The American auto industry is in shambles and the two major car manufacturers have decided to take two different approaches to resurrecting themselves.
The Detroit Auto Show is half a world away from
Honolulu, but that has not decreased my interest in the automobile industry.
GM’s strategy in my opinion is to self destruct. I haven’t seen any new concepts or truly innovative designs from the show from GM. Dispute high fuel prices they have decided to concentrate on producing SUVs and their cars remain fuel inefficient. They have not produced a small hybrid engine car, but have plans to make a hybrid bus (which will be good if it is cheap enough to fit into city budgets), and have made hybrid versions of a few of the larger vehicles such as the Sierra, Silverado, Tahoe, and Yukon. They do have the Sequel concept which is a fuel cell vehicle, but there is no infrastructure (yet) for a hydrogen fuel cell and they are not the innovators in this area. Their lack of real investment in the future isn’t the self-destruction part, it was their announcement today that they were going to lower prices on 57 of their 76 models. GM did this last year with the employee discount and it changed the industry, they lowered prices so much that they didn’t make a profit. Other car manufacturers followed, and they didn’t make a profit. Still a lot of Americans got new cars.
Ford on the other hand has introduced several new cars and concepts that have gotten some press. The Super Chief has gotten some attention as a huge pick up that looks like it can pull a train there are even ottomans for the passengers in the back seat. There is also some excitement for the Ford Shelby GT500, a Mustang with 475 horse power for $40,000.
We’ll see that this summer too. The car that has been getting a lot of press is the Ford Reflex, a B-car that has solar panels, hybrid diesel engine, and is one of the best looking cars ever. The Reflex is a design study but this shows that ford is seriously looking into hybrid-diesel engines which are more fuel efficient and safer for the environment. This car can go 0-60 in about 6.5 seconds AND gets 65 miles per gallon (of diesel), AND it is a B-car. B-cars are really small cars that are popular in Europe (thing Ford Fiesta) and are known to be affordable. It even has easy accessibility to the rear seat to easily get a baby in and out of the child seat. Many of the design aspects of this car may be available in the next two years (solar panels are cool).

My point? Well the hybrid market is expected to grow between 5% - 10% in the next three years (the automobile manufacturers are using the more conservative estimate). Lowering prices is a simple marketing strategy that often leads to self-destructions and is a good indicator that GM is looking into sales and not revenue, which doesn’t help them from their current predicament. GM will need to make revenue, and they will try to do this by screwing the people that they promised a pension to, which makes for great publicity. Lowering prices also is indicative that GM doesn’t have anything of value, they are lowering prices because they need to boost sales (and in fact GM really only talks about sales and ignores revenue) and that they may not have anything of value in the near future. Ford on the other hand hasn’t lowered their prices, and hopefully they will not, it is more important for them to make revenue. Most importantly with the concepts that Ford is looking into they are looking outside the box, and towards what car buyers may be interested in a couple years down the road.