Beginning a new short five-part series, Joseph Simpson explores an issue very close to his heart - the future of the automotive industry. Tossing his hat into an arena frothing at the prospect of GM merging with Chrysler, he has some radical suggestions for a few under-performing brands.
Make no mistake about it, the auto industry that we know and love is in a terrible place right now. While the last few weeks have seen attempts concentrate on stopping the world's financial and banking sector sailing merrily off down the river without a paddle, things are only a little-less tumultuous over in motor-town. In the past few days alone, we’ve had rumours and confirmed stories that have included... (deep breath)...:
- Tesla slashing dozens of jobs and delaying the 'Model S'.
- Chrysler and GM – or is it actually Chrysler and Renault-Nissan (?) - merging. No one seems quite sure...
- Cerberus (Chrysler's owners) getting ready to jump ship – and announcing that they’re culling 25% of the white-collar workforce, and cancelling a new V6 engine programme.
- Industry darlings Toyota forecasting their first ever loss in North America and cutting car production.
- Lexus sales in Japan down for 13 consecutive months on the trot.
- Porsche's sales down 59% in the UK year-on-year (source: Car Magazine).
- PSA cutting production by 30% for Q4 of 2008...
- ... and Renault doing something similar – but with a larger shadow hanging over them, that if new Megane III does as badly as the new Laguna (one entire production shift chopped), the whole company could be in the kind of trouble previously unheard of outside Britain and the US.
...and that's just a tiny fraction of the stories buzzing around.
But let’s assume (and it’s a pretty big assumption) that enough people will be able to get finance to go on buying new cars while the economy bumps along the bottom, and that at some point in 2009/10 things will start to look a lot rosier economically. How will the automotive landscape look? At the moment, it takes a very brave person to predict this (although there are lots of people predicting automotive Armageddon) – but I’ve got a funny feeling that come 2011 the likes of Ford, GM, Renault, Nissan, Peugeot, Porsche, VW et al. will still be present and correct.
But what about that strange group of brands who – despite having the good fortune to proudly wear some of the most evocative, well-loved and best known names in the automotive arena - seem almost permanently on the brink of either being shut down, sold off, or just forgotten? Years of neglect and underinvestment from their owners, incoherent strategies and duff product line-ups do not a happy car company make. So when times are tough, and cash is king, some brands look more in danger than others.
The brands I'm talking about are Alfa Romeo, Volvo, SAAB and Jaguar / LandRover...
But those that apparently have the most to lose, may also have the most to gain. While their rich histories and house-hold names don't currently translate into the sales figures they should, there's a vast amount of public affection and affinity to tap into. What's required is a bit of innovation and clear strategy - things that are typically in short supply during a recession. So in the forthcoming blogs, I'll set out what I think the owners of Alfa Romeo, Volvo, SAAB and Jaguar / Land Rover need to do to ensure these great automotive brands make it out the other side of the automotive ditch.
First up, Alfa Romeo. Stay tuned.
Posted by Joseph Simpson on 27th October 2008.