SAN FRANCISCO — Skittish auto executives, facing today's tough and uncertain times, risk “wishing and whining ourselves into a recession,” says General Motors Corp. CEO Richard Wagoner.
“Sometimes we psych ourselves out over contingencies we have no control over,” says Wagoner.
He spoke at a J.D. Power & Associates' conference along with two other top auto executives: Ford Motor Co. CEO and Chairman William Clay Ford Jr. and DaimlerChrysler AG's Chrysler Group COO Wolfgang Bernhard.
All three say the industry competition is intense. They refer to it as a “dogfight.”
Wagoner calls himself “decidedly upbeat” about the future. He says, “A new American auto boom is ours to win or lose. There's great opportunity for all of us. Let's not screw it up.”
Here's his checklist on how the industry can do the wrong things:
“Fail to support government efforts to stimulate the economy.”
“Stop stimulating customer interest” by cutting back on product development for new vehicles.
“Reduce our commitment to research and development.”
“Keep arguing about slicing up the old pie, rather than grow it.”
“Stop being aggressive” with incentives.
Although some auto makers blame GM for perpetuating costly incentives, especially 0% financing, Wagoner is unfazed.
“There's been a lot of finger pointing and hand wringing,” he says. “We're going to keep playing the game. The strategy is working for us. Guess what? This year we'll keep pushing the incentives.”
He says GM would prefer to reduce them, but not if it means lower production, profitability and sales.
“Eventually the economy picks up, demand increases versus supply, and you can ease out of (hefty incentives),” says Wagoner. “But I think we'll be in this a while.”
Indeed, the industry is in “an all-out incentive war,” says Ford.
He calls incentives a fact of life. “I agree with Rick; stop whining about it. Get on with it because customers like it.”
Ford, who's trying to steer his company into calmer waters after some bad years, says, “You don't last 100 years without facing adversity. We're recovering from our third economic downturn since I joined the company 20 years ago.”
He says how the industry is doing depends on who you ask. “But it's a great time to be a consumer,” he says, citing safer, cleaner and better-made cars that are more affordable than anytime since 1979 when it took 18.1 weeks of family income to cover the cost of a new vehicle. Today it's 19.8 weeks. That compares to 24.4 weeks in the peak year of 1994.
Today's vehicles must be more than just competent, says Ford. In addition, “Each must strike an emotional chord. People must love your product.”
He says that Ford Motor Co. in the late 1990s, as it sought growth in other areas, “took our eye off the ball,” allowing competitors to take advantage of that.
An avowed environmentalist (who nonetheless heads a company that sells its share of fuel-needy full-size SUVs), Ford says that by 2004 cars will run 99% cleaner and require half as much fuel as cars of the 1960s.
Cleaner cars offer a competitive advantage. They'll be part of the industry's “next big battle ground,” Ford says. “That will be a challenge for auo companies, but great for customers, and that's the way it should be.”
Bernhard says Chrysler Group's goal is not just to build better vehicles, but better brands.
He explains, “We spend a lot of time thinking about that. Brand attributes guide how we build and market our vehicles. We ask, ‘Is a vehicle expressive? Does it stand out? Is it beautiful and confident?’”
The Chrysler Group, drawing from its European resources, plans to introduce more vehicles with diesel engines. Americans often regard diesels as quirky engines that put out little horsepower and lots of exhaust fumes. But modern technology has changed that.
“Next year we'll sell Jeep Liberties with quiet and powerful diesels that are 30% more fuel efficient and with 20% less emissions,” says Bernhard. “Keep watching the Chrysler Group.”