Why do US carmakers still only make cars? [Archive]

SmackFu

12-13-2002, 06:09 PM

That Daewoo thread (http://boards.straightdope.com/sdmb/showthread.php?s=&threadid=150042) brought this to mind. That company apparently makes everything under the sun, from cars to TVs to assault rifles. Similar thing with some of the Japanese manufacturers. So why not the US ones?

An easy answer is because they're carmakers and you stick to what you know. But the 3 major US carmakers have been around for quite a while. 80 years or so. Their share of the relatively stable car market has only decreased in the last 40 years, due to every increasing foreign competition. Yet they are all publicly traded companies that have an obligation to grow sales. Most other big companies in this situation expand into other markets and diversify, because it's the only way to get more money. Yet Ford, Chrysler and GM seem to stick to the car business.

Have they tried to expand into other things and failed? Have they actually gone into new markets that I don't know about and succeeded (in which case this question is quite flawed)? Or what?

Tapioca Dextrin

12-13-2002, 06:27 PM

GM owns Hughs which runs directTV does that count?

tomndebb

12-13-2002, 06:28 PM

I'm not sure why you believe that the Big 3 stick to automotive products. GM has also built off-road earth movers, diesel-electric locomotives, aircraft, and numerous other products. Until 1979, Frigidaire was a GM subsidiary. I have a vague (but possibly incorrect) memory that Motorola was originally a Ford subsidiary.

Actually, it has only been across the last few years that pressures to narrow their focus have caused the Big 3 to divest themselves of non-auto products.

tomndebb

12-13-2002, 06:30 PM

(Additionally, the Japanese method of consortium/near-monopoly leads to a situation where a very small number of Japanese manufacturers are responsible for producing an incredibly wide range of products where both competition and anti-monopoly legislation has pushed American business in the opposite direction.)

asterion

12-13-2002, 08:31 PM

Wasn't there a line of Philco products or something like that made by Ford? I think my parents bought me one as a cheap boombox one year as a present.

Sternvogel

12-13-2002, 09:07 PM

Originally posted by asterion
Wasn't there a line of Philco products or something like that made by Ford? I think my parents bought me one as a cheap boombox one year as a present.

If you had a Philco-Ford product, it was made in the early 1960's:

http://www.transistor.org/collection/philco/philco4.html

Motorola was founded in 1928 as the Galvin Manufacturing Corporation in 1928, but supplied factory radios for Ford (as well as Chrysler) products as early as 1948.

http://www.motorola.com/content/0,1037,116-281,00.html

This site is devoted to Chrysler Marine boats and outboard motors:

http://www.hurrikain.com/Chryslercrew-new.htm

Henry Ford was responsible for the popularization of charcoal briquettes, originally sold under the Ford brand name in dealerships before the plant renamed its product Kingsford Charcoal Briquettes (Edward G. Kingsford, the husband of Henry's cousin Minnie, was a real estate agent and Ford dealer in Michigan's Upper Peninsula):

http://www.upclics.org/cityofk/history.htm

Ford also produced the trimotor airplane known as the "Tin Goose":

http://www.grc.nasa.gov/WWW/K-12/aerosim/LessonHS97/TinGoose.html

Omniscient

12-13-2002, 09:14 PM

I think you're missing one important factor. Foreign (mostly asian) companies tend to make a wide variety of products all under one brand. US companies tend to diversify for various reasons, some of which is due to regulatory laws and limited liablility, which usually creates various brands. However, in many significant ways these brands are all under one umbrella company.

I think part of it is that the American consumer doesn't want to buy a "Ford" Tv, they want one made by a TV manufacturer. Branding things differently allows for specialized marketing.

kunilou

12-13-2002, 11:24 PM

As noted, Ford owned Philco (and made tractors), GM owned Frigidaire, and back a few decades ago, American Motors owned Kelvinator.

The bottom line is, the divisions, however profitable, never made enough money compared to the automotive division to be worthwhile. They required management time and effort to be diverted away from the bigger business.

That said, the automakers still have defense-related businesses and HUGE finance divisions that do a lot more than just make car loans.

