Detroit’s automakers face coastal conundrum
http://www.msnbc.msn.com/id/32012052/ns/business-autos/

Danny Martin is precisely the sort of young buyer you once would have
expected to fall in love with the Chevrolet Camaro.

A shaggy-haired surfer and valet at an exclusive San Diego restaurant,
Martin is the owner of a “tuner car,” a modified version of a Honda
Civic he drags in impromptu street races when he gets off work, late at
night. But as a patron hands him the keys to a new Camaro SS, the latest
incarnation of the classic Chevy muscle car, the 20-year-old is anything
but excited about getting behind the wheel.

“I hear it’s pretty nice,” he said, stifling a yawn, “but I’ve got to
tell you the truth: Detroit cars just don’t do anything for me.”
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The young surfer is certainly not alone. Spend some time cruising the
streets of California —indeed, drive just about anywhere along the West
Coast — and you’ll likely notice something, or perhaps it’s the lack of
something. There's a distinct shortage of cars, trucks and crossovers
bearing one of the many Detroit badges.

While the Motor City’s Big Three makers still account for roughly half
of all new vehicles sold in the United States, their numbers are heavily
skewed to what is often called the heartland of the country, the Midwest
and outlying regions. In places like California — the biggest single
market in America — Oregon and Washington, and much of the East Coast,
Detroit brands are in a decided minority.

Last year, only 40.9 percent of California car buyers even considered a
Big Three product, according to research by CNW Marketing. And that
figure includes anyone who even put a Chevy, or Jeep or Ford on their
shopping list, not those who actually wound up purchasing a Detroit
product, said Art Spinella, president of the Oregon-based research firm.

The figures aren’t much different along the rest of the West Coast and
much of the East, say industry analysts. If anything, the consideration
numbers actually declined a bit last year — from 44.9 percent in 2007 —
reflecting growing public concern about the health of the domestic auto
industry, especially as General Motors and Chrysler began to reach for a
federal bailout.

The bad news for Detroit is that buyers in coastal states, collectively,
purchase nearly half of the cars sold in the country each year.

There are a variety of reasons why imports rule along the water’s edge.
The Europeans made their first forays into the American market along the
Northeast, as did the Japanese some year later. The Asian makers later
based their American headquarters in California and aggressively
targeted the state’s buyers. But perhaps nothing worked to the advantage
of brands like Toyota and Honda more than their rise in the quality charts.

“And now, people have gone through generations of super-reliable
Japanese cars,” says Ed Kim of research firm AutoPacific Inc. “All that
works against the domestics.”

Recent studies, such as the annual Initial Quality Survey, by the
oft-quoted J.D. Power and Associates, reveal that Detroit collectively
has made big gains in quality and reliability in recent years. Many
domestic brands now equal or even beat the best of the Asians, notably
Toyota and Honda.

“Too many Americans think General Motors still builds poor quality,
enormous gas guzzlers, so if you want decent cars, you want to turn to
the Germans or Japanese,” lamented Bob Lutz, the former GM vice chairman
and product development chief who recently decided to delay retirement
and take over the marketing efforts of the company as it emerged from a
quick trip through bankruptcy court.

“It’s obvious, we haven’t gotten the message out," Lutz said in a recent
interview. "The magnitude of the problem is (especially severe) on the
two coasts."

The situation has been complicated by the federal bailout of GM and
Chrysler, which has even kicked off boycott talk among some groups. On
the other hand, it may be working to the advantage of Ford, the only one
of the Big Three to reject a federal handout.

Combined with a well-publicized improvement in quality and the launch of
a number of new products, Ford is regaining ground among long-jaded
coastal buyers, Spinella pointed out. In California, his data showed,
the second-largest domestic maker has seen its consideration factor
rising from a low of just 10.6 percent in 1994 to 19.7 percent last
year. Preliminary research suggests Ford is gaining even more ground
this year.

But that still only puts it on a par with much smaller luxury makers
like Audi and Acura. Meanwhile, the Japanese giant Toyota is considered
by nearly twice as many potential customers as Ford or Chevy on the West
Coast.

How to overcome the problem? “If I knew, I’d have already done
something,” said Lutz.

There was a time, not that many decades back, when Detroit iron was the
first choice of "surfer dudes," like Martin, the valet. But that golden
era, captured in song and films like "American Graffiti," is long gone.
Could it come back?

There are signs that the situation is improving for Detroit makers. But
experts caution that it will take time — and additional improvements in
both product design and quality — before the Big Three can make serious
inroads in California and the rest of the coastal markets.


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Civis Romanus Sum