Another wave of catastrophic car-company news this morning, as Honda closes its Swindon plant for a staggering four months. Look around the industry and you see that even the golden boys are in the cack.
These are the companies regarded as impeccably run because they have strong brands. They build high-profit premium cars, or very green cars. They do it to high quality in superbly managed factories. They’re still losing money.
Honda’s profits have collapsed. Toyota is going into loss. Nissan, which already swallowed massively painful efficiency measures under Carlos Ghosn starting a decade ago, is forecasting losses this year too. The latest view in the City is that BMW will burn €600 million of cash this quarter. Mercedes is mothballing plants. Car manufacturing in Britain, as many other places, is getting Government loan guarantees. [Edit, 6 Febrary: Even Audi, previously boasting it was recession-proof, saw its global sales collapse by 29 percent in January compared with the same month in 2008.]
And finally yesterday, Ford posted a third-quarter loss of nearly $5.9bn. Read that number again. Slowly.
Two months ago it was easy and fashionable to knock GM and Ford in Detroit as old, broken companies. But the fact that even their best rivals are in such a pickle shows us what headwinds they face.
I don’t want to sound like a cheerleader for Detroit. I criticised them vociferously in the late 1990s for slow reactions, poor quality and inappropriate car ranges. But now we should cut them some slack. They really were turning themselves around before this tidal wave hit. But because of that, it hit them hardest.
so what? big financial group and multinationals choose the “i don’t care” way and now economy is collapsing. just punish them with the rule they wrote. People need the same amount of cars they needed 12 months ago and a lot of people right now are making profit with the crisis so there’s also private capital around. So is a “who deserve more to go burst” or is just market laws? Is trying to resuscitate the death economy or is a “you were wrong, and you ruined all. now get out of the way and let us clean up the mess and trying another way, maybe with less but and if than yours”. normal people is getting and will get the worse bite of the cake,whatever way will be taken, and, staying on cars, nobody knows if put money on gas, or battery or hydrogen. we have ton’s of technology that has never seen the sunlight because was “less profitable” or “will ruin economy” and now after all what we have? ludicrous social and economic differences, low culture and knowledge and a damn ruined economy.
Now, this is what i think, is not just a company matter, is also a nations matter. They had to put some addresses, some advice about where put the money, on what technology. and save occupation. The big badges will never die, because is better to buy for some quid an historic brand from a burst company that start with a new one.
Things get worse by the day. We need transformative change, as you mentioned a few months ago. Only big and established companies can do it; there’s no way the whole house of cards can be allowed to fall and then rebuilt from scratch
So what are the solutions?
If a company is already producing as efficently as possible (which the Japanese may well be), there are no further savings to be made. Consequently new car prices need to rise….considerably, in order for companies to be able to make a profit at these reduced volumes. This in turn will help the used car market recover. However none of this is possible whilst governments keep bailing out the manufacturers.
but the one 77 is still selling fine
@Svrallo Svrallone – people don’t want cars as much now – people aren’t buying as many second/third cars.
LoL all this is happening, yes but which manufacturers seem to be surviving the best(even if they are going pear shaped)? Lets name a few and then suggest whats happening. Aston Martin, Jaguar, Ferrari, Lamborghini. these are small manufacturers, that dont mass produce millions of cars. and you know what? these are also the best companies with the best cars in the world. I mean ok, ford and the great german marques going under would be CATASTROPHIC, the car industry would never be the same again. But, the other large companies, screw em. If GM goes, just so long as Vauxhall and Holden are saved, i really wouldnt care. Get rid of the crap companies that make loads, keep the old traditional companies that make cars desireable. if only it was that easy………
and its not all luxury and performance cars. I think the lancia alfa fiat group should be ok, so long as they dont mass produce to the million. same with the VAG or the Volkswagen Audi group
(volkswagen, audi, seat, skoda, lamborghini and any others i forgot to say). Seat are brilliant, it was such a shame that the sear dealership down the road took all their buyers money and LITERALLY F***d off, the next day there was NOTHING!!! (something in the contract they had sneakily put in). this just shows how desperate everyone is now. it seems that what i call the ‘passion’ manufacturers, not necessarily the best, but the cars with the most ’soul’ will survive this ‘tidal wave’.
People don’t need the vast majority of new cars they buy, they replace mechanically sound models that are just on the wrong number plate. That’s what is hurting manufacturers at the moment, people have realised that a 55 plate isn’t the end of world when compared to not meeting a mortgage payment.
I can’t feel sorry for the car companies, they been surfing on a wave for almost a decade now and reaping stupendous profits. They stacked the money elsewhere than preparing for the future, now they need to pay a bloody price. But guess what, the execs and top suits who are responsible for planning the failing strategies will not suffer. They will sit snugly in their luxury mansions and enjoy their early retirement, until a new exec job is available. The people on the factory floor are worse off, but in the end a job lost is not more or less whatever industry it is in.