BobT

12-13-2002, 11:34 PM

And I believe that until WWII, you had to go to Ford dealers to buy charcoal briquettes made by Kingsford.

techchick68

12-13-2002, 11:42 PM

Don't forget that US car companies also own all of or part of other car companies.

I don't recall them all but here's a sampling:

Ford/Mercury/Lincoln: Volvo, Mazda, Jaguar, Land Rover, Aston Martin (other offerings include financial services that I know of)

GM/Pontiac/Chevy/Saturn/Buick/Cadillac: Hummer, Saab, works with Fiat, Toyota, Honda, has financial services, Onstar, mortgages, real estate.

Chrysler/Dodge/Mercedes/Jeep/etc...: seems to work more in the auto industry than the other of the big three.

But they are all very diversified by their product brands alone.

People willing to buy a Land Rover might not be as willing to buy a Lincoln not knowing the Ford connection. Years ago, Chevy was the main engine supplier for Jaguar and they both got a bad name, now Jaguar is selling and doing well in upper financial circles. Chrysler did the best thing it could have done by allowing Mercedes become a part of their company. Jeep has really rebounded on the Mercedes connection. GM has done well with offering a lot of services to compliment each other.

While a lot of that is just from the experience I have with day-to-day people, it makes a lot of sense.

While I wont buy a Ford or a Chrysler or Dodge product, they have both taken on companies I would do business with which might make me think about possibly buying a Dodge truck or a Ford truck.

It's in the minds of a lot of people that marketing has separated brands to keep them coming all the while, many don't know the alliances they have with one another.

Besides, I really don't think I want a Chevrolet stereo. I demand Chevy in a truck, not my home entertainment system.

But that's more IMHO than it is fact.

Urban Ranger

12-14-2002, 08:23 AM

Originally posted by SmackFu
That Daewoo thread (http://boards.straightdope.com/sdmb/showthread.php?s=&threadid=150042) brought this to mind. That company apparently makes everything under the sun, from cars to TVs to assault rifles. Similar thing with some of the Japanese manufacturers. So why not the US ones?

Daewoo was not a car company. More precisely, it did not start as a car company and making cars was only part of its business. It is one of thse SK conglomerates called a charbol (or something like that).

I can't recall Honda making anything else other than cars.

racer72

12-14-2002, 11:07 AM

Originally posted by Urban Ranger
I can't recall Honda making anything else other than cars.

I have owned over the years a Honda motorcycle, Honda lawnmower and my generator is a Honda. I also had an uncle that brought home on a trip to Japan a Honda radio.

tomndebb

12-14-2002, 11:18 AM

I can't recall Honda making anything else other than cars. Now I feel just old. Does anyone else remember being curious that that motorcycle company was going to build cars? (Or laughing that their first car was smaller than their largest bike?)

bernse

12-14-2002, 12:05 PM

Originally posted by asterion
Wasn't there a line of Philco products or something like that made by Ford? I think my parents bought me one as a cheap boombox one year as a present.

I remember our old TV when I was a kid had the Ford emblem on it.

voltaire

12-14-2002, 01:23 PM

Yeah, Honda first started out with mopeds and small motorcycles. Now, other than cars, motorcycles, and power equipment, they do a lot of R&D in various fields that are sometimes only loosely related to their products.

From Honda's site:Honda's research is turning dreams into reality, going beyond our present sphere of operations to face challenges in new, unknown fields. The message delivered by ASIMO, our humanoid robot, is of a limitless world of future possibilities, in which technology contributes to the betterment of human society.- http://world.honda.com/tech/overview/

ASIMO: (I believe the robot's name is a tribute to Isaac Asimov)
http://www.honda.co.jp/ASIMO/history/
http://world.honda.com/robot/

ASIMO Concept:
In 1986, Honda commenced the humanoid robot research and development program. Keys to the development of the robot included "intelligence" and "mobility." Honda began with the basic concept that the robot "should coexist and cooperate with human beings, by doing what a person cannot do and by cultivating a new dimension in mobility to ultimately benefit society." This provided a guideline for developing a new type of robot that would be used in daily life, rather than a robot purpose-built for special operations.
Around one year was spent exclusively on initially determining what the robot should be like in order to build the concept. The robot had to be capable of such functions as moving through furnished rooms and going up and down stairs since it was to be designed for home use. At the same time, the design team decided that the robot should employ two-foot/leg mobility technology to make it compatible with most types of terrain, including very rough surfaces. With these ideas in mind, Honda engineers began the development program, focusing on the "foot/leg-walking mobile function" that corresponds to the basics of human mobility. As you can probably imagine, there were a number of technical challenges to be cleared before creation of the robot was possible. Naturally, special attention was paid to how our own legs and feet work. Thus, the first phase of our program was dedicated to the analysis of how a human uses legs and feet to walk. - http://world.honda.com/robot/concept/

