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October 17, 2017

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The comeback kids

The Detroit Three make a surprising right turn on the road to recovery

The Woodward Dream Cruise, the world’s largest one-day automotive event, makes for a captivating snapshot of turbo-charged car culture. Held the third Saturday of August, it transforms Detroit’s eight-lane wide Woodward Avenue into a blacktop shrine. Many of the world’s most iconic automobiles of yesteryear strut their stuff amid hearty cheers and thumbs-up.

The muscle cars and antiques are either lovingly restored or outrageously customized to near-unrecognizable excess. After all, the event celebrates a time when much of the product that rolled out of Detroit was big, bold and badass.

Bu, in recent years the Woodward Dream Cruise had a melancholy feel to it. In fact, in 2009, it seemed more like a dress rehearsal for a funeral procession. General Motors and Chrysler were in bankruptcy protection, only saved from the scrapheap by 11th-hour government bailouts. The mighty had fallen; Detroit had bottomed out.

And yet, what a difference a year makes. Indeed, at the 2010 Dream Cruise, there was the unmistakable air of optimism. There are signs that there is light at the tunnel — and it isn't the high beams of a truck carrying a shipment of Toyota Camrys.

Beating the imports

There is good reason for the optimism: many of the vehicles coming out of Detroit these days have never been better. Quality really is Job 1, and not just a marketing slogan. Apparently, the Detroit Three (it’s not really accurate to call them the “Big Three” anymore) have been scared straight.

Recent data from JD Power & Associates also bodes well for the domestics. Thanks to such products as the redesigned Ford Taurus and the born-again Chevrolet Camaro, domestic automakers have outperformed imported vehicle manufacturers for the first time since 1997 in JD Power’s annual study of vehicle appeal.

Ford vehicles were tops in five segments, the most of any brand. Meanwhile, the once-insurmountable Toyota – which has recalled 8 million vehicles globally in the past year due to unintended acceleration problems – received the second-lowest ranking.

In addition to the Taurus, the Fusion, Expedition, Flex and Explorer Sport Trac all won categories for Ford whereas GM models won three segments. Indeed, GM’s Buick brand was the highest-rated mass-market nameplate in the overall ranking.

And that translates in sales. Case in point: July 2010 turned out to be a wonderful month for light vehicle sales according to tracking by Richmond Hill, Ontario-based DesRosiers Automotive Consultants Inc. The seasonally-adjusted annual rate stood at 1.69 million units, the best in two years.

The sales were “not at the level we achieved through most of the last decade but still very respectable and trending in the right direction,” DesRosiers notes.

Ford was up 1.6 percent in market share for the month, GM was up 22.4 percent and Chrysler was up 40 percent. “You have to be careful with the GM and Chrysler performance since the comparable month a year ago is tainted by their bankruptcies,” says DesRosiers. “But Ford’s number is the real deal.”

Meanwhile, several import brands experienced major declines, including Acura (-13 percent), BMW (-12.1 percent), Honda (-10.2 percent), Lexus (-20.6 percent), Mitsubishi (-12.6 percent), Suzuki (-19.3 percent), Toyota (-22.8 percent).

Reversal of fortune

The numbers make for surprisingly good news. In Canada, Ford is currently the number one automaker, with its market share up to nearly 17 percent and year-to-date sales up more than 23 percent.

Indeed, Ford — which opted not to take government bailout money last year — is enjoying a reversal of fortune for the ages. During one ghastly stretch from 2005 to 2008, the Blue Oval lost about US$30 billion. In order to simply survive, in 2006 a penniless Ford borrowed US$23 billion to fund a turnaround plan, spearheaded by a renewed global focus.

That new vision is paying off, big time: after earning US$2.1 billion in 2009, Ford’s first-half profits in 2010 have already approached US$5 billion — the biggest in a dozen years And Ford certainly isn’t resting on its laurels when it comes to its product offerings. The new Fiesta lives up to its name: this economy car is a fun-to-drive ride and great on gas. It's also proof that a domestic automaker can make a small car that compares favourably with the best imports.

Meanwhile, the 2011 Ford Mustang does the seemingly impossible: the base V6 model sports a V8-like 302 horsepower under the hood yet delivers superb fuel economy (about 9 litres per 100 kilometres on the highway.)

