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Detroit auto makers were an easy target, but now they’re proving critics wrong

An auto show worker cleans a 2014 Silverado pickup truck at the North American International Auto show in Detroit in January, 2013. General Motors will start selling the new vehicle this summer.


CEO Dan Akerson recently had the courage and the wisdom to speak to the facts about the sometimes controversial $60-billion bailout of General Motors.

"It's pretty hard to argue it wasn't successful," Akerson said at the company's annual shareholders meeting, adding, as Automotive News reports, "Twenty-five billion dollars in profits later, growing employment, a strong manufacturing base and the first time in more than a generation that all [Detroit 3] manufacturers were profitable."

Profitable and growing. This week the Canadian arms of Chrysler, Ford and General Motors all reported sales were up at the halfway point of 2013. The sales tales in the U.S. were just the same.

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Ford, of course, never took direct government bailout money, though Ford Motor has benefited from about $6-billion in low-cost U.S. Government loans to spur development of what we'll call "green technologies." Chrysler, meanwhile, has paid back all its government loans.

For GM, a pressing need is to dump the dreaded "Government Motors" moniker. This is happening. The governments of Canada and Ontario have sold a portion of their $9.5-billion (U.S.) in financing to support GM's restructuring back in 2009. Meanwhile, the U.S. Treasury, notes Automotive News, has recovered $32.53-billion (U.S.) from its stock sales and GM repaid a $6.7-billion loan (U.S.) loan in 2010.

The U.S. Government says it will divest the rest of its GM investment within 18 months or less. In Canada, both government leaders have said they will also sell, though they remain fuzzy about the timing. Future stock sales are being aided by news that Standard & Poor's will return General Motors to the S&P 500 index.

Okay, enough of the business news. What I'd focus on here is the fact that GM just aced the latest J.D. Power and Associates Initial Quality Study. GM placed two brands – GMC and Chevrolet – in the top five of the IQS. GM's four brands averaged 98 problems per 100 vehicles. How good is that? Better than Toyota and Honda which each had 103 problems per 100.

"GM has the best quality of any corporation in the study, the first time it's been on top," David Sargent, Power vice president of global automotive and the study's author, told Automotive News.

On top of that, GM has been launching some very well-received new models. For instance, the Cadillac ATS compact luxury car is clearly an excellent automobile. The reinvented Chevrolet Impala is a fine effort, too. This summer GM is launching new full-size pickups, the Chevrolet Silverado and GMC Sierra. Both are coming out the gate with high residual values, another positive sign for GM.

As a group, the Detroit 3 look pretty healthy. In Canada, together they have picked up a point of market share in the last year (to 46 per cent through the end of June). All three have gained market share this year both in Canada and in the U.S. Toyota, by contrast, has lost three-tenths of a point of market share so far this year in Canada and the Camry in the U.S. is in serious jeopardy of losing the title of best-selling automobile.

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John Wolkonowicz, an automotive historian based in Boston, told Bloomberg that Detroit's auto makers are doing things unseen and unexpected for generations. They are gaining market share, winning quality awards, earning fat profits and delivering products that buyers want – buyers who until very recently never would have even considered buying a car from Detroit.

"These are probably some of the best products we've seen from American manufacturers since the early 1970s," Wolkonowicz told Bloomberg. "Younger buyers are more prone to buy American and one reason is they want to be different than mom and dad, who fell in love with Japan Inc."

Wolkonowicz is not alone.

"The Big Three look like they can go toe-to-toe with Toyota, Honda," Eric Noble, president of industry consultant Car Lab, recently said on Bloomberg Television. "On the hybrid side, Ford is actually cutting in on Toyota."

Here at the halfway point in 2013, the misery of 2009 – the bankruptcies, the uncertainties – seems almost ancient history. But let's not get carried away. The story out of Detroit is impressive now and that's good. The car business, however, is all about the long game, about performance over years and decades.

The best imports from Japan and Germany have proven they know how to play that game and win. Detroit hasn't, at least not in my lifetime. But I'm young enough to wait and see if Detroit's current surge is a mere blip or a sign of bigger things to come.

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About the Author
Senior writer, Globe Drive

In 25 years of covering the auto industry, Jeremy Cato has won more than two-dozen awards, including three times being named automotive journalist of the year. Jeremy was born in Montreal and grew up in the San Francisco Bay Area. More


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