At least once a week I hear someone hollering that Detroit’s vehicles are junk. It makes me realize how far in the past consumer perceptions of Detroit’s vehicles remain. I don’t think some people realize how far domestic vehicles have come in the past five years. Some only remember when the Big Three made great trucks but lousy, inefficient, poor-quality vehicles — and refuse to give it another thought. Some of the investing community still describes Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) stock in similar distasteful terms.
Times have changed. In looking at the new vehicles rolling out of Detroit, here are a few things for consumers to keep in mind, as well as what they mean for investors. I’ll use Ford as my prime example.
It took years for the American consumer to give up on domestic vehicles, and it will take years to win them back, but the fact remains that the Big Three have been fighting — and perhaps winning — the quality battle. In your head, rank Toyota Motor Corporation (ADR) (NYSE:TM), Honda Motor Co Ltd (ADR) (NYSE:HMC), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F) one through four, with No. 1 representing the highest total number of recalls over the past three years. Whom do you think comes out on top? The results may surprise you.
Toyota Motor Corporation (ADR) (NYSE:TM), previously known for its industry-leading quality, tops all automakers in total recalls. It also has more recalls than the No. 2 and 3 spots combined — or General Motors Company (NYSE:GM) tripled — in that time period.
I’ll take it a step beyond recalls and point out that Ford is winning critics over with its value. Ford Motor Company (NYSE:F) was recently a shining star in the U.S News and World Report “Best Car for the Money” awards for 2013. It dominated the competition by taking home six first-place categories, more than any other brand.
Past and present
When Toyota Motor Corporation (ADR) (NYSE:TM) and Honda Motor Co Ltd (ADR) (NYSE:HMC) first entered the U.S. market, everybody just knew Detroit was invincible. Well, we all know what happens when we get complacent, and sure enough, Detroit fell — hard.
We find ourselves in a similar situation today with perceptions, except the roles are reversed. Recently it was unthinkable for Detroit to produce a quality and fuel-efficient passenger car to compete with the Japanese. People still struggle to grasp the notion that things have changed. After all, we just know the Toyota Camry and Corolla are unbeatable. The Camry has been America’s best-selling car for 11 straight years, after all.