A few months ago Ford announced the company will cease to sell sedans (other than the Mustang) and will focus fully on SUVs and trucks. Most in the industry thought it is a prudent strategy because consumer tastes having switched dramatically to SUVs, and also Ford’s currently lineup of sedans are lackluster to say the least.
Last week General Motors basically announced a similar plan, only that GM will shutdown plants and cut workforce into the 10 thousands as well. The public reception to that have not been so good. The same GM that received the massive government bailout after the start of the great recession, and the same GM that just last year lavished in the cut to corporate taxes, cannot repay the favors in kind by eliminating precious jobs. Those are real consequences to people’s livelihoods, rather than just a different product mix inside a dealership showroom as in the case of Ford.
Even from a strict economical standpoint this plan by GM isn’t entirely positive. It’s true that the market is leaning so heavily towards SUVs that Lamborghini sells one, but that isn’t to indicate the sedan category is dead in the waters. Asian manufacturers are still making quality sedans and continuously improving them (the redesigned Honda Accord is brilliant), and people are still buying. While not completely immune to shift to SUVs, the combines sales of Toyota’s Corolla and Camry remains in the 600,000s annually.
GM simply isn’t making class-competitive cars.
Indeed (negative) reputation plays a part, and I think American manufacturers never recovered from the adverse brand equity it carried from the 80’s and 90’s. Back then if a customer wanted a well-built car that will last for many years, the only option were Asian marques, and brand perception is a heck of a sticking point. Surely you’ve seen the Chevy commercials where “real people” were surprised at the quality of a Chevrolet car; bad reputation is insanely difficult to repair.
These days GM and Ford are making solid cars, but it’s never class-leading. Alpha-chassis Cadillac sedans are some of the best handling cars currently available, but the interior quality is leagues below its rivals from Germany. It can be argued that GM never intend to produce world-class sedans, but merely what’s good enough to move units. Now that those units aren’t moving quite at the numbers of the past, GM decides to eliminate the category from its portfolio completely.
It’s a shrewd move; partly due to prevailing market forces, and partly because GM doesn’t care to make great cars. Thousands will be out of a job because of GM’s incompetence.
Businesses are driven by the bottom line, but I think ceasing production of sedans is the wrong decision. The popularity of SUVs and trucks is partly bolstered by cheap gasoline prices, so then what will happen when prices inevitably go back up? Just like in the early aughts, American automakers will once again not have the appropriate product mix to cater to that demand.
Only there won’t be another bailout; GM never learned from their mistakes precisely because the government saved them from collapse back in 2009.
Working hard or hardly working?