They're doing some pretty cool stuff!

glilly

12-14-2002, 03:57 PM

In the 60's and 70's, there was much more diversity within large companies For example, ITT owned all kinds of crazy businesses, from business schools to heat exchanger manufacturers. There are student apartments on the campus of the University of Kansas that were previously owned by Phillips 66, for some odd reason.

This was done because corporate strategy conventional wisdom was that companies had to be diverse in order to make them more "recession proof" (if one industry was having a bad year, the others may be doing OK).

There were two things wrong with this strategy.

1) It turns out that the cycles within industries aren't as bad as overall recessions, so diversification doesn't make companies recession-proof.

2) MOST businesses in the US are quite competetive. To really make a profit, a business has to have a real competetive advantage over the others. It turns out that companies don't have general business acumen that can be applied to any company. Bussing companies cannot run soap companies as well as...soap companies. (Greyhound bought Dial soap, and it didn't work out so hot. Dial's no longer part of Greyhound, and Greyhound is bankrupt.)

You do see companies entering new fields, but the sucessful ones do by finguring out what they'd be good at, not which ones look most attractive.

Korean companies being huge conglomerates has more to do with an overall economic, government, and bureaucratic system that has traditionally favored the big companies, but somewhat unnaturally. One of Korea's "Big 4" went bankrupt a few years ago, and the others are starting to break up, and will probably be better off for it.

St. Urho

12-14-2002, 08:16 PM

Originally posted by Urban Ranger
I can't recall Honda making anything else other than cars.
IMHO, Honda makes the best wildland firefighting pumps (http://www.hondapowerequipment.com/pum.htm) on the market. They also make generators, too.

David Simmons

12-14-2002, 09:07 PM

At one time Henry Ford wanted to have complete control of his product from beginning to end. So he had iron mines, ore ships, steel mills, a glass company, and on and on. He also was one of the first to try plastics and was going to make plastic out of soya beans. I don't think that experiment was too successful.

Zappo

12-15-2002, 02:40 PM

Both of the US auto manufacturers, as well as Daimler-Benz' Detroit puppet, have very active real estate and financial subsidiaries.

GMAC (General Motors Acceptance Corporation) was originally started to finance "time payments" of General Motors cars. Today, they are one of the country's largest mortgage lenders and control subsidiaries such as ditech.com (a mortgage-refinancing company), IIRC.

Ford Motor Credit Corporation is also quite robust. Ford also has a large real estate subsidiary, which among other projects built downtown Detroit's Reniassance Center (now GM's world HQ) and the Fairlane Mall outside Detroit.

Chrysler Financial handles quite a bit of leasing and car-loan business.

During the bad old days of the 70s and early 80s, the financial arm's profits were very important to the commericial viability of each of the Big Three.

Balthisar

12-16-2002, 06:13 AM

Originally posted by Zappo
Ford also has a large real estate subsidiary, which among other projects built downtown Detroit's Reniassance Center (now GM's world HQ)...

Hehehe.... we still proudly display pictures of the Reniassance Center at work. It's great to showcase the competition's world HQ.

Zappo

12-16-2002, 08:11 PM

Originally posted by Balthisar
Hehehe.... we still proudly display pictures of the Reniassance Center at work. It's great to showcase the competition's world HQ.

Wow. . .you work for Ford Land?

They ain't hirin' lawyers by any chance, are they? ;)

Enola Straight

08-18-2004, 08:49 PM

My church recently replaced its central air conditioning system.

