Last post on May 18, 2009 at 6:03 PM
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Honda, Ford, Toyota
#3 of 22 Re: Your predictions for the US auto market and industry for 2013 [benjaminh]
May 17, 2009 (8:24 am)
Given what's happening in the auto industry, I think the future is virtually unpredictable. If I were forced to take a wild guess at rankings, with percentages being just too unpredictable, I'd list the top 10 as follows, in descending order:
2. Ford Motor Co.
8. Fiat/Chrysler/Dodge/Jeep/Alfa Romeo/Opel (or whatever)
I have no idea of where brands like Mazda, Volvo, Saturn, Suzuki, Jaguar, Land Rover, etc. will fit in. Also, someone may buy Volvo, Saab and and Hummer. Finally, there's a good possibility for something that's currently unforeseeable to occur. For example, a Japanese or an Indian company, or Roger Penske, may buy an existing brand, such as Saturn, and eventually sell a significant number of vehicles.
The only certainty is that the situation is very fluid.
#4 of 22 Re: Your predictions for the US auto market and industry for 2013 [hpmctorque]
May 17, 2009 (9:43 am)
I pretty much agree with you except I can see Hyundai climbing ahead of Nissan. GM may fall more behind Ford more than people think due to bankruptcy complications dragging on and the risk of importing low quality Chinese products and parts to their product line. If gas shoots back up to $4 or better during this time frame I can see Honda, and possibly Hyundai passing up GM since truck sales will then plummet again. Despite all this media coronation of "King Carlos", I think Nissan has cut into muscle and now will lack sufficient appealing product over the next few years. Ford does have some risk during this period as well though since a quick and successful GM bankruptcy may end up giving them some serious cost advantages over Ford. If that happens, GM could be #2.
May 17, 2009 (12:20 pm)
hpmctorque: good ranking. Like me it looks like you see the Fiat/Chrysler merger being only marginally successful.
berri: you brought up a point that I've wondered about. Ford has some very sharp products--now and coming up in the future--but if GM and Chrysler dump their debt, excess dealers, and uaw contracts through bankruptcy won't that give them a cost advantage over Ford? Might Ford be forced by them to go down that path too? Ford seems so overloaded with debt it kind of reminds me of Spock getting radiation in The Wrath of Khan. Scotty says of Spock "He's dead already!" Even though Spock hasn't quite yet died at that point. But maybe like with Spock and genesis Ford could be reborn with bankruptcy too?
And I also agree with some of what berri says about Nissan cutting costs in some places maybe too much. Here's a little example. They decided to put a stripper base model Versa on the market for $10.5k. It has little safety equipment, no ac, no radio, not very comfortable, mediocre handling, and gets weak reviews in the auto press. They sell only a few of them, and most people who buy them probably rue the day.
Honda, in the meantime, has the Fit, which is only sold very nicely equipped with stereo, ac, safety stuff, nice handling, simple but nice interior, etc. Yes, the fit costs more like $14.5K for the lowest model--in other words about 40% more than the base Versa--but customers are satisfied, the press raves about the car, etc. Most of that $4,000 goes into better engineering of a better tricked out nice small car. Some of it no doubt goes for a bit of profit which they earned fair and square as far as I'm concerned. In other words, Honda doesn't try to chase after the absolute bottom of the market, and I don't really think they ever have.
In the mid 70s I remember Toyota and then Datsun went back and forth claiming to have the "lowest priced car in America" with the Corolla and the B-210. The Honda Civic I don't think ever claimed that. It was only a few hundred dollars more, I think, but that money went into a more advanced engine, suspension, front wheel drive when few others had it, etc. That's how Honda started to build their near-cult-like following.
Still seeing some of that today, I think. The bottom of the line cars from Toyota (Yaris?) and Nissan (Versa) are rather punishing things engineered for lowest cost. The Fit is maybe the best car in its class.
#6 of 22 Correction of Message #3
May 17, 2009 (1:34 pm)
In my second from last paragraph I said, "... a Japanese or an Indian company, or Roger Penske, may buy an existing brand, such as Saturn..."
I intended to say a "Chinese or Indian company," since this would be a way to gain quick entry into the North American market. They could then supplement their North American models with small, low cost, fuel efficient models from their respective country.
