By Jerry FlintWardsAuto.com,
Feb 9, 2009 9:20 AM
We all know General Motors and Chrysler are at risk of going bankrupt in the U.S. But are they the only auto makers on the edge?
Toyota, Honda (phew) and Nissan may be losing money here, but they certainly will survive. Likewise, BMW Mercedes and Porsche are in no danger. But what about Mitsubishi, Suzuki, Subaru, Saab, Volvo and even Volkswagen?
Frankly, some of these companies may fold their tents in North America. They’ve been struggling for years in the U.S. and this is not likely to change soon.
I don’t dislike any of these auto makers, but look at their circumstances: Mitsubishi has a UAW-represented factory in Illinois capable of building more than 200,000 vehicles annually. This year production fell to 58,000 units from 79,000 last year. Sales in 2008 totaled just 97,000 vehicles, compared with 260,000 a decade ago.
Suzuki is a significant global player, the No.1 car maker in India. It sells cross/utility vehicles and pickups in the U.S, but it is best known here for small cars and motorcycles. Suzuki has an assembly plant in Canada, a joint venture with GM. But the plant turned out fewer than 13,000 Suzuki cars last year, against prior year’s 32,000.
Suzuki sales were 85,000 last year in the U.S. against 102,000 in 2007. Again, I like Suzuki, but its marketing budget can’t compete with the big boys.
Subaru cars generally are very good. The auto maker pioneered all-wheel-drive cars in the U.S., and you could say it invented the CUV with its Outback model. Yet, Subaru built just 92,000 vehicles in 2008 in its Indiana (again UAW) plant, against 109,000 in 2007.
Now Toyota has a piece of Subaru and is producing cars in the plant, too, which pushed total production to 183,000 units, more than the 147,000 produced in 2007. Subaru’s 2008 sales of 188,000 in the U.S. actually were up a notch from 2007, and up in January, too, while almost every other auto maker saw sales fall off a cliff.
Still, Subaru never has been able to become a volume player. If Toyota were not using the production capacity, the Indiana plant would be a huge financial drain.
Mitsubishi, Suzuki and Subaru all suffer from the same problem: They don’t have enough money and marketing muscle to compete with the likes of Toyota, Honda and Nissan.
Then there is Volkswagen. Talk about dreaming big. VW is building a new plant in Tennessee, and its executives are talking about tripling U.S. sales in 10 years to 1 million (including 200,000 Audis). I’ll give VW credit; last year was not a bad year, with sales down only 4% in 2008, while the market as a whole dropped a horrific 18%. And everybody seems to like the new Jetta diesel.
But VW has lost billions in the U.S. in recent years and may have lost money last year, too. Tripling sales to a million? In the dismal economic environment of the next few years, this sounds like a fantasy.
Here’s the problem. Most car buyers think of Volkswagen as a low-priced car. But VW can’t keep prices low when it imports cars and components from Europe, not with the strong euro. And it has trouble selling higher-priced models with the VW logo on the hood.
A new Tennessee plant will give VW great growth potential, but the dealership network is weak after decades of poor sales, and executives in Germany don’t seem to understand the U.S. market.
Meanwhile, GM’s Saab and Ford’s Volvo continue to struggle. Both build fine cars but are terribly squeezed for marketing money.
The point is there are other auto makers in bad shape in the U.S. besides Detroit nameplates. If all the companies mentioned here quit the U.S., we’re talking 800,000 cars and trucks. Imagine how the U.S. market would change if that volume were split up among the survivors,
Source;
http://wardsauto.com/commentary/smaller_players_risk_090209/
No comments:
Post a Comment