them . if they don't want to support american then they should live in asia and earn their living there .jdo
8-30-2007 @ 9:25PM
Gumby said...
Is UAW gonna strike or what?? We are spooked !! UAW is taking GM and Ford hostages??
8-30-2007 @ 7:03PM
A D said...
Considering how ugly the Camry is and it's well earned reputation for self destructing engine sludge, the fall of Toyota will be just as fast as it's rise.
Besides that, the new Malibu has something that the Camry doesn't have, style. And an interior that isn't one shade of dull gray.
8-30-2007 @ 8:39PM
Henry said...
The big three need european designed sport and luxury vehicle. The engine should be the higher technology of the four,six,and eight cylinder that have 24 valves that are fuel efficient.The mufflers needs to sound more like A Indy Car. I have A car with all wheel drive which helps me A lot in the snow. I would never leave home with out it.
8-30-2007 @ 11:37PM
Clemson said...
Your premise is defective. GM already has the Chevy Impala, its "old Soldier," that has been giving The Camry and Accord a run for its money. In fact, Impala sales are running neck-in-neck with Honda Accord sales this year, and even surpassed Accord sales in May and June of 'o7. "Enormous lead in design and manufacturing," you say? Total bull. Just more anti-domestic bias. (And why didn't you mention that the Saturn Aura beat out Honda and Toyota for North American Car of the Year?)
8-31-2007 @ 12:31PM
doug said...
I am a retired GM worker of 37 years,this model year top 5 recalls were imports taking 4 out of 5, the American car and truck are the best, if GM and Ford fail this country will see something more with the market than this subprime fiasco
8-31-2007 @ 11:15PM
Sandra Gilbert said...
It's amazing to me how little the internet knows about cars, or who is doing what with cars! Not too long ago one of our major magazines published an article saying that Toyota had the most recalls of all vehicles made! Further, that Ford had and GM had the least recalls. Give me a break about the foreign vehicles being better! Or, has our internet been sold out by foreigners?
9-01-2007 @ 1:28AM
OTISFORDSUCKS said...
No help at all from Ford, and that's not right...SHAME. http://www.otisfordsucks.com
9-01-2007 @ 9:52PM
jpdr1100 said...
Funny, but didn't GM tell us that the last version of the Malibu was going to do all those wonderful things and send the Asians running back home?
The Impala has caught the Accord in sales in part because the Accord is in the last year of it's model run (totally new model due out this week) and in part because GM is discounting the hell out of its car.
The ongoing Ford recall of the self-ingniting cruise controls is now up to 10 million vehicles. It is the largest recall ever.
9-02-2007 @ 9:25PM
bopper said...
America sings the praises of Asian car makers, but in 30 years those workers will have nothing to show for their working lives. They will have neither health benefits nor retirement. Statistics show that Americans are not saving nearly enough money for retirement and the Asian car manufacturers will not provide a safety net for American workers as the profits of Asian care makers go to Asian countries rather than the US.
And, American auto makers do indeed make great cars. Try the new Saturn Aura. Two of our friends have bought one and love it!
9-04-2007 @ 4:59PM
john anderson said...
I have a chevy Impala and its a joy to drive,it locks great drives great and great m p g but best of all its made by north americans
9-07-2007 @ 6:35PM
mh said...
OK well it sounds like every one wants to bash Toyota and the Camry..but I for one have had a two Chevy's one a truck and the other a 2004 Malibu. I loved my Malibu at first but when we went out of town the people in the back said it was to ruff. I did every thing a good car owner should do in regards to maintenance BUT with in a few years I was having one problem after another with my Malibu and it was nothing that I had or had not done to my Car. SO For the first time I went to Toyota and was looking around. I came across the 2007 Toyota Camry I did not really like the car BUT after I checked it out and the more I climbed around in the Camry, the more I liked it!! Well yes I drove off in a 2007 Toyota Camry LE and I have loved every min. of it. The Camry is GREAT on gas and thats great on my pocket book!!! I LOVE MY CAMRY even tho some on here say its UGLY but this is the first place I have seen a comment about the Camry being SO UGLY. I was 1 of 2 people here in my hometown that had a 2007 Camry and now there are about 6 and every one of the other owners I have talked to say that they LOVE THEIR CAMRY'S! I feel safe when I am in my Camry it has many more airbags than my old car (Malibu) PLUS its better on gas and has more leg & head room than the Malibu did. I have never owned a Toyota before but I'm loving it now that I am! For the people who don't like Toyota or the Camry that's just your Opinion maybe take a test drive and see for yourself just how nice and smooth the Camry drives! It's a Competitive world out there and face it no one likes to come in 2nd, 3rd or last. WE ALL WANT TO BE NUMBER 1 but we cant all be the top dog now can we?