Detroit is losing customer loyalty
Too many models, too little innovation
By SHOLNN FREEMAN
Washington Post
4/16/2006
As recently as a generation ago, brand loyalty meant something for U.S. car buyers. You were a Ford man or a Plymouth family.
The first car for legions of young men was a Chevy. As Americans increased in age and wealth, they climbed the General Motors Corp. status ladder, up through the Pontiac, Oldsmobile, Buick and, ultimately, Cadillac brands.
But today, consumers have a broader range of choices, as foreign automakers have poured vehicles into the U.S. market. Further, three decades of disappointment with the reliability of U.S. vehicles has combined with Detroit's on-again, off-again commitment to building innovative passenger cars. The result: Brand loyalty has continued to slip away.
With that, a run of job cuts, plant closings and model-line paring has emanated from Detroit automakers, the most recent coming last week.
The Big Three have confused car buyers by inundating them with poorly defined brands and too many models. And, compared with their Japanese rivals, U.S. automakers have often shown less interest in upgrading cars after their high-profile rollouts, analysts say.
By contrast, for instance, the Toyota Camry has gone through five redesigns since its 1982 rollout as an economy sedan; America's top-selling car received continuous horsepower upgrades and now has features found on higher-priced luxury vehicles.
As the reliability and sex appeal of certain brand names have waned, Detroit automakers have had to rely more heavily on incentive-laden pricing to lure customers.
GM has tried hard in recent years to recoup some brand loyalty but has had difficulty in wooing customers back. Once at more than 50 percent, GM's market share now stands at 24 percent.
In a recent J.D. Power and Associates survey tracking owners who had traded in their vehicle for one of the same brand, U.S. brands occupied seven of the 10 slots that showed the greatest drop-off in brand loyalty between 2004 and 2005. Four of the top five gainers were Japanese; Jeep was the lone American.
This year - as Ford and GM close all or part of 26 factories and terminate several models - car buyers will watch as a blur of familiar and obscure names begin exiting the market, replaced by a raft of new and retooled models.
All told, the world's automakers will introduce 23 new and 27 redesigned models to the United States this year. Hello to the Honda Fit subcompact, Saturn Aura sedan, Volkswagen Eos ragtop and new SUVs from Dodge, Mercedes-Benz and Jeep.
Goodbye to the Lincoln LS, which caught the eye of enthusiasts such as information-technology manager Ron Browne at the end of 1999, when car magazines began hailing the new luxury performance sedan as an "American BMW." Motor Trend magazine named the LS Car of the Year at its debut.
Browne, who lives in Laurel, Md., bought a 2000 model for $33,000 - about $15,000 less than a comparable BMW. He bought a second one in 2002. But Ford Motor Co., Lincoln's parent, did little to keep the car fresh as the years passed. In January, Ford said the LS would be one of several vehicles to be discontinued by 2008.
"They came out with a great product," Browne said, "but they let the competition surpass them."
Goodbye to some iconic names - the Pontiac GTO and Ford Thunderbird. And goodbye to the Ford Taurus. In its day, the Taurus was hailed as the great American import-fighter in the mid-size car category. Ford sold hundreds of thousands of them before the car bottomed out, bypassed by continually updated, glitzier foreign rivals. The Taurus became, for a time, the quintessential American rental car.
The plants scheduled to end production include a factory that builds GM's entire line of poor-selling minivans, including the Chevrolet Uplander and Buick Terraza. Also on the plant hit-list are factories that build low-volume but high-profile vehicles from Ford and Chevy, including the Ford GT and the Chevy SSR - a retro-styled truck that was a favorite of GM executives.
Some plants are scheduled to close soon; others, by 2008. Automakers assure owners of the discontinued vehicles that parts and service will continue to be available.
Some investors and analysts have suggested that GM and Ford haven't gone far enough - they've questioned whether signature brands such as Lincoln or Mercury should even exist anymore. Billionaire investor Kirk Kerkorian, GM's largest individual shareholder, wants GM to drop the Hummer and Saab brands it acquired in recent years.
Charles Hughes, a former president of Mazda North American Operations and the founder of Brand Rules, based in Newport Beach, Calif., agreed that GM and Ford have far too many brands compared with rival automakers. Both automakers oversee eight brands. DaimlerChrysler AG has three American brands - Dodge, Jeep and Chrysler - and Germany's Mercedes-Benz.
By comparison, Toyota Motor Corp. has three brands. Honda Motor Co. and Nissan Motor Co. each have two.
Detroit's product jumble among cars extends beyond mere brand confusion. Basic quality issues - which U.S. automakers have worked hard to improve but seem unable to entirely resolve - still drive buyers away from U.S. offerings, even consumers who want to buy American.
The National Highway Traffic Safety Administration has received numerous complaints about electrical problems with GM minivans.
In Consumer Reports' recently released annual vehicle reliability report, GM's Uplander, Terraza, Relay and Montana were rated as the least reliable of all U.S. vehicles. A GM spokesman said the company remains committed to building quality vehicles.
As for the soon-to-be-discontinued Lincoln LS, the sports sedan captured a loyal following early on, including the LS Owners Club www.llsoc.com. Brian Gowing, of Canyon Lake, Calif., started the club, which grew from 30 members to 850 across the country, and to Puerto Rico, Japan and Korea.
In 2004, members of the club drove from California to Ford's headquarters in Dearborn, Mich. The caravan started out in Irvine, Calif., and picked up members along the way, cruising through Nebraska 30 cars deep. Hosted by Ford in Dearborn, the club learned about Lincoln's history of technological innovation and standout styling.
Gowing said initially everyone in the group had pride in the car. They had the feeling that the LS was a toe-to-toe competitor with the BMW 5 Series or Cadillac CTS, he said. But then other carmakers pumped up horsepower and added new features while the LS stayed the same. Now, Gowing says of Lincoln, "they seem to be OK at being mediocre."
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