- Jun 2, 2012
CNN outlines 8 reasons why Detroit automakers must improve
For the most part, the ideas just rehash things you probably already knew. Carmakers certainly do. Who doesn't want higher residual values? Who doesn't want to build and sell more luxury vehicles? Family sedans?
But what I find more upsetting are some idiotic statements, such as comparing the percentage of crossovers built by one company that doesn't have a full-size truck to one that does. It makes for some neat numbers, but unfairly so. I hate when any story makes me sound like an apologist for Detroit. Of course, no one in Detroit wants its key industry to do poorly again, and it is possible, but let Detroit win or lose on its own merits, not some made-up ones.
Anyway, much to my chagrin, CNN's list of eight reason for Detroit to still worry follows below:
1. Domestics depreciate faster than imports. This gives import buyers cheaper leases and more money back on trade-ins down the road, though residuals of domestics have shown strong improvement in recent years.
2. Old ways aren't the best ways. While Detroit may do well with sports cars and pickups, it falls behind in segments that imports compete well in, except, apparently, in sports cars and pickups. CNN names segments like small coupes, sedans and minivans, even as Chrysler, the only minivan builder in Detroit, outpaces the rest of the world combined this year in U.S. sales.
3. Detroit lags in fastest-growing segments. CNN points to crossovers and how every car maker should have 30 percent of their total volume in sales as crossovers. Only Toyota, Nissan and Detroit offer a full lineup in America. The comparison feels dishonest at best, especially when Toyota and Nissan pickup sales are abysmal at best.
4. Big ticket customers go elsewhere. This is a good point but really, CNN should reexamine this in a year. Lincoln has only started to try and gain traction. Cadillac has just launched the XTS, and the compact ATS arrives later this year. Chrysler is only now beginning to draw its identity and sales for the 200 and 300 continue to grow. But most of all, CNN doesn't even consider pickups, which cost more than many European luxury cars. And the Europeans can only match Asian luxury pickup sales in America at a grand total of 0.
5. Detroit has too many dealerships. It's bad for business, CNN says. And I couldn't agree more. If CNN knows any way to get past all of the politics and pesky laws of opening and closing dealerships around the nation, I'm sure Detroit would listen. It's more complicated than canceling your cable bill. However, CNN appears to think every car maker should run exactly the same business plan. There are a lot of Detroit dealerships in rural areas that may not turn big numbers, but they do turn profits.
6. Detroit dealers stock too many cars. CNN points out, via Automotive News, that Detroit dealers carry 68 days supply of vehicles, whereas imports carry 49 days supply. Here's an easy fix. Detroit should blow up 19 days supply of vehicles on July 4. Think of the promotional opportunities.
7. Good enough is not good enough. When CNN has nothing to say, it resorts to cliches. I think its point was that no matter what Detroit does, it doesn't matter. Kind of like rooting for the Braves.
8. What price parity? I've read this point five times and still don't get it. Basically CNN repeats No. 7 and says that by 2015, Detroit will have 45.8 percent of the U.S. market and the Asian four (which is named as five carmakers) will have 41 percent of the U.S. market. "In the past, when big, successful companies like Kodak, Sears, and A&P lost their market dominance, they quickly slid from mediocrity into irrelevance," CNN says.
So there you have it. CNN implies Detroit will quickly slide into irrelevance shortly after 2015 if it doesn't heed its business-saving advice. I'm going to disagree. Of course Detroit needs to be careful and avoid complacent bad habits. If the last five years haven't taught Detroit that, nothing will.