An AirTemp, made by Chrysler.

eno801

08-18-2004, 10:56 PM

Now I feel just old. Does anyone else remember being curious that that motorcycle company was going to build cars? (Or laughing that their first car was smaller than their largest bike?)

slight hijack i once had a chance to buy a pretty decent S600 honda for only$500.00. I was in college and that seemed like a big hunk of change better spent towards booze. damn, the regrets i have i can count on one hand and this is one of them.

Sam Stone

08-18-2004, 11:31 PM

General Motors owns EDS Datasystems, and they owned DirectTV before selling it a couple of years ago. GM also makes diesel locomotives.

General Motors has also built fight aircraft (The WWII Wildcat among others). The 'coyote' light armored vehicle that Canada loves and the U.S. just bought (as the 'Stryker') is built by General Motors Diesel Division.

Ilsa_Lund

08-18-2004, 11:43 PM

Well, Ford makes chewing gum and supermodels.

::d&r:::

Sam Stone

08-19-2004, 12:23 AM

Man, I'd love to visit the supermodel factory.

Sleel

08-19-2004, 01:46 AM

ASIMO: (I believe the robot's name is a tribute to Isaac Asimov)

[slight diversion] The name stands for "Advanced Step in Innovative MObility." In Japanese the five vowel sounds can stand on their own, but consonants are almost always paired with a vowel, thus: A-SI-MO. It's possible that they chose a phrase that could be made into this particular acronym as a tribute, but there's nothing to indicate that. [/slight diversion]

scr4

08-19-2004, 02:13 AM

I think ASIMO is a pun on ashi ("leg"). The Asimov connection never occurred to me, and isn't mentioned in their FAQ. (Although I did learn from the FAQ that you can rent an ASIMO for $200,000 a year.)

Anyway, I read somewhere that GM was the biggest seller of pornography in the US. I guess that was a reference to DirecTV, but does anyone know if it was true?

Capt B. Phart

08-19-2004, 08:59 AM

People willing to buy a Land Rover might not be as willing to buy a Lincoln not knowing the Ford connection. Years ago, Chevy was the main engine supplier for Jaguar and they both got a bad name, now Jaguar is selling and doing well in upper financial circles. Chrysler did the best thing it could have done by allowing Mercedes become a part of their company. Jeep has really rebounded on the Mercedes connection. GM has done well with offering a lot of services to compliment each other.

.................

It's in the minds of a lot of people that marketing has separated brands to keep them coming all the while, many don't know the alliances they have with one another.

Toyota invented the Lexus brand 'cos people wouldn't have bought the idea of a luxury Toyota - given it's success I'm surpised other Asian car makers haven't followed suit in having niche brands

Who_me?

08-19-2004, 09:29 AM

Toyota invented the Lexus brand 'cos people wouldn't have bought the idea of a luxury Toyota - given it's success I'm surpised other Asian car makers haven't followed suit in having niche brands

????

What do you think Acura and Infinity are... luxurious Hondas and Nissans...

JRDelirious

08-19-2004, 11:30 AM

Daewoo was not a car company. More precisely, it did not start as a car company and making cars was only part of its business.

And the Daewoo auto concern is now owned by GM.

Similarly, SAAB was/is an aircraft maker first (I've flown in their planes multiple times) and in the 90s sold their car business (to GM, too!).

Besides the US companies wanting to stick to what they do best, they do also want to avoid diluting their brand -- so they do not give everything up, down, and across the corporate family tree the same brand name.

suranyi

08-19-2004, 02:42 PM

Most other big companies in this situation expand into other markets and diversify, because it's the only way to get more money.

Well, for whatever it's worth, the famous mutual fund manager Peter Lynch has said in his books that when a company gets involved in businesses unrelated to its core, it usually does badly. He calls it "de-worse-ification."

Ed

Balthisar

08-19-2004, 02:44 PM

Dang, I was reading this thread like it was new until I saw I replied to it almost two years ago!

kunilou

08-19-2004, 02:56 PM

I was around in the 1980s when Ford started divesting themselves of non-automotive businesses. At that time the company was manufacturing steel, glass, tractors and had several other businesses beyond automobiles and trucks.

They had several reasons, but they were all pretty easy to understand.

1) Some businesses, like tractors and construction equipment were very capital-intensive and the investment necessary to stay modern wouldn't be worth it unless the company was #1 in its market. In tractors, for example, Ford had been a second-tier competitor for decades.

