Too many cars being built, too few willing to admit it
#1
Too many cars being built, too few willing to admit it
http://www.ottawacitizen.com/cars/ma...995/story.html
It's entirely possible that 10 years from now, automakers, especially European companies, will view 2009 not as the great cataclysm our headlines now trumpet but with the regret of a long-lost opportunity.
Of course, with the economy in recent free fall, tens of thousands of skilled autoworkers out of jobs and the worldwide cost of the automotive bailout possibly reaching $100 billion U.S., looking forward to future hindsight is a luxury reserved for automotive columnists desperate for this week's column and those few with still-healthy Swiss bank accounts.
General Motors has announced plans to shutter some 14 plants, chop the number of brands it sells in North America by half and reduce its payrolls to levels unthinkable in 1979 when it employed more than 600,000.
But the rest of the automotive world (save, perhaps, Chrysler, which has turned to Fiat, of all companies, as the saviour to show it how to build cars Americans want) seems to be blithely ignoring the fact it is an industry capable of building about 90 million automobiles but currently selling only about 55 million.
According to the Financial Times, not a single European auto manufacturing plant has been closed permanently since the economic crisis began.
GM, for instance, in its ambition to rid itself of non-core brands, is selling Opel. With a great deal of influence from the German government, GM chose a conglomerate of Canada's Magna Corporation and Russia's Sperbank over the more established and extremely ambitious Fiat.
GM's choice isn't because Magna offered the best long-term solution but because Sergio Marchionne, the Canadian-educated CEO of the Italian automaker, was more realistic in his prognosis for Opel and admitted that as many as 9,000 German autoworkers might have to lose their jobs.
It wasn't the kind of news a fragile German government wanted to hear going into an election bare months from now.
Even more curious is the case of Saab, another General Motors castoff. Sad to say, since I consider the 1986 9000 as one of the milestones of the modern automobile, the Swedish marque sold but a paltry 93,000 cars last year. That might be enough for Porsche and a good year for Jaguar, but Saabs don't command the price points to make such piffling numbers profitable.
In what must be a triumph of irrational nationalism, Swedish boutique automaker Koenigsegg has raised enough money to purchase Saab from troubled GM.
Never mind that the European Investment Bank (backed by the Swedish government) has kicked in $600-million in aid to sweeten the deal, but are things really so desperate that people who know absolutely nothing about the mass production of cars are now considered saviours?
Koenigsegg does make cars. Last year, it sold 18. Sure, they each cost more than $1-million, but what does hand-building supercars for rich Middle Eastern potentates have to do with mass producing quirky sedans for a hard-hit middle class? After all, the ability to make a great homemade pizza doesn't mean you can run McCain's frozen food empire.
European governments seem hell-bent on resisting any downsizing that might rankle voters. French president Nicolas Sarkozy has lavished public funds on the country's automakers as long as they don't shut down manufacturing facilities within the country.
Even Porsche, not long ago acclaimed the most profitable car company on the planet, is seeking a 1.75-billion-euro bailout because of adverse market conditions.
Of course, a skeptic could find that just a little duplicitous since it recently incurred a 9-billion-euro debt burden as a result of its -- dare I say greedy -- attempt to purchase a controlling interest in Volkswagen, a company that, you guessed it, wants to increase production so it can overtake Toyota as the world's largest automaker.
If the United States doesn't need its three core automakers -- GM, Ford and Chrysler -- then surely France is oversupplied with Citroën, Renault and Peugeot and Italy with Fiat, Alfa Romeo and Lancia, not to mention Ferrari, Lamborghini and Maserati.
Even the rarefied market of uber-expensive exotica has become grossly oversupplied with not just Italian marques but Aston Martin, Bentley, Rolls-Royce, Maybach and Porsche pumping out their trinkets.
The world is truly building too many cars and, like justice, downsizing delayed is rightsizing denied.
Of course, with the economy in recent free fall, tens of thousands of skilled autoworkers out of jobs and the worldwide cost of the automotive bailout possibly reaching $100 billion U.S., looking forward to future hindsight is a luxury reserved for automotive columnists desperate for this week's column and those few with still-healthy Swiss bank accounts.
General Motors has announced plans to shutter some 14 plants, chop the number of brands it sells in North America by half and reduce its payrolls to levels unthinkable in 1979 when it employed more than 600,000.
But the rest of the automotive world (save, perhaps, Chrysler, which has turned to Fiat, of all companies, as the saviour to show it how to build cars Americans want) seems to be blithely ignoring the fact it is an industry capable of building about 90 million automobiles but currently selling only about 55 million.
According to the Financial Times, not a single European auto manufacturing plant has been closed permanently since the economic crisis began.
