Posted by
OB Busch on Monday, June 08, 2009 3:17:20 PM
Number of cars sold in US, 2006 16.38 million units
9.3 million By US Automakers (5 million by GM)
Number of cars sold in US 2008 14.1 million units
8.1 million By US Automakers (4 million by GM)
Potential future demand (per year) 16.3 million normal demand plus
2.4 million in ‘pent up’ demand and growth. 9-10 million of these
vehicles will logistically have to be built in the US.
Demand
As the economy moves toward recovery the first wave of demand will
come from those that have kept their job through the recession.
The 90 plus percent that have been working have been delaying big ticket
items and paying down their debt. When they see stability in the
workplace, hiring, raises and promotions happening, economic
confidence will return. Replacing that old car is high on their list.
The next wave will be the newly hired who babied their old heap along
through the recession. Then will come the people that buy a new car
because they want to as opposed to need to.
Additionally with CAFÉ standards looming there will be urgency on the
part of consumers to get the car they want before they disappear.
The current media hype is that we want cars that get good mileage.
They have harped on this theme for years despite the fact that
historically Americans have shown that they will sacrifice mileage for
comfort, power, and convenience. In the early to mid 80’s there were
several very good cars that had both power and mileage. What they did
not have was comfort and the power was restricted to the load limits of
the small car. Gas prices were at record highs during this period, yet
these vehicles with high mpg and backed by massive promotion
did not sell. From 1984 through 2008 the top 5 selling cars were midsize.
For most of those years it was either the Ford Taurus or the Toyota Camry.
SUV models were in the top 10.
Supply
With the changes in the marketplace caused by the government
takeover of GM and Chrysler the question is; who will satisfy the
demand?
Ford is in the best position. They make the vehicles that will be in high
demand (mid-size cars, pickups, and SUV’s of all sizes.)
Ford has factories up and running, dealerships, and minimal government
interference. (At least for now)
Import brands that manufacture in the US are also in a good position
with the factories they now have. Expansion will be slow due to
recent losses.
GM and Chrysler will be mandated to produce those little ‘green’ cars
that only a small minority of buyers are interested in.
Ideally Dodge should be sold. It is a viable brand in both cars and trucks.
Factories are up and running. The dealerships recently dropped by
Chrysler Corporation will gladly pick up an independent Dodge franchise.
Cadillac should be sold off by GM. There will be plenty of buyers.
Finally there will be the new comers. The first one is on board.
Penske Automotive Group Inc. purchased the Saturn brand from GM.
This will put Saturn in the fray of the pending demand cycle.
With dealerships in place and a plan to immediately market cars,
Saturn could become a major brand far into the future. (Full article Here)
A Quick History of Saturn
In the 1980’s GM launched “A new kind of Car Company”.
It was the Saturn. Early ads showed the factory workers so involved in
quality that they could stop the assembly line at any time they observed
a flaw. (This was already common practice at GM factories, but woe
onto the one that stops the line for something stupid.) The biggest
positives of this ‘new’ car company was that it was non union and small
legacy costs. The biggest negative was that it was run by GM
management. The same management that in their hearts did not
believe in small cars.
So Saturn made bland cars with plastic doors and limited life spans.
The Union eventually got in and Saturn continued to produce the same
bland cars with the same questionable quality (but they did switch to
steel doors). Their advertising campaigns revolved around the friendly
salespeople at the dealerships. (They smiled and patted you on the
back as you signed for your piece of automotive crap.)
In recent years Saturn has upped their image with stylish cars.
Advertising still revolves around the friendly dealership experience.
An indication that quality is still an issue.