(July 27, 2009) - When surveying the current state of the domestic auto industry and its near-future prospects, an ancient Chinese curse comes to mind. Centuries ago, those words expressed a wish that's at least as applicable today: "May you live in interesting times."
Well, what's happened to GM, Chrysler, and Ford over the past nine months or so is nothing if not interesting. A year or two earlier, it would have been virtually unthinkable to utter the word "bankruptcy" in the same sentence with any of the immense "Big 3" automakers. Ever since the early days of the automobile, these behemoths had been financial giants, fully able to withstand the inevitable, challenging winds of economic change. Hadn't they?
Now that the axe has fallen on GM and Chrysler, in particular, many if not most observers assert that the decline for each corporation began long before the financial crisis that developed during 2008. For years, all three Detroit automakers had focused their attention on trucks - especially the increasingly popular SUVs, including the full-size models that sucked up gasoline like an off-duty sailor might consume cold beer.
When Japanese automakers edged forcibly into the fray during the 1970s, top Big 3 executives either looked the other way or came up with flawed responses to the small-car invasion. Escalating concerns about emissions and safety also brought typically delayed reactions from the domestic companies, which often had to be dragged into the future while their Asian counterparts took the changes in stride. To some analysts, then, this is payback time for their shortsightedness, and retribution for their insistence upon following the wrong path.
More than Chrysler or Ford, GM has taken the brunt of bad publicity related to the plea for government funds that began in November 2008. As part of the deal that gave the century-old corporation billions of dollars to stay afloat, Rick Wagoner lost his CEO post and left the company at the end of March. Fritz Henderson, the new CEO, presides over a corporation that has shrunk beyond belief: vastly leaner and more limited. Whole nameplates have left the GM fold or will do so soon, including Pontiac, Saturn, and Hummer. In the months and years ahead, GM will concentrate on four "core" brands: Buick, Chevrolet, GMC, and Cadillac. All have long histories, but so did Pontiac, which first appeared way back in 1926.
Robert Lutz, the auto-industry elder who has been GM's product chief in recent years, decided against retirement and is assuming new duties, overseeing the corporation's ad campaigns. Automotive News has reported that Lutz's first task as vice-chairman of marketing and advertising will be to revitalize Buick's ads, attempting to seek new buyers for the old brand - which is best known for its appeal to elderly customers.
Because Lutz is seen as a "car guy," many journalists and industry mavens are cheering his decision. Tirekicking Today takes a less rosy view. We believe that to too great an extent, Mr. Lutz represents the past - in fact, some of the worst elements of the past - and not the future that's become essential for a modern GM.
Yes, it's true that Mr. Lutz has helped launch several GM vehicles that stand well ahead of their predecessors in style, performance, and quality. Yet, at the same time, he presided over continuation of emphasis on large vehicles with powerful engines. GM ads tout the current fleet's fuel-economy figures, some of which are laudable indeed. But little has been done to encourage production of smaller, less-powerful models that might appeal to practical-minded buyers. Like too many auto companies, GM has aimed at the enthusiast market, rather than the fuel-efficient end of the spectrum.
Marketers and developers have emphasized excitement over such performance-packed vehicles as the Cadillac CTS-V, revived Corvette ZR1, and Pontiac Solstice. Although the recently-introduced, modern-day Chevrolet Camaro manages to capture a lot of the thrilling nature of the original, as produced from 1967 to 2002, it's essentially a step backward - at a time when forward-thinking should be the rule. This Camaro is a lot better built than its ancestor, but it's still largely a costly "toy," targeting middle-aged perennial adolescents who savor the sound of a throaty exhaust and the exuberant feel of a powerful rear-engine coupe.
This summer's debut of the redesigned Chevrolet Equinox and Cadillac SRX - the latter shunning its prior V-8 engine in favor of more efficient V-6 power - are signs of more sensible thought in the GM executive ranks. So is the imminent debut of a revived Buick Regal. Because the Regal is expected to be based on an Opel design, from GM's European operation, we have to wonder about its viability. For 2008, Saturn introduced an impressively capable and enjoyable hatchback, also from Opel and dubbed the Astra. A year later, the Astra was gone.
With respect to improving emissions, Lutz also is a well-known scoffer at the very notion of global warming, handily dismissing the opinions of scientists who overwhelmingly assert that the earth is in grave danger unless steps are taken. Most subjects are amenable to opposing views. In our opinion, global warming - declared a rapidly-encroaching disaster by countless scientists - is no longer one of them.
Only a few months back, many in the industry - including this publication - were ready to count Chrysler out. After all, not only was Chrysler in dire financial shape, but it had no discernible new products in its coming-soon pipeline. With or without the government bailout funds, how could such a company survive, much less prosper?
Perhaps it can't, but the connection with Fiat that's developed gives the 85-year-old corporation a fighting chance to get back into the game. Now that Chrysler is no longer part of the Cerberus empire, perhaps it will be free to take some fresh directions under the leadership of Sergio Marchionne, the Fiat CEO who is taking the reins at Chrysler.
Foremost among those is the promised debut of a Fiat 500 minicar for the U.S. market. Winner of a design award at the New York Auto Show this past April, the 500 could capture the hearts of the sort of sophisticated customers who first fell for small imports back in the 1950s and 1960s, before foreign brands went mainstream. Several variants of the basic Fiat 500 might join the U.S. lineup, including a convertible. Whether wearing Fiat or Chrysler badging, they could give the company just the injection of freshness that it needs to escape the aftermath of bankruptcy.
Other potential changes are less notable. Automatic News reports that Chrysler is considering moving its somewhat lackluster Sebring sedan to a rear-wheel-drive platform, to differentiate it from the related Dodge Avenger. That's likely not enough to make a difference. Chrysler needs to focus on its strengths, and like GM, abandon certain models rather than let them linger fruitlessly. Also like GM, Chrysler has serious issues related to the massive, abrupt dropping of loyal dealers, leaving many of them distressed and angry.
Partly because Ford Motor Company's financial status hasn't been as horrific as that of GM or Chrysler, the company founded by Henry Ford more than a century ago is looking comparatively strong. Like its "Detroit 3" competitors, Ford has cut back considerably on employees and other costs. Unlike those two, Ford had a palette of new and redesigned models on tap for the 2010 model year.
Taking full advantage of that favorable status, marketers have been pushing hard on Ford products, trying to capture as much helpful publicity for the Taurus sedan and EcoBoost-engined Flex crossover wagon as they can. A redesigned Mustang went on sale earlier this year, as a 2010 model. So did the reworked Fusion, including a Fusion Hybrid that ranks among the most fuel-efficient automobiles offered in the U.S. - a fact that Ford isn't shy about promoting hard.
Lincoln clings to its niche in the luxury league, with such vehicles as the new MKT full-size crossover. One obstacle could be Mercury, which seems more and more purposeless as a separate brand, despite a history dating back to 1939.
Some observers, including this publication, questioned the wisdom of bringing in Alan Mulally, former head of Boeing, to lead Ford Motor Company. Many thought a true "car guy" was needed. But Mulally has proved impressively more suitable than expected for occupying the corporate driver's seat. For the first half of 2009, Ford's production in North America beat GM's output - something that hasn't happened since 1930.
It's a tough time for everyone, though. A recent AutoPacific study found that nearly 59 percent of recent new-vehicle buyers don't intend to purchase another one in the next four years. So, every automaker will be scampering after that 41 percent who might be prospects. Overall, sales have sunk to a 27-year low.
Interesting times? The coming months should be even more fascinating - as long as you're not an auto worker who's lost his or her job, an ousted dealer, or a disappointed stockholder.