Maybe time to start a small garage, as cars will still need service and people will maybe keep their cars a bit longer…?
haha, the Brits understand
yeah the recession is old news for Detroit, we’ve been suffering for a while now. now the whole world knows how we have felt for a very long time.
v consumers dun need cars dat only last fr 5-7 years in life cycles….v need cars dat last fr atleast 10 years!most ppl around da world is getting tired of chasing newewr models every 5-7 years!dis economic crisis is a wake up call fr all car manufacturers to plan car models to last longer n to those dat r not fit to produce cars…plz just die off….v dun need so many brands!
I really don’t feel sorry for the American car companies, they’ve been churning out absolute rubbish for years now. But to the other companies, it just looks like there are too many good manufacturers to survive. The only way, that I can see, some companies can survive is if more mergers are completed. We had the Renault/Nissan deal a few years back, and they certainly aren’t the worst hit by this.
I can see why all the car makers are suffering. Everyone had decided they don’t need to change their car every year, or every three years.It makes sound financial sense. Why sell something that works perfectly well? I have an eight year old E Class Merc (W220)with over 170k on the clock and it runs just the same as the day I bought it (new). I can’t afford, nor can I justify the amount of my hard earned cash it would take to replace it. I have every intention of running it for another 8 years, at least. These days you can expect to get at least 10, if not 20 years out of a mainstream car – you were lucky if they lasted 5 years in the 1970s. (Mind you, who’d want to live with an Allegro for 20yrs!)
Perhaps some companies should just take a break until things are brighter.
I have to admit though, I don’t really know much about why the industry is losing money.
Do car companies only build a car when somebody buys one, and does the price of the car cover building cost and workers wages for each car?
I thinks that’s probably the heart of the problem – car companies don’t make cars to order, they have a production line which makes thousands of cars on the presumption that they’ll sell. That’s why there are fields full of unused and unwanted cars everywhere. Great, though if you’re in the market for one – provided you’re not wanting to trade your ols one (which is worth sod all these days)
We all may be in for some tough and desperate times. Not just in Auto Manufacturing, but in all business, industry, and walks of life. In this country (USA) layoff numbers continue to skyrocket. You can reference our unemployment numbers (which only count those collecting unemployment, and not all those looking for work) at the Bureau of Labor Statistics website.
http://www.bls.gov/news.r elease/empsit.nr0.htm
If jobs continue to evaporate, and the middle class continues to disappear, the effects will be devastating and what will ensue will not have been seen since our grandparents (or perhaps great-great-grandparents, if you live in the USA and are a member of a teen pregnancy family) generation.
crap
Its not economically sound to build cars to order, unless your a tiny manufacturer, because of the workers. They can do shifts, or they can be not at work. That’s why Honda etc. are closing plants for months.
Frankly, they should have made more progress with the changes way ahead of the current financial crisis. All the automobile companies, like many governments, are in cohorts with those petroleum companies, that’s why their progress have been so slow to make electric vehicles. Typical.
their(Honda´s) piece of the market, pensioners, single mums, hoodies and the blind simply have a hard time making ends meet now-a-days let alone buying new and in my opinion over priced Hondas and it was the same group of ppl who took advantage of the quick n´costly loans offered by bannks, who started this recession in the first place, to buy these things.. so though my heart goes out to all those directly effected by the cut downs at honda I can´t help thinking, what goes around comes around…
Quite clearly these companies weren’t impeccably run.
Modern cars are over complicated, over-weight, and over expensive pieces of ****. Of course in a bubble all this is ‘affordable’ cough cough, but in the real world we could NEVER afford these cars. It was all an illusion.
As I write this, I can discover see that my belief Scooter sales will rise is true (In Aus anyway). That correlates with my view cars need to be simpler, less complicated, and cheaper.
Unfortunately for these companies they themselves, like their cars have becomes grossly overweight, and are unable to move with the times at pace. They will FAIL, and the consequences are SCARY! The truth – there is F’ all we can do about it!
My ol’man could take a wrench to an old car and fix it himself, now you need a laptop and a degree in mechanically engineering to change the oil. No WONDER new car sales are plummeting!
Simple, basic cars do not = massive profits.
Which is why such cars tend to hang about on the market for years before they are replaced – think Mk 1 Twingo or Mk 1 Ka for example.
Taking history as a precedent, the real Mini didn’t make a profit for years. Indeed Austin/Morris lost real cash money on every one they sold.
So, the question is, should the Govt’s money be spent on devloping cheaper cars that take years to pay for themselves or would the tax payer rather get his/her money back before the next recession by loaning it to car companies that are in a position to make quick profits on luxury cars?
No Government money (our money) should be spent on car manufacturers. Why anyone thinks the government is better at spending OUR money that OURSELVES is beyond me! I would rather decide what businesses are think are good than some politician trying to win votes in x constituency!
Let them fail and some people can come in who did SAVE and NOT spend over the last decade can come in a buy up the assets and build scooters or whatever!
If the government doesn’t help out the companies now then it will pay more in unemployment benefits when the whole industrial pack of cards built on the car industry collapses. It’s difficult to oversimplify these things I know, but that is a general overview of the situation.
Strange how the “Ford are crap and good riddance mob” have now gone quiet, isn’t it?!
