Washington Post columnist
Friday, May 8, 2009 11:00 AM
Washington Post cars columnist Warren Brown discussed every aspect of the automotive industry on Friday, May 8 at 11 a.m. ET.
The transcript follows.
Montreal, Quebec: I enjoy reading your observations on the auto industry, especially because you don't avoid the discussion of the political aspects of its "re-structuring". The implantation of those companies in the South does echo a sort of 19th century North/South problem. So much of the current economic crisis looks like an attack on gains made by the labor movement in the last century. Incidentally, we drive Ford products (Focus and Fusion) and they seem as good as anything else in their price range.
Warren Brown: Good morning, Montreal:
We pride ourselves in the United States on being class-blind. It's a false pride. The UAW has done much to create a middle class in the United States, helping tens of thousands of "ordinary" laborers to reach that status. For that, the union has paid dearly. But the UAW is not without fault. It's leadership failed to organize rivals of GM, Ford and Chrysler. And for that, the companies with UAW representation have paid dearly.
Wilmington, N.C.: Dear Mr Brown, will you do us the favor and let us know what your perspective is on all the most recent happenings with regards to GM ,Chrysler and Ford . We value your opinion, that's why we ask. Thank you .
Warren Brown: Hello, Wilmington:
GM and Chrysler were unlucky--GM more than Chrysler.
GM has spent the last 15 years revamping its operations--greatly improving product design and development, restructuring global product operations, cutting costs. But it apparently wasn't doing those things as fast as they should've been done. Just when GM had things fixed up--certainly on the product side--the bottom fell out of the global economy, crushing vehicle sales for everybody, including Toyota.
With all of the costs and financial losses involved in its lengthy restructuring, the last thing GM needed was a sales bust.
Chrysler is another story. It simply is doing now what it has been trying to do for the last 22 years--get out of hot fiscal water with the help of a partner. It's tried France's Renault and Germany's Daimler-Benz. It flired with GM. Now, in formal Chapter 11, it's trying Italy's Fiat.
Ford is another story stil. You might recall that it was Ford that was facing banpruptcy, or rumored to be facing bankruptcy three or four years ago. But then came Alan Mullaly, the companies current CEO, who stripped Ford of holdings it didn't need, cut costs like crazy, borrowed billions and invested heavily in hot new products which are now coming to market.
The difference between Ford and GM?
Ford faced its demons earlier and took care of them more quickly under Mullaly's guidance--just in time to beat the global economic collapse.
Silver Spring, Md.: The car market no longer has patience for so-so cars. We are spoiled by the wide variety of really good choices out there. No one but my dad says: "I've liked my last few Dodges so I'm going down to the dealer to get another." Chrysler has some real dogs, like the Caliber, Sebring and Nitro, that never were competitive and need to go away. I'm curious about products like the PT Cruiser which was clever and a very good seller but suffered what I call the "Cavalier/Saturn treatment." It was successful but Chrysler never updated anything about it in terms of style, drive train or image. Are car companies foolish or is it a lack of effort because it's a dull product and the executives can't be interested? You need to feed those cash cows once in a while!
Contrast that with the Corvette or Civic or Chrysler minivan treatment where the brand continues to build as the car is continuously updated and is always kept ahead of its class. It's frustrating because the PT Cruiser was a good product.
Warren Brown: The PT Cruiser WAS a good product...in certain iterations, such as the more upscale Limited version.
The problem was trying to make the PT Cruiser fit everybody's "affordable" budget, which led to the use of dreadfully poor interior materials and goofy powertrain combinations such as a wimpy inline four-cylinder engine and an outmoded four-speed automatic transmission.
Chrysler's bean counters didn't mind as long as they could sell lots of PT Cruisers to the rental fleets, which, of course, bought the cheapest PT Cruisers possible.
Dumb move on Chrysler's part.
Novelty tends to wear off when consumers experience poor materials and performance, which is exactly what they got in the rental fleet PT Cruisers.
Silver Spring- PT Cruiser: I read your review of the current PT Cruiser with sadness - I loved my old one and was hoping to buy a new better one sometime.If I stick to a Turbo or GT model is it still driveable and fun?
(Post, Sunday, May 3, 2009.)
Warren Brown: Both the GT and turbo versions are fine. My problem with the model I rented in Michigan was that it was typical rental fare--a confused base version which showed the car's worst possible face. I will never understand why car companies don't put their BEST cars in rental fleets, even if they have to do it at a loss. The rental fleets are where many of us first meet cars we haven't driven before.
Suwanee, Ga.: What's the latest on the "Cash-for-Clunckers" bill up on the hill? Will it be restricted to certain makes or have income limits for the buyer to be eligible? I'm ready to buy now, but could drive the old car a few more months to save a few thousand dollars.
