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What will happen to Detroit and the American automotive industry?

 

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Question:

Housing values in Detroit are on a down slide. People are leaving the area as 'the Big 3' automotive producers lay workers off. What will happen to Detroit and the American automotive industry? JD Power ratings shows that customers are quite happy with American cars:

http://www.jdpower.com/autos/brand-ratings/


Answer:

(not an answer, just an opinion)

I would take JD Powers with a grain of salt. JD Powers is about customer satisfaction. Satisfaction has to do with expectation. If I buy a cheap Saturn, expecting it to be crap and there are no serious problems, then, sure, I will be very very happy.

If I buy a top of the line BMW and there is the smallest issue, then I will bitch about it. Ok?

I have owned/ still own:
  • 1985 Mazda 626, purchased in 1996 with 110k miles.
    No problems, just maintenance and a new starter after 60k miles
  • 2000 Firebird, purchased new. Rear differential seal broke 3 times (10k, 36k, 60k). Catalytic converter broke at 81k (1k after part warranty expired :-). Transmission started to act up at 90k and I sold.
  • 2004 Mazda RX-8, purchased new. No problems. Fantastic car. Got bored after 3 years and sold it a few weeks ago.
  • 1974 Mercedes 240D. Amazing how solid a 30 year old car can be.
  • 1992 Ford Festiva. Engine by Mazda, assembled by KIA. Nothing Ford in this.
    I bought it with 204k miles, it's 275k miles now, no problems. The best vehicle ever. Cost me $450, just routine maintenance and a new clutch at 250k. The next one will be due at 500k :-)
    It's the 'SATURN EFFECT': low expectations + good performance = very happy customer :-)
  • 1996 Mazda Miata. Owned for 10 days only, no comments.

About the Firebird. I totally babied that car. All freeway miles. Oil change at the dealership every 3k miles = every 6 weeks. All dealer recommended services (more than the manufacturer suggested). Still quite a few problems.


In all fairness, I think American cars are getting better. The Firebird was old design and probably ruined my feelings for American cars.

A manufacturer's reputation is something that changes very slowly. I wouldn't give much on JD Powers.

Take a look at a Mercedes from the 70ies. I owned one for a few months, a 1974 240D. These cars would go forever. Mine felt strong and sturdy. Mercedes models from that era have gone beyond a million miles:

Mercedes 240D with 2.8 Million miles

Anyway, today Mercedes are assembled from the cheapest parts they can buy ('get by') and no longer in Germany but in various countries where labor is cheap. Do you think a 2006 Mercedes will go a million miles?

My family in Germany are big BMW fans. 3 BMWs owned so far. All 3 had brake problems in the first 6 months. I don't know what else, as I don't live there.

But the German cars have a good rep, and it will probably last a few more years.

I think that with international partnerships, American cars are getting better, although they're far from having a technology edge, as someone pointed out above.

By the way, when selling the RX-8, I was test driving the Viper SRT-10. There was something about it that I liked. The rareness? My bad experience with the Firebird made me not buy it. Instead of blowing 70k on a Dodge I bought a used Miata then. Quite the opposite. You see them all over the place and the engine is not the same either. But I won't lose so much money.
(I know that the ZO6 is a better car, but too many of them around.. )



I read a few years ago that Toyota can build a Corolla for less money in shorter time than Chevy can build a Aveo. This is due to more advanced use of robots in Japan. Quality is higher for the same reasons. As a result, Toyota can sell the Corolla for a higher price than Chevy the Aveo, but produce it at a lower cost.
Result: Chevy just breaks even or loses money on the sale, Toyota makes big profit.

I have not much hope for the people in Detroit in terms of automotive industry.
I think GM and Co can succeed by automation and producing offshore. Unfortunately. It's the same as in my home country, Germany. Labor is too expensive.

I think Detroit will come back at some time. But I doubt it will be related to the automotive industry. I could be something entirely different, using existing infrastructure.


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