Join The Conversation With Mishpacha's Weekly Newsletter

A Shining Example

Shimmy Blum

Three years ago, analysts were predicting the end of America’s automotive industry. Today, the Big Three’s turnaround has become a model for corporate America in battling adversity, the competition, and winning back long-lost customers. Are Orthodox Jewish buyers joining the Buy American trend, and if not, why not?

Wednesday, June 15, 2011

The sky didn’t fall after all.

A confluence of positive moves, including corporate restructuring and retooling, giving consumers what they wanted, plus negative factors that played into Detroit’s hands, such as Japan’s tsunami and rising gas prices, has led the US auto industry to an unexpected renaissance.

In 2009, GM and Chrysler received $80 billion in controversial government bailouts, while Ford barely avoided dipping its hand into the government till. Now, all three companies are reporting healthy profits, GM and Chrysler are repaying their loans ahead of schedule, and May sales’ figures show that the Big Three increased market share between 7–19% in the past year, while Japanese competitors Honda and Toyota experienced declines of 16% and 28%, respectively. 

“The Japanese auto companies haven’t been dethroned,” says automobile industry expert Dr. Clay M. Voorhees, a marketing professor at Michigan State University’s Broad College of Business, “but the American companies have made great strides and are once again relevant in the conversation.”

It is still too early to tell if the US auto industry is headed back toward dominating the car market as it did in 1965, when the Big Three garnered 90% of the domestic auto market. By 2000, that market share had fallen to 64% and by 2010, had dropped precipitously to 43%.

The factors behind the industry’s revitalization will certainly be closely studied in an economy still struggling to recover from the recession brought on by the 2008 collapse of the financial and housing markets.

Automobile companies took full advantage of their near demise to significantly loosen the stranglehold that labor unions had over them for decades. The United Auto Workers (UAW) union agreed to significant reductions in retiree benefits and a 50% wage reduction for new workers.

Ford, GM, and Chrysler finally did what industry analysts were telling them to do for decades — shed redundant brands, which spread their focus and resources thin. GM stopped producing vehicles under the Saturn, Oldsmobile, Hummer, and Pontiac labels. Ford shed its Mercury brand and sold its stake in Saab, Jaguar, and Land Rover. Chrysler ditched its Plymouth brand and dissolved its merger with Germany’s Daimler AG (Mercedes-Benz).

Across the ocean, Toyota’s string of safety woes, including stuck gas pedals that led to massive recalls last year greatly tarnished its reputation for quality and reliability. Japan’s recent earthquake and tsunami significantly reduced the Japanese companies’ production capacity.

Even without Toyota’s recent troubles, domestic automakers had considerably narrowed the quality and reliability gap. According to the JD Power and Associates 2010 Initial Quality Study, Ford experienced fewer problems per vehicle than the industry average, and all but one of GM’s brands scored higher than Toyota. Chrysler scored only slightly lower than the leading Japanese automaker.

Dr. Voorhees says that these quality strides have opened a floodgate of opportunity for the Big Three. “Consumers now see a solid power train and a reliable vehicle as ‘givens’ on practically any vehicle they’ll purchase and thus put more focus on the add-ons that make driving an experience. The Big Three have done a great job reacting to this trend.”

He cites some highly popular “cockpit technology” now found in American vehicles, such as Ford’s Sync system, that offers drivers cell-phone, information and entertainment connectivity, as well as voice commands and turn-by-turn navigation directions.

GM’s OnStar communication system also matured from its safety-related origins into a fun, interactive system. Additionally, the American companies are churning out more stylish vehicles, while foreign automakers have been slow to revamp their formerly more popular selection.


To read the rest of this story, please buy this issue of Mishpacha or sign up for a weekly subscription.

Share this page with a friend. Fill in the information below, and we'll email your friend a link to this page on your behalf.

Your name
Your email address
You friend's name
Your friend's email address
Please type the characters you see in the image into the box provided.

Not a Newspaper
Shoshana Friedman A deeper difference between newspapers and magazines
Services in Shards
Rabbi Moshe Grylak “Such a painful, malicious lie!”
The Pittsburgh Protests: All Politics All the Time
Yonoson Rosenblum The old rule — “no enemies on the left” — still applies
Danger: School Crossing
Eytan Kobre The hypocrisy of YAFFED’s assertion is breathtaking
Real Laughter and Real Tears
Rabbi Avrohom Neuberger The two sides of a life lived with emunah
Work/Life Solutions with Eli Langer
Moe Mernick I was proud to be “that guy with the yarmulke”
Is Ktchong! a Mitzvah? When Prayer and Charity Collide
Rabbi Emanuel Feldman These cannot both be done effectively at the same time
An Honest Shidduch
Jacob L. Freedman “Baruch Hashem I’m cured, and this will be my secret”
A Blessing in Disguise
Riki Goldstein “I never thought the song would catch on as it has”
Ishay and Motti Strike a Common Chord
Riki Goldstein Bringing together two worlds of Jewish music
What’s your favorite Motzaei Shabbos niggun?
Riki Goldstein From the holy and separate back to the mundane
Rightfully Mine
Faigy Peritzman Don’t regret the job you didn’t land; it was never yours
Growing Greener Grass
Sarah Chana Radcliffe Nurture your blessings and watch them blossom
My Way or the High Way
Rebbetzin Debbie Greenblatt We know what we want — but do we know what He wants?