COMMENT: U.S. automakers strike back

COMMENT
Franz W. Rother is Editor-in-Chief of Automobilwoche

No one dared to doubt the American automobile industry's chances for the future a few years ago.

The Big Three has just put the first sport utility vehicles on the market and on were riding high on the success of the minivan, which they invented.

Chrysler was one of the most profitable and most successful auto manufacturers in North America.

Ford was about to overtake its archrival General Motors as the world's largest auto manufacturer after buying Jaguar, Land Rover and Volvo.

General Motors fought back by buying shares in Saab, Subaru, Isuzu, Daewoo and Fiat.

At times the atmosphere was similar to that during the big Californian gold rush in 1848.

GM managers now admit, in a self-critical manner, that the focus on the core business was sometimes lost in the heat of the moment.

They took what they could get, without thinking about where to put it. They expanded into new markets -- and then had to watch powerlessly as the Japanese and European competitors took ever-bigger pieces out of the U.S. domestic market.

Mercedes-Benz, BMW, Audi and Porsche as well as Toyota, Nissan and Honda had an easy game.

They only had to build premium cars to whet the American customers' appetite. U.S. manufacturers ignored this segment because they were too busy chasing easy profits.

Foreign rivals slowly introduced four-wheel drive passenger cars, rollover resistant sport utility cars, torsion proof roadsters, high speed sports cars and reliable and fuel efficient minivans.

That's how the Big 3 little by little, year after year, lost the control of their domestic market, which they once dominated with a market share of 96 percent.

Mistakes and misjudgments cost GM and Ford billions of dollars and Chrysler its independence.

But Detroit has not yet been defeated, despite what auto journalist Micheline Maynard maintains in her book "The End of Detroit."

GM, Ford and Chrysler have learned their lesson, which they proved at the Detroit Motor Show 2004.

A wave of new and attractive cars is hitting the US market. Cars such as the Pontiac Solstice, the Ford Mustang and the new Chrysler 300 to name but a few. Cars that will also attract European customers' interest.

It is doubtful that the new models will blow away all of the competitors, as Ford boss Nick Scheele announced.

Still, business will definitely become more difficult for imported brands. Especially as U.S. manufacturers are determined to win back lost ground through aggressive pricing.

On top of that the shares and acquisitions are slowly starting to pay off for GM, Ford and Chrysler.

They are using their partners' know-how and developing common structures to increase their competitiveness. It is definitely too early for obituaries.

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