Warren Brown: Hold on to your old car a little while longer, Suwanee. "Cash-for-clunkers" is still winding its way through Congress and probably will be on that journey well into summer. Your question gives me an idea: We here at The Post and our affiliate, Cars.com, need to do a twiiter-type thing updating everyone who is interested on cash-for-clunkers and domestic industry bailouts/bankruptcies.
In fact, Cars.com has right now is running a consumer's guide on the Chrysler Chapter 11 filing.
Vienna, Va.: Is Ford structured so that Ford USA and Ford Europe are wholly separate companies that only share a common brand name? I see all these great Ford Europe products that I would love to see in the U.S. Any chance we'll ever get some of these over here? Ford S-Max?
Warren Brown: No, Vienna. Ford is a totally integrated global enterprise. But the company historically has viewed Western Europe and North America as distinctly different markets with distinctly different product needs and consumer expectations. Ford now realizes that the world is a much smaller place (the best-selling car in Russia is the Focus), that North American and European product/consumer needs and expectations have merged. That is why we are getting the great little Fiesta. It's why we now have a more European-version Focus. And it's why we are likely to get more Ford of Europe-type vehicles in the United States.
A very weakened UAW won't be able to do much to stop that from happening, which means that we also will see more GM of Europe stuff showing up here, too.
The reality, as your question indicates, is that most American consumers are less interested in "buying American" or "looking for the union label" than they are in getting the hottest cars at the best price.
GM's Plans: From this morning's Post: "According to an outline the company has been sharing privately with Washington legislators, the number of cars that GM sells in the United States and builds in Mexico, China and South Korea will roughly double."
How can a UAW/US-owned company get away with this?
Warren Brown: Get real:
Had it not been for GM of Europe and Ford of Europe, had it not been for more integrated global operations, the domestic companies would have been facing bankruptcy long ago.
How can a U.S./UAW owned company get away with this? A three-word-answer, "The American Consumer."
The American Consumer does not care about "buying American."
The American Consumer does not bother to "look for the union label."
The American Consumer wants the best stuff for the lowest price.
That is why notoriously anti-union Wall-Mart is the biggest retailer in the United States, including in UAW strongholds such as Michigan and Ohio.
It's why the American car companies are struggling to hold onto 44 percent of a home market they once dominated.
Stopping U.S.-based car companies from bringing in cars The American Consumer wants will surely kill those companies and the union-repressented jobs they provide stateside and overseas.
What the UAW needs to do is organize the rivals of the American car companies. The UAW's persistent failure in that endeavor puts the American car companies at risk.
What unions in general need to do is form a strong, truly international union to keep companies, foreign and domestic, from playing worker against worker in their endless hunt for the cheapest possible labor.
Clifton, Va.: Didn't Cash for Clunkers morph into Cash for gas hogs. Cash for Clunkers is a lot easier to manage and regulate. Cash for gas Hogs means more paperwork and govt involvement especially lawyers.
And Ms Pelosi some folks need their big gas guzzlers.
Warren Brown: Cash-for-clunkers has always meant cah-for-gas hogs, Clifton. The theory is that older cars have less-efficient engines. (Yes, I know that theory has a big hole in it. Anyone with a 1999 Honda Civic knows that.)
South Riding, Va.: I must be out of the loop -- what is the Cash for Clunkers bill the chatter from GA asked about?
Warren Brown: Here you go, South Riding:
The U.S. Congress is moving slowly, clumsily to do what lawmakers in Germany did with stunning efficiency: Come up with a program to spark automobile sales by awarding a government credit (tax break and/or purchase subsidy) to buyers who trade in older, less fuel-efficient cars for new, more fuel-efficient models. The program has led to increased car sales in Germany. And the word is that most of the neww models bought there are more fuel-efficient, cleaner burning cars than the models they replaced.
Alexandria, Va.: I always look forward to your weekly Q&A and articles, and wanted to reiterate what you said above about "Novelty tends to wear off when consumers experience poor materials and performance, which is exactly what they got in the rental fleet PT Cruisers." American car manufacturers would be much better off if they could understand that. About three years ago I rented a car and was given a Hyundai Sonata. Instead of just the basics, it had the V6 and power everything. Before that I never would have given Hyundai a second look but because of that great first impression, Hyundai was the first company I looked at when car shopping a year later (I ended up buying a new Elantra).
Warren Brown: Thank ou, Alexandria.
Loudoun County, Va.: Hi Warren, I see on the VW site that there is a diesel tax credit if you buy a diesel before end of 2010. I don't see any further info like if there is an income phase-out or other restrictions on the credit. Do you know, or where could I find a plain-English explanation of all the rules?
