State of the Auto Industry: What Car Makers Are Doing to Survive
Lest you think that America’s automakers are the only ones struggling these days, you’d be missing something that is quite apparent: the global auto industry is in the doldrums with some manufacturers struggling just to survive.
As in any crisis, car companies are figuring out ways to weather the slump, brought on by a worldwide recession that has plunged demand for new vehicles. Excess car capacity needs to be cut in order to realign with demand and there are a number of different ways that automakers are responding to this challenge.
Let’s take a look at some of the key changes being introduced by select automakers in a bid to stem the slide:
Volkswagen: One of the few companies actually selling more cars in 2008 then they were in 2007, Volkswagen is treading carefully as it looks to expand capacity. A new plant is being planned for the US, but the automaker is weighing which vehicles will be built in Tennessee in a bid to have the right cars for the highly competitive US market.
Toyota: The world’s top automaker is feeling the heat from slow sales and is planning to export its big Tundra truck and equally big Sequoia sport/utility vehicle to other markets where demand remains strong. To their credit, Toyota is loathe to lay off permanent workers, but they’ve released hundreds of temporary employees to match production cut backs.
Nissan: Thanks to its unique business relationship with French automaker Renault, Nissan can spread some of their costs across another automaker’s bottom line. Nissan and Renault are examining making an investment in Chrysler, a company Nissan already builds a compact car for in Latin America with other production sharing agreements coming online.
BMW, Mercedes: These German arch-rivals have been sizing each other up for decades. Now, the two premium automakers are looking to share engine and transmission technology as well as purchasing automotive components jointly in a bid to realize additional savings.
Japan: With more automakers than any country in the world, Japan’s nine car companies understand one thing: your competitor is sometimes your producer. Japan has long been tolerant in allowing its car companies to work together even as they remain separate. True, Toyota now owns Daihatsu outright and has stakes in Suzuki and Subaru, but every automaker often shares models in a bid to fill out model lines and to combine costs. The rest of the world should take its cue from Japan.
Whether General Motors is successful in its bid to purchase Chrysler or not, the automaker will continue to work on its alliances with Ford while Ford itself will keep its Mazda relationship alive.
Once the current economic climate improves, look for automakers to continue to maintain their new business relationships to ensure that they remain competitive for the long haul. No one can afford to go it alone no matter how strong their bottom line may be. Fortunes can change overnight, creating a crisis that can quickly envelope any manufacturer.
Matthew C. Keegan is a freelance writer who resides in Cary, North Carolina. Matt is a contributing writer for Andy’s Auto Sport an aftermarket supplier of quality parts including custom Chevrolet Avalanche tail lights and Chevrolet Aveo body kits.
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