Many of the auto workers felt that the SUV craze had to end. They were uncomfortable with the big 3 putting almost all their eggs in one basket. But profits were enormous. In the boardroom that is all that matters. Workers think more about job security. They expected to work for one company for decades. Management comes and goes. They look for short term profits, high wages and huge bonuses. Once a factory worker has resigned himself to working in one place ,he develops a life style to accommodate it. To see their wages and benefits drop through no fault of their puts their life in upheaval.
Didn’t all the members of this board thing the big 3 should have also worked on smaller ,more fuel efficient cars? Same for the workers.
But remember, smaller, more fuel efficient vehicles isn’t the key issue, as much as Obama and the uneducated masses like to make it out as such. They all make (and have made) small, fuel efficient vehicles. Everyone one of them. Their trucks and SUV’s, though, have dominated so much that they have a perception of making nothing but large trucks and SUV’s. Remember, Hybrids and B-sized cars are still a very, tiny little fraction of the market. Very, very tiny (And let’s not forget that Ford has had a hybrid for years). To suggest that these two markets are what are driving Chysler and GM towards bankruptcy is overly simplistic (as it would be to completely ignore that portion of the market).
When you lose $12 billion in a year, it’s not because you missed out selling 200,000 additional vehicles with a $1500 gross margin per year (and both of those figures are generous for a single line).
Its not the nmber of vehicles you sell, its the margins, and to keep the sales number up, the margins on SUVs just kept declining as competition hotted up.
They then got into a spiral, with nothing available for designing and promoting anything else. Once you have paid your development and tooling costs for your SUVs, trying to then invest in the design and production of lower cost and more efficient vehicles is not attractive - short termism.
The public bought SUVs becuase that’s what they had been conditined to buy, through marketing, even patriotism - because thats what all this right wing ‘choicers’ were really pushing during the Bush years.
The public were not conditioned to buy smaller cars, through advertising and all the other means that sales are promoted.
Remember this also, it was largely done on finance, and a large chunk of that finance was secured on the never ending increase in the value of real estate, people took out loans based on the equity in their homes. The boom was never going to end, except that it did.As soon as real estate values froze and then fell, the finance engine stalled, but the SUV manufacturers were hit hardest because their sales were tied to the US home market, whereas manufacturers of more effiecient vehicles still have access to other world markets and are able to ride the storm out better.
The SUV boom was largely a US domestic thing, companies that relied on the US economy made money in the good times but are now paying the price.
Not true. The American public prefers larger vehicles no matter what the auto companies are promoting.
Let’s look at the sales figures for 2009.
In first and second place, once again, are the Ford and Chevrolet pickup trucks. No surprise there – it’s been like that for 30 years.
But look at passenger car sales. The top selling passenger cars are the Toyota Camry and Honda Accord – mid-size models. You’d think Honda and Toyota buyers would not be “conditioned” to go for the larger car, but those two models outsell the Corlla and Civic.
Nissan’s top seller is the Altima. GM’s top selling passenger cars are the Chevrolet Impala and Malibu. The Cobalt, the smaller, more fuel-efficient compact that’s supposed to be competitive with the Civic and Corolla, runs far behind. Ford’s best-selling non-truck is the Fusion and Hyundai’s is the Sonata.
In almost every case (VW is an exception), when a manufacturer offers a larger and smaller model, no matter what they promote, the larger model sells better. That isn’t just conditioning, that’s genuine consumer preference.
Those vehicles sales also say something else, in a year of decline, small cars were outsold by their more fuel thirsty brethren by three and foour to one, and thats in a declining market following a period where fuel prices had jumped dramatically.
Your quote only mentions one years vehicle sales, look around at the two and five year numbers and things become more painfully apparent.
Looking around various such website it becomes apparent that the greateast declines in US car sales has been in US badged vehicles, but every manufacturer is adversely affected. This is partly because US companies are buying fewer vehicles, but also because the only sales that are holding up even slightly are the more fuel efficient vehicles, which are - with the exception of a few Fords- foreign badged vehicles.
Make no mistake, all car manufacturers that have sales in the US have suffered, but the problem is that US manufactured vehicles sell in the US , whereas other marques are selling worldwide - US car industry simply does not design and sell world cars - well Ford does, and its notable that out of all the US car makers, Ford is doing least badly.
It means US badged car companies are probably worst placed to handle falling sales in the US than just about any other manufacturer.
I mentioned both margins and sales, because you need both. The gross margins on SUV’s are still really, really high. They’re nearly as cheap to make as a small car, and clear much, much, much more in the gross margin. They depend on the volume, which is why the reduced sales of SUV’s caused such a quick decline in the US manufacturers. Because you need margin and sales quantities, a one-for-one substitution of, say, a Chevy Cobalt for a Chevy Tahoe would not have kept GM out of trouble. Their problem isn’t exclusively (or even principally) their dependence on SUV’s or a light model mix (they actually have more models and more variety than any other manufacturer).
Well, Chrysler was tied with Mercedes, but despite that it was never really “world” status. GM, though, is spread throughout the world. They’re just not called “Chevrolet” in all of their markets.
According to something I heard on NPR the other day, Saturn seems to have had a structure kind of like what I’m asking.