And Ford’s luxury division, Lincoln, has undergone a much-needed renaissance. The flagship sedan, the MKS, is a sharp-looking luxury-laden ride while the MKT is a spacious and gorgeous crossover (with seating for seven) that has surprisingly nimble road manners for such a large vehicle.

Another anticipated coup for Ford is its upcoming 2011 Explorer. A complete reboot, the Explorer is morphing from a truck-based sport utility vehicle to a car-based crossover. As such, it will feature far better road manners and require less fuel.

The General charges in

Meanwhile, GM is showing signs of rebounding, too. Earlier this year, the company posted first-quarter net income of US$865 million and it says it’s on track toward its first full-year profit since 2004.

Granted, GM’s new CEO, Ed Whitacre, may not be a rabid “car guy,” but he’s pushing ahead with ambitious plans to trim the company’s bloated bureaucracy and to make senior executives directly accountable for results — imagine that.

As part of its restructuring, GM has radically slimmed down, jettisoning such brands as Saab, Saturn, Pontiac and Hummer — elective surgery which, many critics say, should’ve occurred years ago. The new and improved GM is now focussing its efforts on four key brands: Chevrolet, Buick, GMC and Cadillac.

Led by the Chevrolet Camaro, GM had five of the 10 most-successful all-new or totally redesigned vehicle launches last year, based on an analysis by Edmunds.com. Indeed, the made-in-Canada Camaro has outsold its primary competitor for 11 of the last 13 months and continues to sell with practically no dealer incentives.

Other GM vehicles in the Edmunds’ Top 10 new/redesigned list included Chevrolet Equinox, Cadillac SRX, Buick Lacrosse and GMC Terrain.

GM is also working hard to bolster its Buick brand in North America. For example, the new Regal, based on the award-winning Opel Insignia from Germany, will compete in the entry-premium segment where Buick has never been much of a factor. GM is targeting a younger demographic, and the company wants would-be luxury buyers to know that Buick isn’t your grandfather’s Oldsmobile anymore.

In autumn, two extremely important product launches are to be unveiled. First, the high-volume Chevrolet Cruze compact will replace the Chevy Cobalt. This good looking sedan is expected to emerge as a blockbuster for The General given a base price of $14,995. The second is the much-ballyhooed Chevrolet Volt extended-range electric vehicle which will debut in the US first, coming to Canada sometime next year. Capable of running exclusively on battery power, the Volt will certainly be the “it” car for trailblazers who crave the latest alternative-fuel technology. However, with a base price around US$41,000, it may induce sticker shock.

Rule by Fiat

Of course, a key reason for the Detroit Three’s resurgence is making products that look good and perform better. Simply put, Ford, GM and Chrysler have learned from previous mistakes, and the domestic automakers are building good quality vehicles people actually want to buy. At Chrysler, the redesigned Jeep Grand Cherokee is the first new vehicle since Fiat assumed management control. Sales of the redesigned Grand Cherokee have exceeded company forecasts.

But the real excitement at Chrysler will come in the months ahead, when more than a dozen “all-new” or “refreshed” models will be appearing in Chrysler, Dodge and Jeep showrooms. Chief among the reboots will be the much-anticipated next-generation Chrysler 300, the company’s flagship sedan. And, in selected markets, Fiat cars will be returning to Canada for the first time in decades. By year’s end, the Fiat 500 will be available, with the high-performance Abarth version coming to North America sometime next year. As for the bottom line, Chrysler recently posted its second straight operating profit.

While Detroit is still not the Motor City it once was, there’s a feeling that the very worst period is now just a receding image in the rear-view mirror. Indeed, could it be that after decades of cowardly mismanagement, union entitlement and a lackadaisical approach to competitors that the domestic auto industry has been “scared sober”?

Certainly, time will ultimately tell if we’re witnessing a grandiose renaissance or the proverbial “dead cat bounce.” But while it’s still early for Detroit to plan a victory parade, this much is certain: to paraphrase Mark Twain, reports of the Detroit Three’s demise have been greatly exaggerated.

This article was accurate when it was published. Please confirm rates and details directly with the companies in question.

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