A Car Industry Revolution in the Making

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The gloom is everywhere, but we see some patterns emerging that may bring healthier days for the industry—at some indefinite, down-the-road time. What these patterns basically mean is that everyone will do more business abroad.

First, the bad news: One week from today GM and Chrysler will have to face the music publicly in Washington about the viability of their companies. God knows what Chrysler can say, other than play up its connection to Fiat and its capabilities.

GM workers fear more shutdowns in power train and parts factories, assembly plants, plus assorted bad deals with bondholders and the UAW. Some 10,000 salaried jobs recently were blown away; “thousands” more will undoubtedly go.

nissanNissan just announced 20,000 job cuts over the next year, including some 12,000 in Japan, where the country’s third-largest carmaker posted a $2.9 billion loss, its first in 9 years.

The outlook: If GM can survive, and many doubt it, the company will grow smaller in the U.S., as Bob Lutz predicted, and do more business abroad, particularly in China. That country, by the way, beat out the U.S. in auto sales, as announced today, and may be the world’s only viable car market left, though it, too, is down.

The future for a good piece of GM’s production will be abroad, particularly in China. Edmunds’ Michelle Krebs sees “tremendous opportunity” there for GM, VW, and maybe Ford—if it can sell its Volvo unit to Chery. “Buick,” she says, “sells more cars in China than it does in the U.S.”

Nissan and Toyota may be on the prowl, too. Since the yen is very strong now against the dollar, Nissan is clearly looking to foreign markets and hoping its cost-cutting strategies will position it as a smaller, leaner company. CEO Carlos Ghosn has a great record in that department.

byd-electricTo spur development of the car market, the Chinese government has put forward a “multibillion-dollar economic stimulus package while it also tries to promote cleaner, more energy-efficient engines.” And it’s cutting the sales tax on small-engined cars in half. Sound familiar?

If you needed more proof of a global car economy, this is it. For U.S. auto producers to thrive in it, cars will need to become more fuel-efficient, electric or hybrid-powered, and price-competitive. . . . Except for Buicks, that is.

“Buy American” hasn’t made sense for years in the car industry. Do you still believe in it?

—jgoods

2 Comments

  1. Really Car girls? While I don’t think the car companies deserve to be bailed out I understand why, but even with the bailout I’d be surprised if all 3 survive, especially chrysler. As for JGoods question, I don’t believe in “buy american”. I’m only 24, but even as a kid I picked up on the fact that Foreign cars lasted longer than American cars. My parents went through lots of american cars while I was young, a chevy celebrity, buick skyhawk, chevy lumina, dodge intrepid, and guess what they all died right at 100k like clockwork. When i got my lisence I went for a toyota and now a hyundai and they have been great. My parents saw the light and now they drive older infinitis and couldn’t be happier. While I do think buying american is important in some respects, the customer should have to take such a huge hit in doing so.

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