New Book Questions Future of Detroit Auto Industry's Market Dominance
October 23, 2003
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In her provocative new book, The End of Detroit: How the Big Three Lost Their Grip on the American Car Market, journalist Micheline Maynard describes the decline of Chrysler, Ford and General Motors. The industry publication Automotive News predicts U.S. car and light truck sales will hit 16.5 million units in 2003, the fifth best year ever.
On its face, it seems like encouraging news. But author Maynard suggests looking behind the headlines. Detroit's automakers are frowning as the import brands take an ever-larger piece of the sales pie.
"The Big Three have just about 60 percent of the market," she said. "And to give that some context: that's as much as General Motors controlled on its own in 1960."
And Ms. Maynard says that downward slide by Chrysler, Ford and GM will continue.
"I predict in my book that by 2010, it's quite likely that the Big Three and the import companies will divide the [U.S.] market 50-50," she said.
How did the imports, especially the Japanese, gain such strength against the Big Three and do it on the Americans' home turf? Author Micheline Maynard says it's just basic business practices.
"What they did, starting from about 1980, was they figured out what American customers were looking for in vehicles which was basically a lot more space and a lot more comfort than they offered customers at home [in Japan]," she said. "So they worked on that. Part of their strategy in doing that was to build plants in the United States to build those kinds of vehicles."
Ms. Maynard says another Detroit failing is a short attention span. Ford, for example, did a great job with the original Taurus sedan back in 1986. But, she says, then Ford management lost interest in the car, focused elsewhere while companies like Toyota or Honda refuse to rest on their laurels.
"What the import companies would do, by contrast, is get into one of those markets say for luxury cars and just keep improving their vehicles," she said. "In doing that, they generated loyal customers who would stick with them as the vehicles just got better."
One distinct advantage the imports have over the Big Three is the amount of money the Detroit companies have to pay out to employees and retirees in health and pension benefits. Contracts negotiated by the United Auto Workers union and GM, Ford and Chrysler over the years have left a huge obstacle for the domestic automakers to overcome.
"The Detroit companies face a $1,200 per vehicle burden because of pensions and health care," said Ms. Maynard. "And that is something that they have to overcome that the import companies don't have to."
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