- The Washington Times - Monday, October 2, 2006

2:47 p.m.

TROY, Mich. (AP) — U.S. automakers have a $2,400 per-vehicle profit disadvantage compared with foreign manufacturers because of flawed pricing strategies, a lack of common platforms and vehicle architectures, and labor issues, according to a report released today.

“Lean methods have driven the Detroit automakers for the past 25 years,” said veteran automotive consultant Jim Harbour, who authored the report with Laurie Harbour-Felax. “They’ve made impressive progress in quality and productivity, and now they must adopt a new guiding principle: Common.”

By using common platforms, body architectures and components, Toyota Motor Corp. has saved about $1,000 per vehicle over the past five years, according to the report, titled “Automotive Competitive Challenges: Going Beyond Lean” and put out by the Harbour-Felax Group. In addition, when fewer unique parts are needed for each vehicle, quality improves, reducing warranty costs, the report says.

Another major contributor to the gap is revenue per vehicle. On average, domestic automakers take in $21,597, 11 percent less than the average revenue of Japanese automakers, which collect $24,289 per vehicle, the report says. The authors attributed that disparity to steep discounts that domestic manufacturers use to fuel sales, as well as discounts for rental and other fleet sales, which average 25 percent of total domestic sales.

The study also points to labor issues, including generous health care benefits and contracts that allow workers to continue collecting wages when there is no work for them, as a major factor in the profit gap.

Mr. Harbour called on the United Auto Workers and the government to help General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group resolve those issues.

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