Detriot Refueled

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http://www.nytimes.com/2010/10/14/au...T.html?_r=1&hp

IT wasn’t long ago that American consumers were wondering whether Detroit’s troubled auto companies would survive, much less prosper again.

Decades of decline and financial pressures had finally caught up with the beleaguered Big Three. Without hefty government bailouts last year, chances were that General Motors and Chrysler would go out of business and drag their suppliers, and possibly Ford Motor, down with them.

Now, with Ford leading the way, Detroit is recapturing the interest of many consumers who ditched domestic brands in favor of Asian and European models.

“Ten years ago, the younger, more cutting-edge buyer was mostly interested in cars from Japan and Germany,” said Art Spinella, president of the consulting firm CNW Research in Bandon, Ore. “That is changing and changing fast. Detroit all of a sudden seems fresher than the competition.”

This revitalization has little to do with the government bailouts. People are considering American cars because of their improved quality and fuel economy, and high-tech features that are equal to or better than those offered by overseas manufacturers.

“Detroit is building its comeback the old fashioned way — with competitive products,” Mr. Spinella said.

Sales of Detroit’s vehicles have climbed 11 percent this year through August, compared with an 8 percent increase for the overall market. Both G.M. and Ford are profitable for the first time in years, in part because of improved sales and higher sticker prices that customers are increasingly willing to pay.

Ford, which managed to stay afloat without help from taxpayers, is leading the pack with an 18 percent gain in sales, fed by a sweeping makeover of its vehicle lineup.

“Our consideration rates have grown remarkably for our industry,” said James Farley, Ford’s global marketing chief. “The reason is we can now show customers the cold, hard facts that our vehicles are world class.”

The proof emerged this summer in the influential “initial quality study” of new cars conducted by the research firm J. D. Power & Associates.

For the first time since the study was inaugurated 24 years ago, the domestic auto brands posted better scores on quality than imports. Consumers reported 108 problems per 100 vehicles in domestic brands, versus 109 for imported models.

“This year may mark a key turning point for U.S. brands as they continue to fight the battle against lingering negative perceptions of their quality,” said David Sargent, vice president for global vehicle research at J. D. Power.

Ford’s surge in quality has been particularly impressive. It trailed only the luxury brands Porsche, Acura, Mercedes-Benz and Lexus in initial quality.

And Ford has blown past Toyota, once considered the paragon of reliability for new-car buyers. While Ford registered 93 problems per 100 cars in the survey, Toyota had 117. The improvements at Ford have managed to change consumers’ perception of American vehicles in general.

“Ford has become almost the ‘halo brand’ for G.M. and Chrysler,” Mr. Spinella said. “Because of Ford’s success, people are less resistant in general to considering all of Detroit’s products.”

Recent surveys of consumers by CNW Research show a marked change in attitudes toward Detroit by younger buyers in particular. Three years ago, more than 40 percent of new-vehicle shoppers under the age of 30 said they would never consider a Detroit-made product. Now that figure is 32 percent and dropping steadily.

When Ryan Kelso, a 28-year-old information systems analyst, began looking for a car to replace his Toyota Corolla, he was intrigued by the improvements at Ford.

Mr. Kelso had not owned a domestic vehicle for several years. His last one was a Ford Ranger pickup, and it was not a pleasant experience.

“It had some problems and kind of soured me a bit on Ford,” said Mr. Kelso, who lives in the small town of Napavine in western Washington. “I was kind of thinking I would buy another Japanese car.”

Mr. Kelso looked at the Nissan Altima, Honda Accord and Subaru Legacy but kept coming back to the positive reviews he had read about the new Ford Fusion midsize sedan.

“I was prepared and ready to buy the Altima, but the Fusion just got really good marks from all the reviews,” he said. “So I decided to test drive the Fusion and I could tell immediately that this was a really nice car.”

Mr. Kelso, who calls himself a techie, was impressed by the voice-activated phone in Ford’s Sync multimedia system. “I thought, this is pretty cool,” he said.

He has a 2010 model Fusion on order. “It just had everything I needed,” Mr. Kelso said.

Mr. Farley of Ford beamed at the description “pretty cool,” but said that nuts-and-bolts quality and a positive driving experience were the bigger reasons shoppers were considering Ford products.

