7 Myths of the Auto Industry

Hat tip to CUG for finding this one.  Must have been shoveling too much snow & taking care of the wife to miss this one…


7 myths about Detroit automakers

BY MARK PHELAN • FREE PRESS COLUMNIST • December 5, 2008

The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are seven myths about the companies and their vehicles, and the reality in each case.

Myth No. 1: Nobody buys their vehicles
Reality: General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of nearly 700,000 so far this year. Globally, GM in 2007 remained the world’s largest automaker, selling 9,369,524 vehicles worldwide — about 3,000 more than Toyota.

Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year.
Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.

Myth No. 2: They build unreliable junk
Reality: The creaky, leaky vehicles of the 1980s and ’90s are long gone. Consumer Reports recently found that “Ford’s reliability is now on par with good Japanese automakers.”

The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands’ overall quality as high as or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

J.D. Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.

Myth No. 3: They build gas-guzzlers
Reality: All of the Detroit Three build midsize sedans that the Environmental Protection Agency rates at 29-33 miles per gallon on the highway.

The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic.

A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.

Myth No. 4: They already got a $25-billion bailout
Reality: None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that’s killing them now.

Myth No. 5: GM, Ford and Chrysler are idiots for investing in pickups and SUVs
Reality: The domestics’ lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry.

The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel-economy ratings than Toyota and Nissan’s full-size pickups.

Myth No. 6: They don’t build hybrids
Reality: The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.

Myth No. 7: Their union workers are lazy and overpaid
Reality: Chrysler tied Toyota as the most productive automaker in North America this year, according to the Harbour Report on manufacturing, which measures the amount of work done per employee. Eight of the 10 most productive vehicle assembly plants in North America belong to Chrysler, Ford or GM.

The oft-cited $70-an-hour wage and benefit figure for UAW workers inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees.

That’s like assuming you get your parents’ retirement and Social Security benefits in addition to your own income.

Hourly pay for assembly line workers tops out around $28; benefits add about $14. New hires at the Detroit Three get $14 an hour. There’s no pension or health care when they retire, but benefits raise their total hourly compensation to $29 while they’re working. UAW wages are now comparable with Toyota workers, according to a Free Press analysis.

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About Tom Roland

EE for 25 Years, Two Patents - now a certified PMP. Married twice, burned once. One son with Asperger's Syndrome. Two cats. Conservative leaning to the Right. NRA Life Member.
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2 Responses to 7 Myths of the Auto Industry

  1. Mustang says:

    I fully understand how union arguments would differ significantly from those of business managers and analysts. I am frustrated because, in the process of negotiation, both sides demonstrate less than total honesty . . . it is, in my experience and judgment, much like playing poker. If you have aces, may as well keep that to yourself until the pot builds. Still, I heard an absolute refutation of this article on Faux News this morning. I also heard, last week, that the health care additives for UAW workers costs American consumers about fifteen hundred dollars per vehicle produced. This last tidbit is telling because it demonstrates that every dollar of production cost is passed along to consumers – and it makes consumers stop and think that if they can’t get health benefits where they work, why should they pay for benefits of other people. I know; it’s a base argument. But I also think it makes (or should make) people ask yet another question: “Why does medical insurance/coverage cost so much in this country?” I’ve seen medical costs first hand, and you know what? I don’t get it. How can a four day stay in a hospital cost upwards of $30K?

    So I think there are solutions to wages, benefits, and production costs . . . but not without looking at the extraordinary costs of the basics of life in the United States: government spending, government taxes, and unreasonable medical costs. And for the record, I do not think the solution is national health care.

    [Sigh]

  2. Tom says:

    Mustang, you are not the only one that is frustrated!

    For the breakdown on costs, see the preceding and succeeding posts.

    Medical costs are high to cover the number of hands that the paper must cross at both the medical and insurance institutions as well as liability for the healthcare institutions, doctors, and medical supply (drugs, equipment, etc.) companies. Someone has got to pay for it, and that’s us, one way or another.

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