July 1, 2008 10:48AM
The Sputtering Auto Industry
By Alexis Glick
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Today may be one of the worst days for U.S. auto makers as they are set to report dismal June auto sales numbers. The auto industry keeps ratcheting down expectations for the year as car sales get clobbered. Everything seems to be going wrong. Is there any good news in site? No according to my guests this morning.
Rick Franzen from Battenkill Capital and David Magee author of “How Toyota Became #1″ and “Ford Tough” joined me to discuss the state of the auto industry and where we go from here particularly given the bankruptcy rumors.
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The big three were greedy. They took the profits from SUV sales and did nothing to re-invest and develop the next vehicle consumers want. Typical corporate greed. Now they are looking to liquidate and consolidate just to stay solvent. The US automakers have nothing in the queue to compete with the technology that Toyota and Honda have in their hybrid vehicles. GM says it has the Chevy Volt, but it is far from being ready for the road (battery fires being the big obstacle). Market share of efficient vehicles will go to Asian producers, just like it did in the 1970’s. Plug in vehicles will not solve the problem, though. The US electric grid will be overwhelmed if even 10 to 20% of car owners switched to a plug in. Think about millions of people in urban areas plugging in their cars at 5 PM then turning on their home air conditioners. If we want electric cars, we need a bunch of nuclear power plants to keep up with the electrical demand.
I don’t feel sorry for the American auto makers - they were so money hungry and greedy by the large profit margins in SUV/Truck sales - that they blinded themselves from the realities and effects of rising energy prices. They were greedy for immediate profits - instead of wisely preparing for what many people, and energy predictors, knew was comming…
I am seeing more and more foreign autos on the streets now - Toyotas, Hondas, Mazdas… Hybrids… Good for them!
(On another note, I laugh whenever I see one of those redisigned Caravans - When those came out last year, knew Dodge had lost its innovative edge.)
great story,sounds like real trouble brewing,for most dealers,few have the cash to feed their stores,and the ones who do,and spent fifty years earning it,are not willing
to lose their own money.
I’ll keep driving my american made ford truck. we drive 140 miles everyday a plug in car is not realistic, and in my opinion small cars are not safe. America will be buying gas & diesel cars & trucks for many years to come.
I don’t know why the US auto makers don’t understand, were waithing for a realistic plug-in, we want something that looks and preformes like the cars we drive now. We’re not buying gas powered cars anymore