Competitive Connection

April 23, 2007

Then & Now
In 1950 in the United States, the per capita spending on health care was less than $100 a year – or $500 in today’s dollars, compared with almost $6,000 now.

What others are saying . . .
Bankruptcy’s impact
All of Detroit's key automotive players – GM, Ford and Chrysler, the UAW, suppliers and dealers – must sacrifice to survive, said Tower CEO Kathleen Ligocki.

"All sides," Ligocki said, "will have to break through traditional thinking because fundamentally the market won't tolerate noncompetitiveness anymore. When you really have a global market – both for your products and the money that's funding the products – investors aren't going to subsidize it, consumers aren't going to pay for it and so you really end up having to squeeze the noncompetitiveness out of everything."

"Bankruptcy," she added, "really clarifies your vision. It gets rid of the clutter. It gets rid of the nonsense. What you'd like to be able to do is translate that clarity into non-bankruptcy situations. How do you get the same sense of urgency, the same sense of unified purpose among people before the crisis is so dire?" –Source: Tom Walsh, Detroit Free Press, April 16, 2007

A look at the competition
Ford: Quality equal to Toyota
In terms of initial vehicle quality, Ford is in a statistical dead-heat for second place with Toyota and Nissan, according to a new study. Honda is the quality leader.
The report is based on an annual survey of 31,000 new vehicle owners that was conducted for Ford by the RDA Group, a market research firm. The study evaluated 2007 model cars and trucks from all full-line manufacturers during the first 90 days of ownership.
The RDA study found that Ford still lags its Asian competitors in customer satisfaction and another key metric: whether or not customers would recommend the brand to other car buyers.
"We see Ford as the top domestic in many ways," said David Champion, senior director for automotive testing at Consumer Reports. "They've realized they're going to be eaten for lunch if they don't produce reliable vehicles."
Improved quality is also helping Ford reduce its warranty costs.—Source: The Detroit News, April 18, 2007

A look at the competition
Toyota goes aftermarket
Automakers increasingly are trying to find ways to allow customers to personalize their cars and trucks, transforming a niche business for aftermarket parts into a highly sought segment. The trend is having a direct impact, with customers spending more money on aftermarket parts – everything from add-on spoilers, body panels and wheel spinners. U.S. sales of aftermarket parts rose 9 percent last year to $34 billion, according to the Specialty Equipment Aftermarket Association.

Driving the movement are the preferences of teenagers and early twenty-somethings, who expect choices for everything from their cell phone ring-tone to their coffee.

"In two or three years, one out of every four vehicles sold will be sold to a Gen Y consumer," said Jim Farley, group vice president of marketing for Toyota. "The reality is they grew up with 25 different versions of Coke."

Farley, who used to lead Toyota's Scion brand, is trying to bring that brand's spirit of customization to the Toyota Tundra. Toyota has roughly doubled the number of direct aftermarket parts it offers on the Tundra to 45, and it hopes to increase that by partnering with more aftermarket suppliers.–Source: The Detroit Free Press, April 18, 2007

Then and Now
E-Vehicle program aims to reduce U.S. oil consumption
AutoNation Inc., the largest U.S. car dealership chain, launched an initiative called "E-Vehicle" this month in which vehicles that get at least 28 miles per gallon or deliver 10 percent better fuel efficiency than the average for their class are promoted in 350 of its dealerships.

"We have gone from importing 30 percent of our oil to importing 70 percent of our oil and the situation gets riskier every year," said AutoNation CEO Mike Jackson.

AutoNation's list of "E Vehicles" includes about 23 percent of the vehicles on the market. Toyota tops the list with 22 percent of the vehicles, followed by General Motors with 17 percent and DCX with 14 percent. –Source: Reuters, April 17, 2007

A look at the competition
Ford wants employees to have a positive outlook
Ford is asking every employee to become "a walking advertisement" for the company as it struggles to boost its brand image and stem its U.S. market share slide.

"An improving reputation leads to higher purchase consideration among our customers and, ultimately, more vehicle sales," said Mark Fields, president of Ford's Americas group. "Externally, each of us is a walking advertisement for the company to the world around us. We need to take this role very seriously as we speak with our co-workers, our neighbors and everyone with whom we associate."

Fields called on employees to adopt "a more confident tone of voice – one that underscores we are a team that knows how to win and we have a plan that shows us how to win."—The Detroit News, April 16, 2007

What others are saying . . .
Iacocca’s take on the industry
Former Chrysler Chairman Lee Iacocca’s new book is called “Where Have All the Leaders Gone?"
Iacocca praised GM Chairman and CEO Rick Wagoner and Chrysler Group President Tom LaSorda. As for the rest of the auto industry, Iacocca advises several strategies for turning business around, including building smaller cars. He says higher fuel-economy standards and a gas tax would help reduce oil consumption, and that the Detroit automakers will not succeed in the long term without agreements from the government and the United Auto Workers on pensions and health care costs.—Source: The Free Press, April 12, 2007