GM, for instance, in its ambition to rid itself of non-core brands, is selling Opel. With a great deal of influence from the German government, GM chose a conglomerate of Canada's Magna Corporation and Russia's Sperbank over the more established and extremely ambitious Fiat.
GM's choice isn't because Magna offered the best long-term solution but because Sergio Marchionne, the Canadian-educated CEO of the Italian automaker, was more realistic in his prognosis for Opel and admitted that as many as 9,000 German autoworkers might have to lose their jobs.
It wasn't the kind of news a fragile German government wanted to hear going into an election bare months from now.
Even more curious is the case of Saab, another General Motors castoff. Sad to say, since I consider the 1986 9000 as one of the milestones of the modern automobile, the Swedish marque sold but a paltry 93,000 cars last year. That might be enough for Porsche and a good year for Jaguar, but Saabs don't command the price points to make such piffling numbers profitable.
In what must be a triumph of irrational nationalism, Swedish boutique automaker Koenigsegg has raised enough money to purchase Saab from troubled GM.
Never mind that the European Investment Bank (backed by the Swedish government) has kicked in $600-million in aid to sweeten the deal, but are things really so desperate that people who know absolutely nothing about the mass production of cars are now considered saviours?
Koenigsegg does make cars. Last year, it sold 18. Sure, they each cost more than $1-million, but what does hand-building supercars for rich Middle Eastern potentates have to do with mass producing quirky sedans for a hard-hit middle class? After all, the ability to make a great homemade pizza doesn't mean you can run McCain's frozen food empire.
European governments seem hell-bent on resisting any downsizing that might rankle voters. French president Nicolas Sarkozy has lavished public funds on the country's automakers as long as they don't shut down manufacturing facilities within the country.
Even Porsche, not long ago acclaimed the most profitable car company on the planet, is seeking a 1.75-billion-euro bailout because of adverse market conditions.
Of course, a skeptic could find that just a little duplicitous since it recently incurred a 9-billion-euro debt burden as a result of its -- dare I say greedy -- attempt to purchase a controlling interest in Volkswagen, a company that, you guessed it, wants to increase production so it can overtake Toyota as the world's largest automaker.
If the United States doesn't need its three core automakers -- GM, Ford and Chrysler -- then surely France is oversupplied with Citroën, Renault and Peugeot and Italy with Fiat, Alfa Romeo and Lancia, not to mention Ferrari, Lamborghini and Maserati.
Even the rarefied market of uber-expensive exotica has become grossly oversupplied with not just Italian marques but Aston Martin, Bentley, Rolls-Royce, Maybach and Porsche pumping out their trinkets.
The world is truly building too many cars and, like justice, downsizing delayed is rightsizing denied.
#2
I wonder if what we are seeing now is anything like what was seen when the horse-and-buggy was competing with the horseless carriage as the dominant way to move a person from point A to point B?
We still have horse-and-buggies; just an order of magnitude fewer of them. Are we seeing the beginning of the same situation now as the personal automobile gives way to mas transit and planned communities (where traveling significant distance to get to work or school or shopping isn't necessary at all)?
30 or so years from now will the only think left of the personal automobile be relegated to car shows, heritage events and museums?
We still have horse-and-buggies; just an order of magnitude fewer of them. Are we seeing the beginning of the same situation now as the personal automobile gives way to mas transit and planned communities (where traveling significant distance to get to work or school or shopping isn't necessary at all)?
30 or so years from now will the only think left of the personal automobile be relegated to car shows, heritage events and museums?
#3
We still have horse-and-buggies; just an order of magnitude fewer of them. Are we seeing the beginning of the same situation now as the personal automobile gives way to mas transit and planned communities (where traveling significant distance to get to work or school or shopping isn't necessary at all)?
The auto industry is contracting because it was running under unrealistic sales levels, not because society is shifting away from personal transportation.
#4
Q. How does
- France justify having 3 major domestic automakers
- Germany justify having 5 major domestic automakers
- Japan justify having nearly 10 major domestic automakers
when the US cannot justify the existence of 3 major domestic automakers?
A. ???
- France justify having 3 major domestic automakers
- Germany justify having 5 major domestic automakers
- Japan justify having nearly 10 major domestic automakers
when the US cannot justify the existence of 3 major domestic automakers?
A. ???
#5
#6
It seems that when the US economy tanks, those exports numbers cannot be sustained and the Euro/Japanese companies begin to struggle to make money.
Given the current state of the global economy, there's far too many car companies in the world that either need to be eliminated or downsized.
Given the current state of the global economy, there's far too many car companies in the world that either need to be eliminated or downsized.
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