2) Some of the businesses, like steel manufacturing, were too expensive to remain profitable, particularly in the wake of global competition. The old business model of controlling costs and quality by owning every step of the process didn't work anymore. It was much easier to tell a supplier what you needed, and let them figure out how to deliver it.

3) Home electronics (Philco, which by then was only active in South America) required different marketing strategies than went beyond taking a car stereo, putting it in a case, and putting it in stores. Ditto with the glass business, which required reaching the construction market, as well as just windshields.

4) Each of the industries required top-notch management, design/engineering, quality control, etc. hat's an awful lot of gold stars to expect one company (even a big one) to earn consistently.

yabob

08-19-2004, 03:34 PM

...
Similarly, SAAB was/is an aircraft maker first (I've flown in their planes multiple times) and in the 90s sold their car business (to GM, too!). ...
I bought an '87 Saab. It was their 50th anniversary, and they sent me a coffee table book on the corporate history, which had a few interesting details in it. They decided to make small cars after WWII because they figured the military aircraft business was going to be horribly depressed for a while, and they had better do something else with their plant capacity in Trollhatten1. They also made computers at one point, eventually selling their "Datasaab" division to Sperry-Univac in 1975:

http://www.ctrl-c.liu.se/misc/datasaab/om-eng.html

They still do make avionics / space / weapons system stuff, but not general purpose computing hardware.

1 - one of the more charming anecdotes was that they painted all of their first year's production green because they got a good deal on green paint from the Swedish Army. It was supposed camouflage paint, only the army found that everything they painted with it stuck out worse than before. So they unloaded it to Saab, cheap.

Capt B. Phart

08-19-2004, 03:49 PM

????

What do you think Acura and Infinity are... luxurious Hondas and Nissans...
Oops! - Actually I had vaguely heard of Infinity (prob in a US film) but neither are imported in the UK (- I think - though it wouldn't surprise me to be told I'm wrong about that too!)

Pushkin

08-19-2004, 04:55 PM

Oops! - Actually I had vaguely heard of Infinity (prob in a US film) but neither are imported in the UK (- I think - though it wouldn't surprise me to be told I'm wrong about that too!)

Nah, I think the high end Honda's were still Honda Legends last time I checked.

Pushkin

08-19-2004, 05:00 PM

Now I think about it the only place I heard about the high spec Honda's was on Gran Turismo, so maybe they're the Interga's and Prelude's we see over here.

stockton

08-19-2004, 10:04 PM

Now I think about it the only place I heard about the high spec Honda's was on Gran Turismo, so maybe they're the Interga's and Prelude's we see over here.

Oh, for the love of...

Okay, 2-year old thread.

Honda = Acura
Nissan = Infiniti (notice the spelling)
Toyota = Lexus

All very nice cars, and some have interchangable (compatible) parts between badges. The antenna mast, for example.

For the record, you can insert the word 'Datsun' in the Nissan space.

Cardinal

08-20-2004, 12:20 AM

Honda cares so little about your knowing the connection to Acura that my 89 Acura Integra had "Honda" right on the valve covers.

GMAC is really big in mortgages. Big, I tell you.

The auto companies are also involved in making the big rig tractors. I've taken liberties with some text from this site:
http://www.thecarconnection.com/index.asp?n=156,192&sid=192&article=1617

From 1999:
"The pre-merger Daimler-Benz owns two big-rig nameplates. The largest is Freightliner, and Freightliner alone accounted for nearly 72,000 sales in the first seven months, nearly 32 percent of the total. The second Daimler-owned nameplate is Sterling, a new one. Daimler bought out Ford's big-rig business in 1998 and put the Sterling name on what used to be the Ford big rigs.

Another foreign-owned company is Mack. Yes, the Mack bulldog is owned by French Renault. And Volvo trucks are Swedish-owned, of course. But Volvo includes the big-rig business that it bought from General Motors.

Daimler, through Freightliner and Sterling, is the No. 1 big-rig seller in this country. PACCAR, an American-owned company, headquartered on the West Coast, is No. 2. Its two nameplates are Kenworth and Peterbilt. Navistar, another American company, headquartered in Illinois, is No. 3, though its sales have been slowing recently. "