Why do US carmakers still only make cars?

Factual Questions
1

That Daewoo thread 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?

2

GM owns Hughs which runs directTV does that count?

3

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.

4

(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.)

5

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.

6

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

7

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.

8

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.

9

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

10

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.

11

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.

12

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.

13

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?)

14

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

15

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:

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

ASIMO Concept:

They’re doing some pretty cool stuff!

16

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.

17

IMHO, Honda makes the best wildland firefighting pumps on the market. They also make generators, too.

18

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.

19

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.

20

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