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Debunking myths surrounding domestic auto industry

November 15, 2010

By Tom Eisbrenner

Our office, our families and our entire state of Michigan have been glued to the news the past few weeks watching the auto bridge loan saga unfold. It’s clear the domestic industry has done a poor job reaching out to Washington and the rest of the country for too many years. But I cringe with nearly every article or newscast I see that talks about the auto bailouts. (Point No. 1: It’s a loan, not a bailout.)

So, I am on a bit of a crusade to set the record straight wherever possible. Much of this information comes from the Detroit Free Press, and industry sources.

Myth 1: Nobody buys the vehicles of the Big 3

Yes, Toyota overtook GM for the first time in 2008 in annual U.S. sales. But there are more than 40 car-producing companies globally, and three companies—Ford, GM and Chrysler—account for more than half of market share of the cars sold around the world. Somebody’s buying their vehicles.

Myth 2: Their cars are built poorly

Reality: The creaky, leaky vehicles of the 1980s and ’90s are long gone. Consumer Reports recently found that "Ford’s reliability is now on par with good Japanese automakers." The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands’ overall quality as high as or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

J.D. Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry. The 2008 Chevy Silverado earned the highest ranking in the Large Truck category; the Dodge Dakota and Ford Ranger were Nos. 1 and 2 for Midsize Pickup initial quality.

The 2008 North American Car of the Year was the Chevy Malibu; in 2007, it was the Saturn Aura, and the Truck of the Year was the Chevy Silverado.

Myth 3: They build gas-guzzlers

Reality: All of the Detroit Three build midsize sedans that the Environmental Protection Agency rates at 29-33 miles per gallon on the highway. The most fuel-efficient Chevrolet Malibu gets 33 mpg on the highway, 2 mpg better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic.

And consider this: GM has two times as many models that get 30 mpg or better than its nearest competitor.                       &nbs​p;

Myth 4: GM, Ford and Chrysler are idiots for investing in pickups and SUVs

Reality: The domestics’ lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry.

And the most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel-economy ratings than the full-size pickups of Toyota and Nissan.

Myth 5: Their workers are lazy and overpaid

Reality: Chrysler tied Toyota as the most productive automaker in North America in 2008, according to the Harbour Report on manufacturing, which measures the amount of work done per employee. Eight of the 10 most productive vehicle assembly plants in North America belong to Chrysler, Ford or GM. And GM has more plants today leading their respective segments in productivity than any other competitor, foreign or domestic.

The oft-cited $70-an-hour wage and benefit figure for UAW workers inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees. That’s like assuming you get your parents’ retirement and Social Security benefits in addition to your own income.

Hourly pay for assembly line workers maxes out at $28; benefits add about $14. New hires at the Detroit Three get $14 an hour. There’s no pension or health care when they retire, but benefits raise their total hourly compensation to $29 while they’re working. UAW wages are comparable with Toyota workers, according to a Free Press analysis. Overall, labor is about 10 percent of the cost to produce a vehicle. "Labor" is not the real cause of the current state of the industry; the economy is.

Myth 6: The Big Three are dinosaurs and have done nothing to improve their bottom lines

Reality: Ford was profitable in the first quarter of 2008 before the economic crisis began. The company has been working for two years on improving its balance sheet through aggressive restructuring while accelerating the development of safe, fuel-efficient and high quality products.

GM has reduced structural costs in North America by $9 billion since 2005; eliminated raises and bonuses for executives and salaried employees; and aggressively addressed its manufacturing footprint, shifting from trucks and SUVs to smaller cars and crossovers.

Daimler-Benz bought Chrysler in the late ’90s, stripped it down like an abandoned car, and spit it back out. Its new owner, Cerberus, is acting fast to improve its foundation, but the economic downturn could not have come at a worse time for this company.

The author is president of a public relations firm in Troy, Mich.