The loss of loyalty

My dad sells cars for Ford, and he was sure to pass on his brand loyalty to me. I knew well before I started kindergarten that Ford was good and GM was bad. My grandparents drove Fords, my parents did, and I would too one day.

General Motors made bad cars, ugly cars, dangerous cars that did poorly on crash tests. Ford made the awesome white Aerostar in my driveway with that blue racing stripe, and Ford paid for it, too.

The Ford-GM rivalry was a constant companion growing up, and as far as I was concerned, there were no other manufacturers. In elementary school, I counted the number of Ford and number of GM vehicles parked in my subdivision – an easy task, as nearly every car was one or the other. I was proud of my neighbors when Ford won. I doubt it would fare so well now.

Where as I once saw the Ford-GM rivalry as your standard battle between good and evil, it seems now that Ford and GM actually have a lot in common – falling market shares, heavy legacy costs, a bleak future. But these are fairly new trends. As recently as 1995, the Big Three was still the Big Three, holding a 75-percent market share. Today that’s down to just more than 50 percent, with Toyota first taking DaimlerChrysler’s spot as number three, and now poised to knock down Ford from its number two position.

With both Ford and GM frantically treading water to avoid bankruptcy, it’s not worth arguing whether Ford is so much better than GM, or vice versa. Both companies are losing sales and have announced massive restructuring plans in an attempt to return to profitability. Automotive News reported Monday that talk of an alliance between the two has come up, perhaps even a merger.

Such an arrangement would signal not only the end of an era, but the loss of each company’s identity. It seems unlikely in the near future – besides convincing Congress that a merger wouldn’t violate anti-trust legislation, the companies don’t exactly have complementary product lines; both are excellent in selling trucks and sports utility vehicles, and rather pathetic lately in designing a car model that sells.

But even without merging or forming some sort of alliance, the rivalry is over. What Ford and GM had was something special, the last of its kind – a rivalry fueled by customers’ lifelong loyalty, passed down from generation to generation. From the instant Henry Ford offered his employees five dollars a day so they could afford to buy his cars, automotive manufacturers relied on this generational brand loyalty from their employees to keep up sales. They not only consciously built this brand loyalty in their employees, but they assumed everyone else in America would choose their cars in the same way.

As Ford and GM are only starting to realize, this loyalty has already weakened dramatically, as customers focus more on product and less on producer. But the actions both companies must take to make it through their current crises – cutting costs wherever possible – will be the final blow. The mutual respect between employer and employee that forms after a lifetime of employment was what created Ford families. With heavy layoffs and wage cuts, this security will not survive, and neither will the loyalty.

Brand loyalty isn’t dead entirely. The cult of iPod worshipers is alive and growing, and many are full-out Apple devotees. Lots of Coke drinkers would choose water over Pepsi. But unlike the Big Three during the American automotive industry’s heyday, it’s a different loyalty, one that comes from really liking the taste of Coca-Cola or the click of the iPod’s click-wheel. If Ford and GM can take advantage of that sort of loyalty and compete on product, convincing customers that the Ford Focus, the Chevy Impala or some yet-to-be-imagined model is worth their devotion, they may have a chance of coming out all right. Otherwise, they’ll have to find tens of thousands more workers to fire.

Beam can be reached at ebeam@umich.edu