March 03, 2007
Detroit's dreadful finances
Paul Ingrassia, who used to cover Detroit for The Wall Street journal, had an opinion piece in that paper recently, DaimlerChrysler: The Divorce.
Buried in the middle of his account of the troubled union of the German and American automakers is this information.
Added evidence of Detroit's devaluation comes in the bond ratings of General Motors and Ford, now generally at Single-B-minus. that's just one notch above the dreaded Triple-C rating that defines debt as "highly speculative."
Thus GM and Ford bonds are deemed safer than Ecuador's, which are rated Triple C, but riskier than Venezuela's, which has petro wealth but also has loco-lefty president Hugo Chavez. The Detroit companies have the same debt ratings as Argentina, which is still recovering from the largest sovereign default in history a few years ago.
Things are no less encouraging when Detroit's latest offerings are compared to the competition. Sure, they've improved their quality and design in an effort to catch up to the Japanese, but the imports haven't rested on their laurels.
In the new issue of Consumer Reports, the annual auto issue, the top recommendations in all seven categories are Japanese.
Not a single American make takes best-in-class.
And in an interesting look at all the brands sold in the U.S., Consumers' Union gave each automaker two scores: the first an average of the scores for its vehicles after testing; the second figure is the percentage of models recommended by CU to its readers.
The two halves of the DaimlerChrysler union have a lot in common -- unfortunately.
Mercedes had the highest test score average; its cars have great fit and finish, and drive well. But it had the single worst score in the second category: CU recommended 0 percent of the Benz models, a result of terrible reliability.
And Chrysler -- scoring in the middle of the tests, came in second to last on the purchasing recommendations.
The Japanese -- and, increasingly, the Koreans -- are producing class-leading vehicles, and Detroit's Big Three look like they're falling farther behind.
Posted by Mike Lief at March 3, 2007 08:48 PM
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