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Subject: Quality alone is not enough, Habour warns

Author: TonyV

[ Next Thread | Previous Thread | Next Message | Previous Message ] Date Posted: 17:55:46 01/18/06 Wed AUTOMOTIVE NEWS WORLD CONGRESS Quality alone is not enough, Habour warns Richard Truett Automotive News / January 18, 2006 - 4:23 pm -------------------------------------------------------------------------------- CLICK BELOW FOR MORE: >> 2006 Automotive News World Congress -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Advertisement -------------------------------------------------------------------------------- DETROIT -- Poor quality is no longer the major reason for domestic automakers' declining market share, according to Ron Harbour, president of Harbour Consulting. Instead, Harbour told the Automotive News World Congress, the cause is lackluster products and pricing issues. "Improvements in quality have been dramatic," he said in his prepared remarks. "It is no longer the differentiator for people going to buy a car. Product and price are the differentiators, not quality." Harbour, whose firm in Troy, Mich., publishes the widely followed Harbour Report on manufacturing competitiveness each year, cited the new Ford Mustang as an example of an American car that offers attractive styling and good quality at a price consumers think is reasonable. Ford sold 160,975 Mustangs in 2005, up from 129,858 in 2004. Since Ford rebuilt the iconic car from the wheels up last year, it has been one of the few bright spots for the Ford brand, which has lost more than 820,000 units in sales since 2000. "If you have the product, you can get the price for it," Harbour said. Ford has a slew of rebates and incentives on nearly all of its vehicles but offers nothing for the Mustang, which sells for close to sticker price. The three domestic automakers won't be able to stop the decline in their combined market share - from 73.1 percent in 1992 to 56.9 percent last year - until they build more compelling vehicles, Harbour said. "Those companies able to get their price are able to put that money back into new products," he said. "That's where they are really gaining." Falling market share has led to a slew of other problems for domestic automakers, such as higher material costs, labor issues and overcapacity. But Harbour said massive gains in factory productivity, as measured by fewer labor hours per vehicle and more flexible production lines, have helped the domestic automakers compete against Asian rivals. Harbour cited Honda of America as the most productive and flexible producer in the United States. He said Honda twice moved the Accord assembly line from one plant to another in one weekend in order to maximize production. You may e-mail Richard Truett at rtruett@crain.com [ Next Thread | Previous Thread | Next Message | Previous Message ]