Why VW Should Be Very Frightened by the Fall of U.S. Automakers

I pulled into my apartment complex last night in our 2009 Volkswagen CC test car just as a neighbor was parking in a spot behind me. I couldn’t see what he was driving, but it made the unmistakable noises of an older Domestic vehicle that has seen better days.

“That a Volkswagen?” he asked once we were both in warmth of our building. When I replied in the affirmative, he whistled. “That thing is beautiful!”

His compliment is not the first we’ve received on the CC, and certainly portends success for the car. But it’s what he said next that really caught my attention.

“Those Germans build some quality cars, man,” he said, nodding knowingly,
adding, “Much better than the U.S.”

His sentiment – not an uncommon one – is intriguing for the fact that it’s completely wrong. Just about every recent quality study ranks American cars, especially those from General Motors and Ford, close to or equal with the best from Japan. Meanwhile, VW and several other European makes have languished at the bottom.

Indeed, the irony of the Domestic automakers’ present crisis is that they are by and large producing their best vehicles in decades. Cars like the Chevrolet Malibu and Ford Flex are class competitive and exude quality. Future products like the 2011 Volt and 2010 Fusion, the latter of which I was able to preview earlier this week, promise to be even better.

Unfortunately, Detroit might have gotten the product religion too late in the game. Consumers’ perceptions, like that of my neighbor, often lag behind reality.;Biases can be changed – the success of the Japanese and more recently, the Koreans is proof of that. But it takes money and time. The Big Three appear to have neither.

GM and Ford can now only hope that they somehow survive long enough to see their aggressive product strategies bear fruit. For companies like VW, the death spiral of the American auto industry should ring out as a warning. VW’s stock currently goes for around $500 – more than 100 times that of GM and Ford – and the company recently rivaled Exxon Mobil as the most valuable on Earth. Much of this success is well deserved. It has consistently brought innovative designs to the market that are favorites among consumers – not to mention staffers here at Automobile. But it was not long ago that the Big Three ruled the automotive universe with fantastic looking but shoddily built products. They fell from grace slowly but surely, one bad customer experience at a time. VW and others like it should pay heed. In today’s competitive market, there’s simply no room for product failures or even annoyances – like the interior trim that’s already coming loose on our CC.