#7 of 22 Re: Your predictions for the US auto market and industry for 2013 [berri]
May 17, 2009 (1:40 pm)
You may certainly be right, but to me it looks like a flip of the coin as to whether Hyundai/Kia will surpass Nissan by 2013. If forced to bet, I'd put my money on Nissan, since it's easier to maintain the lead than to overtake a rival.
#8 of 22 Re: engineering [benjaminh]
May 17, 2009 (1:58 pm)
"Like me it looks like you see the Fiat/Chrysler merger being only marginally successful."
I see the Fiat/Chrysler merger as a wild card. Sergio Marchionne is taking a huge calculated risk, based on sound strategy, in my opinion. He's convinced that Fiat has only two options, in the long run; sell out to a major rival or go on the offensive. He's chosen the latter course, which is admirable and gutsy.
Marchionne has shown considerable talent in turning Fiat around, but his latest gambit faces long odds. Whether he can make this merger work, and also buy and absorb Opel, won't be known for some time. The new company could implode or it could be successful, but from now until 2013 doesn't give him sufficient time to become a top tier player in North America. The outcome might be very different with a longer time line.
#9 of 22 Re: engineering [hpmctorque]
May 17, 2009 (4:41 pm)
Well, I think Chrysler is already sort of a marginal player. Its quality is behind most, it lost its excitement mojo and I don't think most really care if it sticks around or not. I think the Jeep name goes on, but I don't know about Dodge or Chrysler? I don't see a bunch of small Fiat's making much of a dent either. Maybe Maserati can boost sales, but that market is kind of saturated, particularly in a deep recession with Lexus, MB and BMW already. I can see sense in Fiat getting Opel, but I think the US market and Mopar is a crap shot at best (then again, once in awhile a long shot wins big on the craps table, but the odds are tough).
#10 of 22 Re: engineering [berri]
May 17, 2009 (6:19 pm)
Fiat also owns Alfa Romeo (and Lancia), which could give BMW and Infiniti some competition. Alfas are highly regarded in Europe.
I'm very aware of Fiat's poor legacy in the American market, but that was then and this is now. I say this because there's an entire generation of Americans who don't have a preconceived notion about Fiat, because Fiat has been absent from our shores for 25 years. Quality and reliability have improved significantly since Fiats last plied our roads. Also, Fiat is a world leader in fuel economy, and has leading edge diesel technology. These attributes carry more weight than they did in the '60s, '70s and '80s. Further, unlike Toyotas, Fiats are fun to drive. They've got character. Now, these attributes don't guarantee success in the marketplace, but I think it's premature to count Fiat out before the first new models have even been introduced. Will Fiat be a big seller by in North America by 2013? It's highly doubtful, but it just might beat the long odds and be a meaningful presence by, say, 2019. After all, look how long it took Toyota, Honda, Nissan and Hyundai to get established here. And their cars were crap at first too.
Marchionne's no fool. He know's what he's up against.
May 17, 2009 (6:54 pm)
Had a friend of the family with an Alfa Romeo in the early 80s. I thought it was very stylish, comfortable, and sporty. Nice, nice car. Don't know about reliability, but I think it was spotty..
I like the looks of the Fiats *a lot*. I wish them success sooner than 2019. If Mercedes Benz can't wait that long to make Chrysler work, I don't think Fiat's going to have deep enough pockets to wait that long. They need some success in four year or the losses are going to be staggering even if they get Chrysler "for free." My guess is that the losses will be staggering. Chrysler vehicles just don't seem that competitive for the most part. Consumer Reports has been shocked the last couple of years at the poor design and quality of some of their vehicles, which often came in dead last in their comparison tests. And they've cut research and development to the bone. It's not like there are many (or any?) good models just about to be introduced, I don't think.
And so I hope they start bring over Fiats asap. But of course they have to do it right and make sure they have the parts, the training for the mechanics, modified engineering, etc. Can Fiat just take over one of Chrysler unused factories and start building some Fiats over here?
#12 of 22 Re: Fiat [benjaminh]
May 17, 2009 (9:38 pm)
I'm not suggesting that Fiat/Chrysler can't be successful in North America before 2019. it will take several years - I used 2019 just to cite a year -for it to "be a meaningful presence..." What I mean by that is that it's likely to take that long to regain a significant market share.
I agree that if Fiat isn't profitable here long before then, say in 3-4 years, it will be gone. I think we're in agreement.