Published May 22nd, 2009 on blogspot.com

I have been closely following the big three car makers for the past many years. Though I was the least surprised on Chrysler's filing bankruptcy, the somewhat contradictory positions of the bigger two leads me to believe that to undo the shortcomings of the past, just good products are not enough. A better management plays a bigger role in a company's survival and recovery.

Let me try to explain -

Chrysler - Though the former name Daimler Chrysler leads one to think that the company would have had the strongest products line in the US, it seems Chrysler hardly benefited in any model launch since the marriage. Except for the Pacifica, I find it hard to find any other model which showed traits of German Engineering. In the past few years, the only cars worth remembering from this manufacturer are the Chrysler 300C and Dodge Charger. Honestly, when I look at the older models like the 300, Concorde I wonder what happened to the design gurus at Chrysler that they started churning out Calibers and Avengers. Did Daimler Benz have a role to play here? Though the company is bankrupt today, it proposed line up of EVs, the new 300, 200 EV looks more promising than any of its models in the past decade. This again leads me to think, did the merger with Daimler actually do more harm than good to Chrysler? Agreed that the exit has not been a bed of roses for the German either but it has had a ruining effect on its partner across the pond. I just hope that with Fiat infusing some much-needed cash, the company starts chugging again and reaches the design and product leadership it was so well known for. Having recently read an article about the new leadership of Chrysler and the enthusiastic young CEOs, Chrysler seemingly is in the best position in decades to regain its lost share.

GM - GM's bankruptcy did come to me as a bit of a surprise. Of the Detroit big three, during the last 3 - 4 yrs, GM probably had the best product line. As is the case however with any large company, wrong decisions of the past couple decades would have taken more than just good products to shed the excess baggage, especially in an environment where competition is fierce and lesser popular entrants (from S. Korea) are gaining significant market share. GM's revival started with the launch of the new Malibu and its realization that to survive it needs products at the lowest end of the market as well. Though the Aveo wasn't the best execution, it was a contributor to the mind shift at GM (the company and its dealer network) that a small car is required to complete the portfolio and allow GM to at least be considered as an option for entry-level car buyers. Honestly, I fell in love with the new Camaro and was pleasantly surprised by the Cadillac CTS line. With the CTS, GM not only proved that they are capable of launching great products, but they also have a great product line up. The crossover platform was also a winner and the Buick enclave on this platform was another car I came to love. These good cars led me to believe that GM has learned from its past, the future looks better and the bankruptcy filing was a little but much-needed shock.

Ford - This is the classic example of better management and not necessarily better products coming to the rescue of a manufacturer. While Chrysler and GM took the bankruptcy route, Ford chose to chug along with its resources. Though at that time, there was not a single product which Ford could claim to be a winner in any of the segments, the management's vision, etched shortly after Allen Mulally took over the ruins, was the single reason Ford could live through this situation. I believe the most important decision at Ford was to unify the global product offerings, especially those in the European and American markets. From my personal experience, I could vouch that Ford's European offerings were much better than those in America (I took a Ford Focus 1.6 Zetec for a 700 mile trip in the UK and instantly came to love it. I cannot say the same for the Focus offered in America). With this decision, Ford had a better outlook for its products which today is well proven by its offerings in all segments - right from the Fiesta to the new Explorer. I do commend the management for taking the bold steps of shedding off the unprofitable brand names and earning much-needed cash in the process, something GM could not do partly because it had integrated its acquisitions much tightly than ford (for e.g. SaaB vs Volvo) diluting those brands in the process. Even after being in the process of an optimistic recovery, Ford did not hesitate to close down the Mercury brand realizing that the gap between Ford and Lincoln brands is not wide enough for Mercury to fit in. Today Ford seems well positioned to take back the slot it lost to Toyota a few years back and has managed to improve its processes where it now offers better quality than those of its Asian counterparts (of course, the Toyota fiasco of sticky pedals has only helped the recovery). It may take a few months/quarters/years for the Americans to embrace Ford again, but Ford seems to be moving in overdrive to claim its rightful position in the marketplace.