AutoGuide News Blog
The AutoGuide News Blog is your source for breaking stories from the auto industry. Delivering news immediately, the AutoGuide Blog is constantly updated with the latest information, photos and video from manufacturers, auto shows, the aftermarket and professional racing.
The global automotive industry could shrink from nearly 30 major automakers to merely a half a dozen in the future.
Cries rang throughout the world last night as President Barack Obama clinched a second term in office, but what that means for the auto industry is still somewhat unclear.
American automakers are performing much better regarding vehicle safety recalls compared to their Japanese counterparts. Approaching the middle of 2011, there have been 59 recalls, potentially affecting 6.8 million cars and light trucks. In 2010 at this point in the year, there had been 65 recalls potentially affecting 9.6 million light vehicles.
Toyota, whose reputation has been smudged recently for recalling millions of cars and trucks linked to sticky accelerator pedals and ill-fitting floor mats, is still in the hot seat. So far, Toyota has racked up nine of the industry’s worst recall campaigns affecting more than 2.8 million vehicles. The issue continues as the company widened its recall for another 1.4 million units also affected by floor mats that threatened to shift and pin down accelerator pedals. Since 2009, Toyota has recalled 9.8 million vehicles and has paid 32.4 million in fines for not issuing the recalls sooner.
At current pace, auto makers are on track to bring in fewer cars and trucks into dealers for recall issues compared to 2010. In 2010, 17.2 million units required a recall making it one of the poorest performances in recent years. 2009 was also plagued with recall issues totaling 16.4 million.
[Source: Wards Auto]
Auto industry legend Bob Lutz may no longer be in the employ of the Big Three, but that hasn’t ever stopped “Maximum Bob” from giving his two cents on what the industry could do improve upon At the New York Auto Show, Lutz held court for a handful of journalists and expanded on what he felt were the key failures of the domestic manufacturers.
Lutz first fingered the CAFE (Corporate Average Fuel Economy) regulations for helping to give import manufacturers an advantage. While American car makers had perfected the large, rear-drive V8 formula, CAFE forced them to switch to smaller engines and front drive platforms – precisely the kind of vehicles that the Japanese automakers had perfected. Lutz also blamed the typical villains, such as the press, the UAW and foreign exchange rates, but didn’t hesitate to chastise managers of the Big Three automakers, with Lutz deriding the ”… Harvard Business School-type, profit-optimization thinking as opposed to customer excellence focus,” as a key culprit.
[Source: Automotive News]
We’ll spare you the awful cliches about failing to learn from the past and get right to the point. “Emerging markets” like China and India are all the rage right now for profit-hungry car makers, but the same problems of too much supply and weakened demand could spell doom for OEMs if a similar situation pans out in the locales that automakers are banking on to help propel their recovery.
A report released by multinational consulting firm KPMG was blunt in its findings, stating “”It does seem likely that China and India will see some overcapacity within the next few years. The industry may have to brace itself for some casualties.” The report was based on interviews with 200 auto executives around the world.
The biggest culprit behind a surprise contraction of the industry would be automakers expectations not matching up with reality. Despite seeing year-over-year growth of over 30% in China and India, the potential exists for automakers to “overbuild” by as much as 20 percent. China’s recent limits on the number of vehicles its allowing to be put on the road could play a big role in this phenomenon. India, on the other hand, is already experiencing overcapacity by 17.6%
[Source: The Financial Post]
China is looking at doing away with their mandatory rule forcing automakers to enter into 50/50 joint ventures with local Chinese auto makers.
This arrangement allows Chinese automakers to gain knowledge from auto makers that are already established, allowing for a an accelerated learning curve while keeping some of the profits at home. However, the arrangement has intellectual property implications that made many automakers uneasy, and doing away with the forced joint ventures would open up China’s auto market and be a strong measure of goodwill towards foreign car makers who wish to invest capital into the Chinese market. Furthermore, it would eliminate the awkward bureaucracy that many joint ventures fall victim to, due to overlapping levels of executives who must approve of corporate decisions.
[Source: The Truth About Cars]