Japanese Muscle In On Detroit's Power Struggle

USA TODAY reported that,the U.S. auto industry's predictable patterns have given way to upheaval the past year. The turmoil means that you should be open-minded if you're a shopper, wary if you're an investor, nervous if you're an auto executive -- and delighted if you're merely a spectator, because the anarchic auto industry's again good sport to watch. The amazing turnabout on center stage: General Motors, which stumbled through the past decade, has halted its market-share slide, boosted quality scores, improved productivity and made headway on earnings. Once king of blandness, GM has innovative new models. Ford, dreadnought a year ago threatening to overtake No. 1 GM in sales, has lost nearly 2 percentage points of market share, has been beset by serious vehicle-quality problems and was hurt by two high-profile recalls of Firestone tires on its Explorer sport-utility vehicle. Ford's fighting to regain momentum. GM hopes to thwart that. And Detroit's third player, DaimlerChrysler's Chrysler Group, is more about survival than rivals. But the Detroit battle might be like bald guys fighting over a comb, because Japan's Big Three -- Toyota, Honda, Nissan -- are threatening the U.S. companies' bread and butter, the high-profit pickups, vans and SUVs that make up the light-truck category. In 1999, Detroit could count on owners of Asian-brand cars trading for Detroit products, mainly trucks and big cars, 31 percent of the time. This year, it's less than 25 percent, meaning Detroit has lost one in five converts. Even though "GM and Ford have had 30 years in which to go to school on the Japanese . . . they consistently fail to delight and deeply satisfy their owners," says Dan Gorrell at consultant Strategic Vision. The Japanese trio are opening new factories in the USA and expanding others, mainly to build trucks, while Detroit has reduced, even halted, production to avoid a glut of unsold vehicles. "The Japanese new-product threat is not serious. It's worse than that," warns Merrill Lynch auto analyst John Casesa. Unless Detroit finds an effective antidote, it can count on a downward truck spiral likely to be an earnings disaster. <http://www.usatoday.com/usatonline/20010712/3475806s.htm>.