Are American cars and carmakers getting a fair shake? Amidst all the bad news and management missteps, despite the overreliance on gas-guzzling cars and crippling labor costs, the tumbling stock prices and the depressing debt ratings, the news is not all bad. Like a struggling baseball franchise with some hot prospects in its farm clubs, the future could be a lot better than the present.
May sales numbers confirm the grim current state of affairs for U.S. auto makers. As a whole, sales were down 4.6% last month over the year before—and 2005 was already a bad year. General Motors, Ford, and DaimlerChrysler's Chrysler Group are all hurting due to plummeting demand for large and midsized SUVs. The category, formerly a cash cow, has been transformed into an albatross. Worse yet, all indications point to another summer incentive free-for-all like last year, which left a bruise that lasted throughout the fall.
So goes Detroit's ongoing financial saga.
But from a product perspective, auto consumers interested in buying American have a wider range of appealing models—that is powerful, safe, reliable, fuel- efficient, or just good-looking—to choose from, which is better than past years. Even as U.S. auto makers continue to struggle to catch up to foreign manufacturers in terms of reliability, both actual and perceived, as well as initial quality, some of the most buzz-generating models of the year are homegrown. Of particular interest has been the resurgence of attention-grabbing sedans and coupes—especially such models as the brand-new 2007 Saturn Sky roadster and the 2007 Ford Shelby GT500.
Even in traditional stronghold segments, like trucks and sales-troubled SUVs, innovation has been recognized and gains have been made. Ford's 23-year best-seller, the redesigned F-Series truck, still absolutely dominates the sales charts, having maintained its performance and functional advantage over competitors. Even though Ford's Escape Hybrid SUV doesn't make fuel-efficiency gains as drastic as smaller gas-electric hybrids like the Toyota Prius do, it has been praised as a step forward by environmental groups.
Detroit has also introduced a raft of new upstarts aimed at challenging niches typically dominated by foreign companies. Cadillac's CTS, for one, is gunning for BMW's legendary 3 Series. Though that car needs to make significant cabin improvements, it's got enough performance under the hood to at least begin competing.
Other impressive new models coming out of Detroit include the Dodge Charger, which, in the R/T trim, can be equipped with a drool-worthy 340 horsepower, 5.7 liter HEMI V8 that would make the Dukes of Hazzard proud. Daimler has sold nearly 50,000 of these since the beginning of the year. Auto fans have even gone wild over two as-of-yet unreleased muscle concepts, a reborn Dodge Challenger and Chevrolet Camaro, both of which are most likely bound for showrooms soon given public response.
And, the U.S. indie supercar king, Steve Saleen, continues to wow racing fans and hone America's reputation for race-worthy machines with the 750 horsepower, $580,000 Saleen S7.
Comparing the cars
But with all this improved iron being made in America, how to determine which is the best? With that in mind, BusinessWeek.com took attempted to rank the best American cars of 2006—by reported reliability, government crash-safety ratings, and total cost of ownership.
We first took into consideration reliability data from Consumer Reports, including that publication's judgment on the car's overall reliability, acceleration performance, accident avoidance maneuvering, comfort, and fuel efficiency. Because those ratings operate on a five-tier scale (poor, fair, good, very good, and excellent) and because the overall rating is a figure out of 100 points, it was simple to "grade" cars on a one to five scale. Safety ratings, meanwhile, came from the government's database, maintained by the National Highway Traffic Safety Administration. Also based on a five-star system, crash ratings were averaged on a similar scale.
The most complicated—and potentially driest—calculation compared the total cost of ownership of each vehicle. Total cost of ownership (TCO), as calculated by Edmunds.com, is a general indication of ownership expenses over a five year time span. It incorporates a wide-range of long term factors including financing, taxes and fees, fuel, maintenance, repairs, operating cost, and depreciation costs.
A few exceptions
TCO is often most easily grasped as cost to an owner per mile driven. Some tricky math enabled us compare TCO intelligently, that is relative to the mean for the car's class. That means that a Hummer H2, for example, scores poorly in terms of ownership relative to the Cadillac Escalade and Ford Expedition, not just against a gas-sipping Ford Focus.
A few caveats: Not every single car on the market was compared. Some cars don't have complete crash or reliability data and couldn't be accurately or completely considered. Their results, for the most part, are still contained in the data below, for at-a-glance comparison. Only 2006 base model year cars were considered.
Additionally, we made vehicle categories flexible in order to compare as many models as possible. This sometimes results in groupings that aren't totally conventional. For example, we considered the Pontiac GTO a small car and the Chrysler Pacifica a station wagon. Standard vs. optional equipment, gas mileage, sticker price, and basic engine performance weren't considered explicitly, though some of those elements factor implicitly into other figures.
A "rough scale"
To compare total cost of ownership, we calculated the average cost per mile of each vehicle group. Then, by establishing a rough scale based on standard deviation from group average cost per mile, we were able to code scores—again on a one to five scale — so that vehicles which cost the most relative to the class average scored the lowest and those that cost the least relative to the class average scored the highest.
At the final tally, vehicles were scored on a one to five scale and compared with peers that also had complete data sets. Final score differences within .04 of each other were scrutinized individually for distinguishing characteristics. Take a look at America's best cars — by the numbers — some of the results may surprise you. They certainly surprised us.