Wrong Way for GM & Ford.

FT reported today that both GM & Ford are set to significantly increase their incentives and reduce their output between July and September. It is a wrong direction for both Ford & GM and is yet another sign of the weakening influence of these yester-year giants. This should be more devastating for GM whose credit rating was downgraded few weeks ago.

The problems with GM & Ford is not that they are costly but that they make cars of inferior quality and poor reliability that no one wants to buy. Years of pummeling by Toyota and Honda and the newly resurgent Nissan is taking its toll on these American Carmakers slowly but surely. Add to this the increasingly stronger performance of Hyundai one wonders if the end of the days of dominance for Ford & GM is near.

Unappealing body design, staid interiors with inferior materials, knobby & cheap dashboards are the rootcauses of the worsening performance of GM & Ford. I cannot fathom how a car like Ford Taurus can possibly hold its ground against Toyota's and Honda's fine cars, much less compete against them and win market-share. GM has atleast improved the exteriors of its cars - as seen in the new Malibus, Cobalts and Cavaliers. But cosmetic changes alone cant persuade people to buy these cars again. These two majors are paying a heavy price for chronically poor quality of their cars made in the late 80s and early 90s.

I don't see their position improving till they adress their fundamental problems without resorting to cosmetic changes.