Warren Brown: Hello, Loudon:
You will find more information on that at www.fueleconomy.gov.
Kensington: PT Cruiser: I have one and love it. The one I got as a rental in Madison, WI was bottom of the barrel skimpy spartan. Why on earth do they do this?
Warren Brown: I don't know, Kensington. It defies a basic rule of common sense, which is that you try to make your first impression the best impression. You might not get another chance.
Toronto, Canada: Hi Warren, really enjoy your chats and columns. What do you think of the new Chev Equinox and how does it stack up against the rivals in that class? Thank you very much
Warren Brown: Hello, Toronto:
The Equinox finally is a no-excuses, compact suv/crossover. Overall buil quality and presentation are excellent, world-class. Powertrains much improved...and varied. There even are experimental hydrogen fuel-cell models running around the U.S.--proof that GM and Chevrolet are taking the future of the Equinox seriously.
Fortaleza, Brazil: Which auto companies worldwide do you think have the best chance of disappearing in the next few years? By the way, some reports simply refer to Fiat as an Italian company. It is,like GM and Ford, found worldwide. Fiats, are ubiquitous down here. They are, like most cars from "foreign" makers, made domestically. There are only a few brands, such as Hyundai, Land Rover and Volvo totally imported.
Warren Brown: Hello, Brazil:
I think Chrysler will go.
Isuzu for all intents and purposes is leaving the U.S. market as a purveyor of passenger models. Will it become a commercial-vehicle only manufacturer?
Mitsubishi seems to be struggling. And one wonders how long Hyundai will continue carrying an increasingly redundant Kia as wholly-owned subsidiary.
Clifton, Va.: Warren, cash for clunkers originally was for vehicles 1999 and older but now its you have to buy something that gets better gas mileage than your pick up or SUV. The original bill was to clean up the air only.
Warren Brown: You are right, Clifton. But the bill's true reason for being has always been to get dirtier, less-efficient cars off the road and replace them with cleaner, presumably more efficient models. Such proposals always have an underlying reason for being, usually wedded to environmental and/or safety concerns.
PT cruiser: How can a 2.4 liter 150 HP engine be wimpy? I never considered my Benz's 2.3 liter 148 HP engine wimpy. In Europe they'd kill for (and would be taxed extra!) for so much HP and engine displacement. How can Europeans manage highway driving with much smaller engines?
Warren Brown: The PT Cruiser weighs 3,222 pounds. That's a load for a compact car. In that application, a 2.4-liter engine mated to an outmoded, sluggish four-speed automatic transmission is a drag to drive. And with a combination of front disc and mediocre rear drum brakes, it's not much fun to stop, either.
Rockville PT: Given the current situation can I afford to keep my PT Limited vis a vis parts etc. or can I kiss resale trade in value good bye?
Warren Brown: Kiss trade value goodbye. You will be okay on replacement parts. Chrysler dealers are up and running, and many are beefing up their back shops in anticipation of doing more repair than new-car sales. Your best option is to amortize your current car's value through extended use.
Germantown: Warren, I'm sort of confused about your take on unions, and how all automotive companies should be unionized. Don't non-union companies provide good middle class jobs also (ie. Toyota)? What additional benefit would a union give them. And Wal-Mart: they don't seem to have trouble finding workers. Any my industry: software - we all make good livings and no union.
Warren Brown: Hello, Germantown:
Trust me. Now that the UAW has been humbled, look for downshifting of wages and benefits at the non-union companies. Keep in mind that salaries at places such as Toyota and Nissan in the United States have long been pegged, at a slightly lower level, to salaries negotiated by the UAW. The "foreign" companies had a great strategy: Locate plants in ani-union strongholds. Offer jobs that paid higher salaries and provided more benefits than those normally received by the local populace (salaries and benefits that closely patterned those negotiated by the UAW). Provide other amenities, such as an empolyee gym. Turn employees into "associates" and keep the union out.
Now, with Toyota and Nissan both losing sales and big bucks in this economy, and with the strength of the UAW a distant memory, keep an eye on what's going to happen--indeed on what already has started to happen--to those empoyees in the non-union shops.
Power concedes nothing freely.
Unchecked power has never helped the people who are subject to it.
Warren Brown: That's it for today, folks. Please join us again, next week.
Program note: "On Wheels With Warren Brown," WMET World Radio, 1160 on the AM dial, will move to Sundays, 12 Noon-to-! PM, beginning May 17. Call-in is 866-369-1160.
Thanks for producing today, Sakina.
Eat lunch, Ria.
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