News From the Auto Industry

GM after realizing the enormous success that Toyota Motor obtained from being an environmentally friendly technologically advanced carmaker has finally decided to join the bandwagon. GM’s announcement came at the eve of the President Bush’s visit at the Fairfax Assembly Plant in Kansas City, Kan., where both versions of the Aura are made.

Service and Customer Loyalty

Eighty years of building cars and they can’t get their act together, and Detroit wants to know why they continue to lose market share. In the last two or three years, Japan has begun implementation of a free oil change policy. Everybody thinks they are being kind to their customers. The truth is the cars never break down, people were leasing their cars, and consequently never changing the oil. Cars were coming back with 30,000 and 40,000 miles on them without oil changes.

Detroit won’t however. They are locked into a different mindset. In Detroit’s way of thinking, it would be prohibitively expensive to implement zero defect manufacturing in this country. Although this might be true for factories currently in production, this would no be true for new factories coming on stream. Since GM and others could have implemented this policy years ago, and chose not to, Detroit’s big three is at least a decade further behind the eight-ball.

When you take delivery of a Japanese car, it is perfect. Everything fits, everything works, and very seldom is there an issue. I do remember buying a new Acura MDX and having the starter fail the first week out of the showroom. No only did Acura tow the MDX in and replace the starter at no charge, but I found out later that the faulty starter was air expressed to Japan to determine why it failed. Acura wanted to learn from the experience. Could you ever imagine in your wildest fantasies, an American car dealer sending the part back to Detroit for rip down and investigation. It’s not even vaguely possible.

3) Service their cars in an appropriate manner that retains and builds customer loyalty

I live in Westport, CT., you can’t buy a house under a million dollar, in fact a million dollars is a tear down. We have a Chrysler jeep dealer adjacent to Westport which is the closest dealer if you want to buy any kind of Chrysler. Upon inspecting it, I found the shop employees who handle the customers to have grease on their clothes. These are not the guys who fix the cars. They are the service advisors.

Sure, not in my lifetime, maybe in yours. When you walk into an American dealer, they still try to snow you. In our investment work when we get involved in stock investing, we do hands on stock research. If it’s Detroit’s manufacturers, we walk into dealers all the time to see what’s going on. We are looking for tidbits of information, what we call the scuttlebutt method of stock investing.

This is no different than a boxer stepping into the ring and thinking about which of the next several rounds I will get knocked out in. It’s throwing in the towel, and you don’t want to get involved with stock investing with companies that have that attitude. Chrysler along with its two American counterparts General Motors and Ford must implement a couple of very simple ideas to make a comeback. They are: