U.S. carmakers must change ways to stem losses

0 Comments | Oakland Tribune, Jan 8, 2008

OUR OPINION

LAST year was a difficult one for the auto industry in the United States, particularly for American companies, and especially for Ford Motor Co. Toyota Motor Corp. overtook Ford as the

No. 2 automaker in U.S. sales. It was the first time in 75 years that Ford was not in the No. 2 position.

Despite declines toward the end of 2007, the three major Japanese auto companies were able to increase their overall sales for the year. Toyota sales were up 3 percent, Nissan boosted sales by 5 percent and Honda sales went up by

2.5 percent.

During the same period, General Motors, which remains the nation's largest automaker, posted a 6 percent drop in sales, while Ford's sales plummeted by 24 percent.

Ford has reduced its losses, but it is still short of cash and is selling its Jaguar and Land Rover brands, likely to Tata Motors Ltd. of India.

Over the past three decades it is not only Ford that has experienced losses to foreign competition, particularly Japan. In the 1960s, U.S. automakers had more than 90 percent of the domestic market.

Last year, their market share dropped below 50 percent for the first time.

The huge gas price increases of the 1970s dealt a severe blow to U.S. automakers, which could not match their foreign competitors in high gas mileage.

Also, the quality of Japanese cars improved considerably and gained a reputation among many Americans as being superior to U.S. cars.

With gas prices rising again to well over $3 a gallon -- and more increases in store -- high-mileage and hybrid cars are likely to capture a larger share of the market.

New corporate average fuel efficiency standards from the federal government and, if the courts agree, from many states, will put increasing pressure on all auto companies to produce more-efficient cars and trucks.

Unfortunately, Japanese automakers continue to have an advantage in offering fuel-efficient, high-quality small and midsize cars. But that advantage does not have to continue.

Instead of fighting tougher fuel-efficiency standards, American auto companies should embrace them. Gasoline prices are going to increase as demand for oil outpaces global supply. If it was not clear in the 1970s that fuel-efficient cars were the wave of the future, it is now.

Fortunately, there are current and emerging technologies that make it possible to build safe, comfortable and decent-performing cars that get 40 or more miles per gallon.

There is no good reason why U.S. automakers can't compete, especially with a weak dollar that boosts the price of all imports, including cars.

American car companies need to take a long-range view of their industry so they can design and build cars for a changing future.

That means making quality motor vehicles that get high gas mileage or do not run on gasoline alone or any fossil fuel.

We trust U.S. automakers are up to the task.