“The cool factor in design and high technology is critical,” he said. “But it’s the fundamental, underlying trust that people have in our vehicles that is the foundation for shopping our brand.”

Mr. Farley worked for Toyota for 17 years before joining Ford in 2007. As a longtime competitor, he knew well the baggage that Detroit carried for years as a purveyor of subpar cars that could not match the quality of Japanese models.

He said that the financial crisis that landed General Motors and Chrysler in bankruptcy actually helped raise awareness of the steady improvement that Detroit — and Ford in particular — had made.

“For the first time in many years, Americans debated the value of our industry,” he said. “When the crisis happened, they started to notice that we were doing things differently and our cars had gotten a lot better.”

Industry analysts say that consumers are proving they do not hold Detroit’s past problems against them.

“Things do move pretty quickly,” said Jeremy Anwyl, president of the auto research Web site Edmunds.com. “Look at how people have reacted to Toyota and its safety issues. People react fast to both improvements and problems.”

Despite their financial problems in recent times, G.M. and Ford have not scaled back spending on new products. In fact, the companies have brought out more new models in the last two years than Toyota and Honda.

G.M., for example, can hardly keep up with demand for its hottest new vehicles like the Buick LaCrosse, Cadillac CTS and Chevrolet Equinox — all of which marry provocative designs with efficient engines and superior handling.

In the past, Japanese cars have overcome bland styling with their reliability and fuel economy. Now that Detroit has improved quality and engine performance, its sleeker designs help its models stand out.

Like Ford, G.M. sees a clear advantage over foreign rivals in the area of car electronics. The company is overhauling its OnStar brand to include more information and entertainment options, like the ability to get access to Facebook accounts with hands-free technology.

Ford’s Sync system has become a major selling point. Since its introduction three years ago, Ford has sold 2.5 million vehicles equipped with Sync, and Mr. Farley said some consumers sought out Ford because of the high-tech feature.

“Sync-equipped cars sell faster than nonequipped models,” he said. “Imagine that — a $295 option is causing the whole car to sell quicker.”

Even Chrysler, which has struggled since emerging from bankruptcy, is gaining traction. The company’s new Jeep Grand Cherokee has been well received because it offers a more comfortable ride without compromising Jeep’s tradition of off-road capability. Down the road, Chrysler’s new partner Fiat will bring a fleet of smaller, more fuel-efficient passenger cars to Chrysler showrooms.

The combination of new technology, popular designs and better quality has transformed Detroit from a laggard to a leader, Mr. Spinella said.

The last time Gary Bernstein of Marlton, N.J., owned an American car was 10 years ago, when he had a Jeep. Since then, he has owned a Mitsubishi, an Audi and a Nissan.

Now he is looking at a Chevy Equinox or a Ford Edge to replace his Nissan Sentra. The 56-year-old freelance court reporter has been pleasantly surprised at how attracted he is to Detroit’s offerings.

“I do like the gadgets, especially Sync,” said Mr. Bernstein. “And the ride of the American models are so much smoother and more comfortable than the Jeep I had 10 years ago.”

He was particularly impressed by the 32 m.p.g. of the roomy Equinox, with its four-cylinder engine.

“It just seems there is a lot more value in Detroit’s cars than there used to be,” he said. “I never thought I’d say this, but the domestics have rebounded pretty well over the last few years.”

It is too soon to know where Detroit’s comeback will take it. Toyota has vowed to increase its quality to higher levels after its recalls for unintended acceleration. Honda is preparing to introduce models it hopes will recapture its sizzle in the small-car market. Formidable competitors like Volkswagen and Hyundai are readying their own new-vehicle blitzes.

And every automaker will have to deal with weak demand in the United States until the economy improves. So nobody in Detroit is foolish enough to declare victory.

But with each model introduction and percentage-point gain in sales, the domestic auto manufacturers are proving that they once again are a force to be reckoned with.

“You know, during the bankruptcy I had to pause when people asked me where I worked,” said Mr. Bly, the G.M. executive. “Should I tell them I am with G.M.? Well, now that people want our products again I feel pretty good about saying I work for General Motors.”

It is fantastic to see the Big 3 come back stronger than ever.

[Sax1031]

really awesome

I am glad the big 3 are building world class leading products again

[BackinBlackSS/RS]

I wonder how alrox feels about this?