The Auto Industry Has Been Turned Upside Down and Twisted Around

With all the news about the hurting auto industry, loans from the government, bankruptcies and acquisitions, people tend to lose sight of the fact that the whole automotive world, (something which has been a big part of my life and the lives of millions of others), has been turned on its head.  Sure it may not seem like a big deal, but this is arguably the largest and most important industry on the planet.  The products people buy from it touch our lives daily, inspire us, and allow us the ultimate freedom, mobility.  Cars and trucks are aspirational objects that we often depend on do to just about everything else in life, we judge people by the vehicles they drive, and some people dedicate their lives to careers or hobbies revolving around vehicles.

From the corporate perspective, let’s put it this way, there is hardly a single manufacturer or automotive brand that hasn’t gone through substantial change in the last 5 years, and the pace has recently accelerated.  GM, the formerly largest corporation on the planet that sold almost half the cars we bought in the U.S. is a much smaller version of itself and in financial desperation.  There are a lot more competitors and other factors that made this happen, but that’s just the beginning in describing our upside down automotive world.  The second largest American car company, Ford will probably take over as first, the third largest is now mostly owned by Italian auto company, Fiat, part of which GM owned in the 90’s and sold at a major loss before turning it around.  Fiat, (or its Alfa Romeo division), hasn’t sold vehicles here in more than 20 years and now they have control over many of Chrysler’s old dealers.  Even crazier is the fact that GM used to own part of Subaru, and now Toyota owns part of them.  BMW used to own Land Rover, sold them to Ford and now Tata, (a huge company in India that sells everything from tea to telecom to steel), bought Land Rover and Jaguar from Ford.  So a company from a country that was a British colony now owns one of Britain’s historical car brands.  Had enough craziness?  Well, BMW owns MINI which was purely British, but even more importantly, they own the British ultra luxury brand Bentley while Volkswagen owns Rolls Royce.  Then there are the Swedish car companies.  Saab had been owned by GM for quite a while, but they just sold the brand to a small Swedish supercar maker Koenigsegg.  And now it’s reported that Geely, a Chinese company with a not-so-great safety record is looking to buy the Swedish brand Volvo which is known for safety.  In the last 10 years, we’ve lost the brands Eagle, Geo, Oldsmobile, and Plymouth.  What’s going on?  I feel like I’m in a blender.  GM has closed down Pontiac, also sold Hummer to a Chinese company, sold Saturn to Penske who’s associated with racing, Hertz, and AutoNation.  The latest news says they plan on selling cars from many different international companies under the formerly all-American Saturn badge. 

As if this wasn’t all enough, another Indian motor vehicle manufacturer, Mahindra and Mahindra is going to start selling cars here and Tata is planning on bringing the groundbreakingly low-priced Nano over.  GM’s European division Opel has been sold to both a Russian investor and Magna, a Canadian parts supplier.  Think about it.  A parts company owns a car company.  I don’t know whether I want to buy a Chinese Volvo, an Italian Chrysler, a Malaysian Saturn or an American Chevy.  I do know that I would rather support the U.S. auto industry to keep more jobs and profits in our country.  So, now that my beloved Saab brand is Swedish again and not owned by GM, I doubt that I will buy another new one.  I think I’ll be buying a Cadillac, Chevy, Ford or Mercury.  But those Fiats and Alfa Romeos do look pretty cool.  And I could support my home country a bit more by buying an Indian Jaguar, but Jaguar is not really my style.  Mercedes, BMW, and Volkswagen are doing alright with their government-sponsored health care and pensions that reduce costs to the company for vehicle production.  But there’s news there too.  Mercedes dumped Chrysler and Volkswagen is largely owned by Porsche.  Honda is doing OK given the circumstances while Toyota is hemorrhaging from perhaps trying to grow too fast.  At least the Japanese car companies can thank their government for not only health care and pensions, but for currency manipulation and trade restrictions.  All we need now are for the French to bring Citroens or Peugeots to the U.S. and the car market free-for-all will get more confusing.  As it is, I’m in an automotive daze.  I’m waiting for the dust to settle and I don’t know what to make of it yet.  Maybe I’ll just build my own car, (or buy a bicycle).

Comments

[chancelucky]

There are a lot of factors, but I think the US makers need to face up to one other thing that was clearly true. I remember looking at some surveys of cars in the consumer magazines/websites etc. and looked for the top 5 ranked vehicles at various price levels and market niches. There just weren't any American cars near the top in most categories outside of trucks and large SUVs.

When we bought our daughter's car a couple months ago, we wound up with a 2008 Ford Escape though we looked very long at used Saturn Vue's . It was one of the few American vehicles that was rated well and that was selling at a competitive price.

With the majority of dealers, I was shocked to find that just the way they sold cars was still ridiculous. As in, they were reluctant to tell you what they had available, what the actual price was, provide accurate objective information, etc.
The Toyota dealer was pretty straightforward, but Nissan, Hyundai, and GM were ridiculous.
US makers still need to build a truly competitive product (I know it was getting better) and I think the dealership model of distribution needs to be drastically modernized.

[UH2L]

CL,

Yes, there aren't too many US vehicles ranked highly in some indexes, but there are some in others. Regardless, they do have a long way to go, but part of it is a perception gap from reality issue, (as with quality), that won't go away. Sometimes ratings are high because people buy what they're supposed to and then they excuse the product for problems they might have. My friend has a Scion which has had numerous issues but to him, it still has Toyota quality. And one thing people forget is that GM still sells the most vehicles, Ford is still number two, although that could change this year. And there are plenty of loyal GM and Ford buyers. Apparently, the companies already do sell cars and trucks people want to buy.

As far as dealers go, generally, the domestics do pretty well on the customer service side, (especially Saturn), and local experiences vary significantly. I've heard many horror stories at Toyota dealers due to their arrogance when they were selling well. Sometimes high end luxury brand dealers like Mercedes and BMW can be downright uppity to potential customers.

As for truly competitive U.S. products, there are many, like the Chevy Malibu, Cadillac CTS, Ford Fusion Hybrid, GM's full-size trucks, the new Ford Taurus, Buick Lacroose, Buick Enclave. The key is, people need to go to the dealer and drive them. I would attribute a large part of the Domestic 3's failures to bad P.R. in fighting the anti-Detroit bandwagon, although I know some of this was due to product deficiencies.

Sorry this is so long :-) Hope you're doing well.

[UH2L]

This is one survey on customer service from JD Power.

http://www.autonews.com/assets/PDF/CA60189225.PDF

[Felix Chesterfield]

Will GM's bankruptcy affect a site like this for truck and auto parts ?

[Tim Chalk]

The way the dealerships operate is definately an issue. I recently tried...and I do Mean..tried to buy a new car, and I was surprised at the way I was treated at the dealerships. They sure don't seem desparate or even slightly worried. My wife and I were met several times by what I can only describe as apathy and arrogance. In the end, we purchased a used car from a friend.
We still laugh, because we were completely prepared to put money down and take on a hefty car payment, but were discouraged by the personnel at the dealerships. We just didn't feel good about investing in their company.

[UH2L]

Tim,

Thanks for the comment. Yes, some dealers are horrible, but it comes down to the individual place and even the individual salesman at times. I've had some pretty good experiences lately mixed in with one bad one. But, you did the right thing, you let your money speak for how you were treated, and I'm sure your friend appreciates the sale of his/her car.