We can learn a lot from the past, even if predicting the future is impossible. So, naturally, opinions seem to be all over the lot regarding the auto industry outlook for 2012.
Let’s begin with the optimists. Bloomberg interviewed several people who stressed the fact that auto companies, foreign and domestic, were committing to new plants in the U.S. and quite a number of new jobs. The reasons are, basically, pent-up demand and the increasing cost of labor in China and India. Can you believe it? U.S. labor is competitive!
Toyota is opening a new plant to build Corollas in Mississippi (above) and hiring 1,500 people. Other furriners—Kia, VW, Mercedes, Nissan, Honda and BMW among them—are adding capacity and jobs: 6,350 this year, 3,400 in 2012.
The Detroiters have made contract agreements to restore or create 20,000 U.S. jobs by 2015. Steve St. Angelo, Toyota’s North American EVP, is quoted as saying the auto industry “will spur 88,000 more jobs” this year and next.
This rosy picture is very much clouded by the financial crisis in Europe, and Alex Taylor reported last month on some gloomy forecasts, with many analysts predicting around 13 million cars sold in 2012. Compare that to the glory days of 2007 and before.
The industry is suffering badly in Europe, where new cars are being discounted heavily. Manufacturers and dealers are playing games like registering new cars to resell them as used, exports are way down, and GM’s Opel division is a mess. All this, plus FIAT shares are down 39 percent for the year.
No wonder Sergio Marchionne, FIAT/Chrysler CEO, is putting so much faith in the rebirth of Chrysler. Sales are up 24 percent for the year (more than GM’s), and he has done some smart things that have paid off, like spinning off Ram as a truck brand and reviving Jeep.
The company’s big issues include the delay in producing compacts and subcompacts, slow FIAT 500 and van sales, and the problems in importing Alfa Romeos. But Sergio has accomplished the next-to-impossible in bringing Chrysler back to life.
Where does all this leave us? It’s pretty clear that what happens with the euro (and in Italy) will play a key role in our economy this year and next. If we get a recession, all those happy, forward-looking investments the automakers have made here may come to naught—or less.
Are you an optimist or a pessimist on the auto economy for next year? Why?