U.S Auto Crisis And Its Lessons

by Carazoo India

For nearly 35 year the world automobile industry was dominated for General Motors. It was a symbol of American Capitalism. GM owned several brands spanning over different countries. It ranged from the dominant GMC to Saab and Opel in Europe and Mitsubishi in Japan. GM was the biggest of the big three in American Automotive industry. But General Motors is in shambles and is asking for a cash bailout from the U.S.government. The bailout runs into several billion U.S. dollars and it is facing the toughest times in the history of American automotive industry. Another of the big three, Chrysler Motors is also seeking help from the government. But getting the cash bailout may not be easy for the two companies. General Motors has put the Hummer up for sale since 2008. It recently announced the end of Pontiac. Saab is being considered for closing down the production. Many other quintessentially American brands like the GMC and Buick could also face demise. The American operations of Mitsubishi may be closed I the near future. The same goes for Chrysler, which has scheduled the end of production of retro-styled PT Cruiser, Aspen and Dodge Durango. This was an expected measure by auto critics as four other models were discontinued in 2008. Except for Ford Motors, both the car manufacturers have clearly stated that they will close down operations of non-performing models. It has become clear to the car manufacturers that many of these models have been slow to moves off the shelves from the last five years. The slowdown in the sales numbers was witnessed even during the good economy days, where car buyers overlooked these brands for more recognizable ones. The total car sales fell by 18.3 percent which is a record low in U.S. history. As much as 13.2 million units were sold in 2008. This was a major set back to automobile manufacturers. The highest decline was noticed in Buick, which witnessed a sales fall of 81 percent compared to its 2003 figures. This was after new blood was infused with new models with completely new styling. The sales of Lacrosse and Lucerne sedans were the biggest losers after reported a drop in sales to the tune of 66 percent and 43 percent, respectively in January 2009. But car manufacturers seem to love these brands, as they were the top selling cars a few years ago. The Saturn brand of cars was a huge money earner for GM. The retro-style PT Cruiser was one of the bestselling vehicles for Chrysler. Encouraged by the sales response, Chrysler introduced PT Cruiser in coupe and convertible body styles also. The twin grille Pontiac has been a steady revenue grosser for GM for many years. However, GM has made an announcement that the production of Pontiac model would be closed down by 2012. The Swedish origin Saab is also being considered for death in U.S. The GM vice chairman and CFO Mr. Fritz Henderson said that the decision on Saab will be taken considering it global brand image. But for the U.S. market, GM wants focus on their key brands Chevrolet, Cadillac, Buick and GMC. The decision on others will be taken after careful consideration. Critics however, point out the trouble actually started brewing from the end of 80's. It all started when cars from the brands Oldsmobile, Buick, Cadillac and Chevrolet all looked the same. General Motors had allowed the same car to be sold under different labels with some minor styling changes. General Motors thought that they could capture a bigger share of market with multi-branding of cars. This policy has shown its results, where GM stands to be wiped altogether.GM read the car business wrong, say auto analysts. In the automobile industry, the car is the biggest brand ambassador for the customers. People who found only model lacking a few features, discredited GM. The result was that the company lost value among customers. Another fallout of the crisis is that, people employed in the auto industry will loose jobs with the production plants close down. It is estimated that more than a lakh jobs will be lost and Detroit could loose edge. Indian car manufacturing has a lot to learn from the U.S. auto crisis. The Indian car market has witnessed a boom in car market size. It will soon be on of the biggest passenger car market of the world. This should not force the car makers to resort to such tactics. Indian car industry will have a bright future with some careful planning and strategy. An example is how Tata Motors which took up the ailing Jaguar and Land Rover, the two British car icons, have been able to pull it out of deathbed.

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