US car companies trucking out of trouble

The Ford F-150

Once upon a time, an American car was just that. American cars stood out. They were mostly as big as Texas and covered in chrome. They had big motors in the front, big boots in the back - and big bench seats in between.

Some had fins, swept-back things designed to give the car the same presence on land as a shark has in the water.

These made some cars look hideous - even to Americans. The fins later came to symbolise American excess, in car design and in everyday living.

Classic Americans included the 1949 Ford pick-up, 1955 Chevrolet, with its small block V8, and 1963 Buick Riviera. The Riviera was inspired not from anything Detroit could dream up but by a foggy night in London.

General Motors designer Bill Mitchell was standing outside the Claridge Hotel when a Rolls-Royce appeared out of the fog. The sharp corners of the car coming through the mist gave him the idea for the Riviera.

That was the golden age of American cars, in the 1950s and 1960s, when Detroit designers ruled.

Then came the 1970s Arab oil embargo and new federal laws and carmakers were forced to rethink fuel efficiency. American cars got smaller. New safety standards were introduced. Somehow in all of this American cars pretty much became boring - with one or two exceptions.

Since then, Japanese and European carmakers have captured more than half the American car market and and are gaining in sport utility vehicles, or off-roaders.

Korean carmakers Hyundai and Kia are also making inroads.

Kia is turning to small-town mid-America to fuel its next wave of growth. It is on target to sell about 280,000 vehicles this year and wants to double that volume within five years.

"If you look at mid-America, places like Indiana, places that aren't the image markets, this is where Kia can make huge advances," says Kia America boss Len Hunt, until two months ago the head of Volkswagen in the US.

Kia also has its eye on customers who may not even be considering a new car because they have credit problems: "Sixty per cent of Americans have credit issues, yet they're not villains," he said.

General Motors now has about 25 per cent of the US market - down from a peak of just over 50 per cent in 1962. Ford has a similar share. The Chrysler division of DaimlerChrysler has 14 per cent.

Toyota has 11 per cent, and Honda 8 per cent. The Toyota Lexus is the most popular luxury car, ahead of Mercedes-Benz and BMW. The Toyota Camry and Honda Accord are the best-selling sedans.

Most Japanese brands sold in America are built from parts made in America. Eight out of 10 Hondas sold in America are built in American factories. About 90 per cent of the parts for those Hondas are made in America, too.

Detroit is under siege. GM is losing billions of dollars. It is shutting down plants and laying off 30,000 workers. It is hamstrung by pension and health costs and it isn't making the cars American buyers want.

Wall St fears bankruptcy - chapter 11 - protection. Chief executive Rick Wagoner (they call him The Rick like they call real estate billionaire Donald Trump The Donald) refuted the bankruptcy rumours in an e-mail to 325,000 employees.

"I'd like to just set the record straight here and now: There is absolutely no plan, strategy or intention for GM to file bankruptcy," Wagoner wrote.

FORD, also burdened by health and pension commitments and flagging sales, is expected to close plants and lay off thousands of workers next month when its trouble-shooters Mark Fields - former chief of Mazda and Ford of Europe - and Anne Stevens - an engineer who is head of product development - report to the Ford board on December 7.

Fields and Stevens, say analysts, will recommend that Ford close four assembly plants and some engine plants, lay off 4000 white-collar workers, and shut down some of its 53 corporate officers. Blue-collar jobs will also go.

"We want to make sure this is not all just done on the backs of a certain level of the company," chief executive Bill Ford said.

For years, the powerful United Auto Workers union and GM, Ford and Chrysler put together deals that gave workers above-average hourly wages and rich health and pension benefits.

The car companies could pass along the costs to consumers. The Big Three largely had the market to themselves. But not any more. They are now taking a back seat to imports and Japanese, Korean and German carmakers with non-unionised US assembly plants.

So far this year, Ford's North American automotive operations have lost $US1.4 billion ($2 billion) before taxes. Ford sales in the first two weeks of November were down nearly 30 per cent. GM's sales are also down.

But the Chrysler Group, which went through crisis after crisis in the 1970s and 80s before merging with Germany's Daimler in 1998, isn't as burdened with fringe benefits, although it too is laying off workers and cutting costs.

The slump in sales of pick-up trucks - traditionally the pillars of profit - and sports utility vehicles is hurting the Big Three.

But in spite of the rise in fuel prices and an active environmental lobby pushing the use of more efficient engines like hybrids, they are mounting aggressive advertising campaigns in support of the truck.

GM is pushing its Silverado pick-up hard with a new campaign called Long Live the Truck, aimed at men - who make up 87 per cent of the full-sized pick-up's buyers. Of those, it says, 81 per cent are married, 28 per cent are university graduates, and 22 per cent are retired. The average age is 51.

New ads call the 2006 Silverado the "one true truck". They emphasise its claim to be "longest lasting - most dependable".

The campaign's print advertising includes a 10-page brochure called: Men, Women and the Truck: A Relationship Handbook. The booklet begins: "It's a simple truth. Man's fascination with the truck is hardwired into his DNA."

The Silverado is the second-best-selling vehicle in the US, trailing only the Ford F series. In the first 10 months of 2005, Chevrolet sold 599,578 Silverados, a 4.3 per cent increase over the year-ago period.

But Silverado sales in October were 39.1 per cent below the same month last year.

John Roth, Chevrolet's truck advertising manager, says the Silverado campaign seeks to promote the bond between men and their trucks, at work and play.

A television ad for the Silverado observes: "Men love trucks. Why? Because trucks don't ask why."