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What’s Happening to the U.S. Automobile?

March 19, 2006

Filed under: life,manufacturing — Terry Wohlers @ 16:24

The North American International Auto Show in Detroit was held last January. Lee Teschler, editor of Machine Design gave an alarming report of the show in the February 23, 2006 edition of the magazine. The show painted a bleak picture for U.S. automobile makers. An example of their competition is the new Lexus LS460, the world’s first eight-speed automatic transmission. Journalists were dazzled, according to Teschler. One journalist said that these guys could take a five-year nap and still be ahead. Other products that turned heads were Hyundai’s new Santa Fe SUV, the Acura MDX, and Volvo’s XC90.

As an example of the problem with U.S. car manufacturing, Ronald Khol, former editor of Machine Design, explained what went wrong at Cadillac in his August 4, 2005 editorial. “Cadillac not only became the car of choice for CEOs, but also for pimps and small-time neighborhood criminals,” he stated. “Even worse, the car eventually was priced where middle-class people could buy it. You began to see Cadillacs at K-Marts in addition to the country club.” Meanwhile, cars from Mercedes were priced at up to twice that of a Cadillac and it became the car of choice for image-conscience drivers. Khol said that Cadillac management lost sight of the fact that they were supposed to be selling an exclusive product and instead focused on sales volume.

Teschler, in his editorial, pointed out that Korean carmaker Hyundai did not begin to export cars to the U.S. until the mid-1980s. Quality was a problem in the beginning, with many in the U.S. not taking it seriously. Today, the problems have all but disappeared. 

At the Detroit show, the Chinese introduced the Geely, its first export to the U.S. The company claims that its quality will be superior. Teschler concluded by questioning whether U.S. auto observers will view Chinese automobiles the way many judged the early Korean cars. My advice is to them is to take the automobile very seriously. They may not be a strong contender in the beginning, but look out after they’ve established themselves.