Quote:
Originally Posted by thecamaroguy
Myth No. 5
GM, Ford and Chrysler are idiots for investing in pickups and SUVs.
Reality
The domestic companies' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and
BMW have all spent billions of dollars on pickups and SUVs because trucks are a large and
historically profitable part of the auto industry. The most fuel-efficient full-size pickups from GM, Ford
and Chrysler all have higher EPA fuel economy ratings than Toyota and Nissan's full-size pickups.
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This is the only sticking point in the list of myths, IMHO. I don't think they're idiots for investing in pickups and SUVs. Pickups are the best selling vehicles in the US, SUVs sold very well too, and they were all highly profitable. Their failure in this investment however is that throughout the late 80s and most of the 90s, the Big 3 didn't have any contigency plans for world-class small cars in America, and they weren't putting their SUV money into creating world-class cars. There were exceptions, of course, but most of their bread-and-butter line up of cars suffered and stagnated while the foreign makes all kept refining their cars. Affluent buyers who could afford the pricey American SUVs bought them, but young buyers coming out of school with tight budgets just entering the car market made their first purchases with the foreign companies' better lineup of entry and mid level cars, and those companies started building loyalty from the ground up.
And then when those companies entered the SUV market, they not only did so with solid SUVs, but with a solid portfolio of cars as well and a lot of equity built up in their customer base. When the gas prices started shooting up after Hurricane Katrina, the mainstream foreign companies still had their excellent portfolio of cars and small vehicles to fall back on, while Detroit was largely caught off-guard, especially Chrysler. Ford and GM have just started putting out serious competition, and 2010 is going to be an excellent product year for them, but not having those cars in place back then and not having most of them now is costing them dearly.
So I don't think they're idiots for investing in pickups and SUVs, but I do think they're idiots for not investing what was needed in everything else.