Side-view mirrors show Detroit’s problems
Report puts a number on Asian advantage over big U.S. automakers
It’s no secret that like companies like Nissan and Toyota are outrunning their American rivals, but now a new study has put a number on the advantage Asian automakers have over Detroit’s Big Three.
U.S. automakers make an average of $2,400 less per vehicle than their Japanese counterparts because of less-efficient purchasing and manufacturing procedures, according to a study by the Harbour-Felax Group, an industry consulting firm based in suburban Detroit.
By restructuring through layoffs and plant closures, GM and Ford are not focusing on the root cause of their problems, Felax said. One large U.S. automaker, which Felax declined to identify, makes 81 different types of wing mirrors, while its Asian counterpart Honda only makes two, she said. By using more common parts and processes, U.S. carmakers can close the gap with their rivals, she said.
“You can cut labor, but at the end of the day you can’t cost cut your way to competitiveness,” Felax said, adding that automakers need to share components between their vehicle brands to save money, especially commodity components that will not have a major impact on a car buyers' purchasing decision, like wing mirrors or batteries.
Felax calculates that for every component that is shared between vehicle models, automakers stand to save between $1,000 and $1,500 dollars per vehicle.
“So if you multiply that saving by the volume of vehicles made by any one of these companies you can see there’s a potential for saving billions of dollars,” said Felax. “GM still produces the largest volume of product of any other carmaker, and this is an issue over which they have total control” — as opposed to the vagaries of consumer tastes and gasoline prices.
According to a recent report, inefficient design adds $2,400 to the cost of a car: