What Has Become Of The US Automotive Industry?
The scale of the recent suffering in the global automotive industry is possibly second only to that of the finance industry. We need only rewind to September 2008 to see the three US giants of car manufacture in begging cap in hand in Washington at the end of George Bush’s tenure. Over a year later two of these three companies have filed for bankruptcy and the US Government has handed over tens of billions of dollars in Federal aid. This article examines the prospects and recent history of General Motors (GM), Chrysler and Ford.
Over the past year these three automotive giants have fallen on especially hard times. The global downturn has reduced new car spending and the rising price of oil has changed the focus of the industry. Consumers are no longer willing to buy inefficient gas guzzling small trucks that are sold with a high margin. America’s obsession with oversized SUVs and pickup trucks was over. Instead, consumers now want to buy fewer, smaller, more economical cars that are being sold with lower margins.
GM has been losing billions of dollars for years as it failed to appropriately size its business operations to the changing needs of car buyers. GM has received tens of billions of dollars in Federal aid to keep it afloat. Failing brands like Saturn, Hummer and Pontiac are being wound down or sold. 40% of the GM dealer network will be eliminated by 2010 and many factories will be closed. GM has now come out of bankruptcy with its succeeding brands placed in a new company. The state will own 60% of this new company.
Chrysler too suffered intensely with the death of the SUV and pickup truck markets. Billions of dollars in Federal aid have kept the company afloat. When a debt restructuring plan failed in April 2009, Chrysler filed for bankruptcy. 25% of the dealer network have since been closed down and 20% of the company has been sold to Italian car maker Fiat. This last move has allowed Chrysler to come out of bankruptcy.
Ford has weathered the storm rather better, managing to survive on cost cutting measures alone. The company was badly hit by the downturn in sales but has managed to survive without needing bailouts or bankruptcy protection. It is hoped that an overhauled and revitalized model selection will serve the company well in the next decade.
Recent data from GM and Ford shows that there has been a rise in their US car sales. GM has stated that it intends to start repaying its government loans early. These positive signs point to a tentative recovery in the US automotive sector.
So where to look for glimmers of what the future may hold? China, where else. You can do all the deals you like with the unions, but I’ll think you’ll agree that not much can match the economic efficiency of the Chinese workforce. Many industry watchers have been noting the improving quality of Chinese made cars and that they are pushing hard into the emerging electric car market. It’s worth remembering what people thought of Japanese cars many years ago, the Japanese manufacturers not only broke through the perception barriers of quality and innovation, but smashed it.
List of Chinese Car Manufacturers
- BYD Auto – http://www.byd.com/
- Geely International Corporation – http://www.geely.com/brands/international/
- Tianjin Qingyuan Electric Vehicle Co., Ltd. – http://www.qyev.com/
- Beijing Automobile Works Co., Ltd. – http://www.chinabaw.cn/
- Foton – http://english.foton.com.cn/
- Cherry – http://www.cheryinternational.com/
- Chana Automobile – http://www.globalchana.com/
- Great Wall Motors – http://www.gwm.cn/eng/
- Dadi Auto Group – http://www.bddqc.com.cn/web1/web/index.asp
- FAW – http://www.faw.com
- Foday – http://www.fdqc.com/
- Brilliance Auto – http://www.brillianceauto.com/main.html
- Qinhuangdao Jincheng Automobile Manufacture Co., Ltd – http://www.jc-auto.net/en/index.asp
- Chang Feng (Group) Co.,Ltd – http://foreign.cfmotors.com/main.asp?Lst_Language=0
- Shuanghuan Auto – http://www.hbshauto.com/en/cars/cars.html
- SG Automotive Group – http://en.sgautomotive.com/
- Tianma Automobile Group Co., Ltd – http://www.tianmaauto.com
- Xinkai – http://en.hbxk.com
- Polarsun Automobile – http://www.polarsunmotor.com/
- ZX Auto – http://www.zxauto.com.cn/en/
- Kingstar – http://www.kingstar.biz/
- Jiangling Motors Corporation, Ltd. – http://www.jmc.com.cn/english/index.asp
- Beijing Automotive Import & Export Corporation – http://www.baiec.com
That list is by no means exhaustive but it does provide an introduction to China’s emerging automotive manufacturing powerhouse.
Also considering the fiscal positions of the relative governments, the fact that one government would be stretched to find public support for another bailout/cash injection, and that the other government can do whatever it likes, you start to think…perhaps it’s a wise time for GM, Ford and Chrysler to think about who they are, what they do and what role they will play in the global automotive industry of tommorow. The automotive industry of the next decade will be a very different prospect to that of the last.
I think you might find now that all the American car manufacturers have serious relationships with Chinese manufacturers. Expect Chinese auto companies to be big players in the US before long.
Japanese cars are now selling more than any car manufacturer in the world because of safety. It is true that Americas has faced serious financial crisis but why they failed to keep car safe 99% SUV by which Chrysler has died.Should it be blame for financial problem?
Recently, Chinese cars selling is more due to its cheaper price but I do not think that those car have equivalent safety like Japanese car manufacture. American cars are not that much marketed like Japanese technology. America is busy for killing people like Chrysler or new generation killing methods.
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these were very looking nice..and japanese cars has attarcted me in a good way..thanks for the post
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Nancy.R
Recently, Chinese cars selling is more due to its cheaper price but I do not think that those car have equivalent safety like Japanese car manufacture. American cars are not that much marketed like Japanese technology. America is busy for killing people like Chrysler or new generation killing methods.
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