Is There a Bias Against American Cars? (F, GM)

Includes: F, GM
by: Douglas McIntyre

Roger Simmermaker has made an excellent case that the American media is biased against cars made by U.S. manufacturers in both his online Monthly Tune Up, and his site But, his is a minority view. JD Powers tends to rank American cars fairly high, with three of the top five spots going to U.S. companies with Lincoln, Buick and Cadillac running just behind Lexus but ahead of Infiniti in the coveted Vehicle Dependability Survey.

Turn to Consumer Reports, and you can quite another picture. When they released their Most Reliable Cars list in late 2004, one American car was on the list, the Pontiac Grand Prix. The Buick Regal made it, but manufacturing of the vehicle had been discontinued. Lexus, Toyota, Infiniti and Honda dominated the list. Interestingly, BMW, Mercedes, Volvo and Jaquar made the list of "least reliable" cars more than any other manufacturers. Odd. Well, yes. But, it does appear that it depends on who is counting the votes.

Take a quick look at Edmunds, arguably the best car site on the internet. They run a section called "Editors' Most Wanted Vehicles". You will run into plenty of American cars here. First, they gave the Pontiac Solstice the award for 2006 Most Significant Vehicle of the Year. Given all the new models that came out in '06, that is very high praise. The Dodge Charger made the sedan list, and BMW and Audi dominate the balance of that section. The same BMW that gets ripped by Consumer Reports and the same Audi that gets banged in the JD Powers survey. Weird.

Moving to the wagon section of the Edmunds editors' list, the Dodge Magnum makes it, but Audi makes this list as well. Better tell the guys at JD Powers. In the coupe category, the Mustang and Corvette make it, but so does the BWM 6 Series. In the SUV category, the Ford Explorer and Mercury Mountaineer get on the list, and so do Nissan, Toyota, Lexus and BMW. All in all, the American car holds its own with the Edmunds editorial staff.

So, why all the headlines about the death of the American car? Part of it may have to do with the way the car manufacturers are viewed independent of the quality of their products.

First, the demise of the companies and the demise of the cars themselves is not the same thing. The cost to build American cars is higher. Dr Peter Morici of the Business School at the University of Maryland published an excellent article on this topic at FinFax, an Irish business site of all places. He made the point that GM China had little problem competing with the likes of Toyota on the mainland, but the North American cost structure creates too much drag for GM to compete in the U.S. Does it mean GM does not make good, or even great cars? No, but it may mean that it doesn't have the financial structure to make them at a profit.

A survey of 140 global automotive executives conducted by the accounting and consulting firm KPMG Canada and released in January 2006 found that 58% of those surveyed were growing pessimistic about the prospect of North American brands competing globally. A year earlier, the number had only been 45%.

This clearly creates a mixed message with the press. If the company is in trouble, maybe it is because the products are no good. And, maybe not.

American car manufacturers have the opportunity to "disconnect" the negative message driven by the labor costs and their pension costs from the message about the quality of their brands. It is a form of silo marketing, and it works well in a lot of other industries. For example, do people stop buying software from Microsoft because the federal government, the European Union, and a number of companies have sued it for monopolistic practices? If so, it happens rarely.

The bias against American cars and in favor of Asian cars may exist in the media, but there is also ample evidence that a number of American vehicles are viewed very, very well. Part of the problem is that headlines about a company can get confused with headlines about the company's products. That can be fixed. Does it solve all the problems of marketing American cars? No, but it's a start.

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Tagged: , Auto Manufacturers - Major
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