Therein we pointed out that in fact GM has not been "saved" by the government. And that only consumers will determine that as they make free market choices about which cars they select to buy and drive.
Thus, the conclusion is that the auto industry competitors' eventual winners and losers are not for the government to decide --- that's a job for consumers.
Detroit's Joy Ride is Over summarizes the current situation and long term issues for American manufacturers this way:
"September’s U.S. car and truck sales results are proof that whatever grace period Detroit’s auto makers had from competition-as-usual in their home market is over.
Certain bullet points from the latest U.S. figures look ugly for the companies formerly known as the “Big Three:”
- The Japanese are gaining share, again.
- Americans are ditching their big SUVs and buying small cars.
- Gas prices seem stuck at nearly $4 a gallon.
But the script isn’t a simple replay of the 1980s and 1990s.
Let’s start with market share. It’s true that September was a tough month for Detroit brands.
General Motors Co., Ford Motor Co. and Fiat S.p.A’s Chrysler Group LLC combined to sell 44% of the cars and light trucks delivered in September, down from 48% a year ago, according to figures compiled by Autodata. Where did those four percentage points of share go? To Toyota Motor Corp. and Honda Motor Co., which together picked up 4.4 percentage points of market share in September, thanks to big jumps in sales for the Toyota Corolla (+43%), the Honda Accord (+57%) and the Toyota Prius (+103%.)
A year ago, Toyota and Honda were still fighting to get production up to speed after the extraordinary disruption created by the earthquake and tsunami in Japan, and floods that disrupted parts making operations in Thailand. The yen’s persistent strength against the dollar was undermining profits. The two companies had problems of their own making, as well. Toyota had the hangover from its clumsy handling of recalls linked to reports of sudden acceleration. Honda launched a clunky new design for its Civic compact.
The yen is still a big problem. But the Japanese auto makers are adapting, as they have in the past, by building more vehicles in the U.S., Canada and Mexico. The supply lines are back in operation. Both Toyota and Honda are fielding new models – such as the just launched smaller, nimbler Honda Accord and slick, new versions of the Prius – that are hitting the mark.
Toyota and Honda also are benefiting from a shift in American car buying tastes toward smaller, lighter more fuel efficient cars. Autodata reports that small cars captured 20% of total car and light truck sales in September, up from a 15% share a year earlier.
The move to smaller cars is happening without the sort of loud panic over gas prices that drove consumers to small cars and hybrids in 2008 (and the late 1970s.) Instead, consumers appear to be quietly factoring gasoline prices of close to $4 a gallon into their buying calculations, and reassessing just how much car they need to crawl to work on congested freeways.
Small cars are home turf for the big Japanese brands. But in contrast to past cycles of Japanese resurgence, the Detroit automakers have credible compact models on the field.
GM’s Chevrolet Cruze was the best-selling compact car in the market in September. The new Chevy Sonic was No. 1 in what Autodata calls the “lower small” segment, which includes subcompacts such as the Honda Fit, Hyundai Accent and the Ford Fiesta. The Ford Escape compact crossover sport utility is the leader in that segment, one of the biggest in the market.
The real challenge for the Detroit Three will be sustaining the drive and discipline forced on them by the 2008-2009 collapse, and the government-led bankruptcy restructurings at GM and Chrysler. All three companies have proven during the past two years they can make money in the U.S. on smaller shares of the market – even share levels that would have spelled disaster a decade ago. . . .
The Detroit Three still have substantial, money-making large pickup truck franchises that the Japanese have failed to crack. GM, Ford and Chrysler are making significant investments in new technology and designs to make these trucks more fuel efficient. The success of Ford’s “EcoBoost” six cylinder engine in the F-150 shows truck buyers aren’t going to cling to the old V-8 formula if presented with something better.
But Detroit executives will have to manage carefully the retrenchment in the large pickup business as fewer suburban cowboys buy Chevy Silverados or Ford F-150s as personal transportation.
Here, there are signs of work to be done. Autodata says GM has enough Silverados left on dealer lots as of Sept. 30 to last for 114 days at current sales rates. GM does plan to shut down some truck plants for a model change. But that’s still a lot of trucks gathering dust."
Summing Up
The trend toward smaller and more fuel efficient cars is firmly in place and will be permanent.
The days of cheap gas and "unlimited funds" (due to recent consumer borrowing binge) to make big ticket consumer purchases are over, too.
Fewer trucks will be used for personal transportation, and that's long been a segment favoring U.S. manufacturers.
Finally, there's the UAW factor. U.S. manufacturers will continue to be weakened by a lack of optimal productivity in their union facilities due to a lack of a team oriented company specific "we're all in this together" employee mindset.
Make no mistake. Productivity increases are a big deal and on display when one team plays hard, smart and together (non-union transplants) while the other team has lots of internal team dissension and "infighting" (GM and Ford).
U.S. players can win, but they're going to have to adopt and quickly implement a new and better game plan in order to do so.
Thanks. Bob.
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