As I said before this a global issue caused by over production and difficulty in obtaining car loans for anyone who isn’t a millionaire and therefore actually neeeds one.
With these two factors causing most of the industries woes. The lack of product quality, whether preceived or actual, has no bearing on this.
They’ve been ‘turning around’. Right. I imagine the Titanic also made some effort to dodge that lump of ice. As long as Machoman and MC Bragger only wanted Escalades w/ 20in spinners, that’s what they built. Best of luck, guys.
On the other hand, I’ll be forever grateful for the Corvette and the Viper GTS. I’ll never own either, but they need to exist for little boys (aren’t we all?) to dream about. I can’t dream about Toyota. Except for the Supra, once upon a time.
J. Stevens – The cost of bailing out these companies is going to cause HUGE problems you seem to be TOTALLY blind to. Keynes wasn’t right in the 30s, he wasn’t right in the 60s, and he ISN’T right now.
Had we allowed the banks to fail, and the car companies too, we would now be in a complete mess economy wise but we would be bottoming out rather fast. YES we would have civil unrest, YES it would HAVE BEEN TOUGH! BUT we would have a shorter recession and be able to recover quicker.
Unfortunately what’s happening now is we are ploughing money into a hole, and the cold harsh light of day will dawn and we will realise the car companies, and banks are still failing and we have wasted BILLIONS, if not TRILLIONS of dollars or pounds.
In effect your employing people to dig, and refill holes!
..the question you really wanna be asking though is how “well” some of these concerns were really doing before the crisis hit them and if it turns out that they weren´t doing well at all than what reasons and who are really to blame ? I believe in the survival of the fittest and the price we, the tax payers are forced to endure now-a-days to keep everything even bars of led afloat is antievolutionary it is against everything that got us out of the caves.Is it this relentess effort in making the blind try a spectrum of specticals in order to try to make them see that, taken for granted, allowed for mutlinational concerns, amongst them atomanufacturers that led us to believe that we´re all invincible or is it their ot indeed our own stupidity ? Honda amongst others thrived on small and simple eco”type” cars, quads, motorcycles and their heavy industry when everyone else struggeld, what went wrong ? Too strong competition ? Bad design ? Greed ? Faulty marketing ? Dodgy dealers or whas it the rapid depresiation of their used vehichles or all of the above turned people away from the brand ? All I can say is this if you choose to ignore reality it will bite you right back before you can say ouch and Honda needs to look themselves hard in the face and get a grip or GO..I personally shouldn´t have to pay for their mistakes and neither should any of you…
as for the U.S. market, ..I have an aquaintance in Tampa, Fl, she´s been working as a waitress on minimum wage at a pizzaria for the past 15 or so years, she bought her own house,had it completely refurbished, got a swimingpool in the back yard next to her golf course green and swops her old year Tacoma in for a new one every 3 years… HOW ?? …and you wonder why Toyota,Chrysler the U.S. economy and ours and all the rest of them are strugling… And who gets the bill ??????
Who’s going to change their car when there’s a distinct possibility they could be made redundant at any time?
The problem is that these car manufacturers have been making cars that they assumed would be sold, but now the market has dried up, we have fields full of them that nobody wants, and they’re likely to stay there for a while yet. What happeened to “build to order” plus a few extra? You don’t see supermarkets buying huge quantities of a product on the off chance it’ll all be bought – they buy enough to keep the shelves full an no more.
there you go car supermarkets are already working taking full advantage of the crisis so building to order when you´re selling get in and go isn´t gonna work, the problem is rooted deeper in modern day society than that..
ps. I´ve got another friend, works in finance, DB and the likes, he says they´ve seen this crisis coming three years ago and the automotive industry didn´t ? or were they just hoping to skinn everyone before they got skinned throwing cheap finance at people making them buy what they new they wouldn´t be able to sell otherwise ? And now that crowd is gone and Honda´s surprised ? Please, don´t insult our intelligence..
You can’t just bottom out an economy like that, it isn’t socially responsible. In an ideal world you’re right, let the lot fail, struggle for a year or two and entrepeneurs will step in and fill the holes left, hopefully learning a thing or two from the process. Unfortunately this isn’t an ideal world and it would get very messy very quickly. People at the bottom of the ladder would suffer the most, many of them falling through the cracks altogether and it isn’t right to punish those people for mistakes they didn’t make. Previous depressions show that it isn’t the people who were culpable for the collapses that suffer it’s the workers much further along the chain. This isn’t lefty hippy talk either, if you upset the social order like that these days you’re going to create problems that wont go away in a few years and will cause lasting damage to society and the economy.
Honda make some good vehicles, their motorcycles especially. I’d agree their four wheel efforts don’t scream ‘desireable’ but they’re solid as granite mechanically so a good choice with your sensible hat on. I think they’ve been a lot more sensible than some other manufacturers too, they had the first hybrid in production, they’re capable of producing the clarity as soon as there’s an infrastructure to support it and they don’t have a massive 4×4 mooching around their forecourt (the CRV is smaller than it used to be, I can’t think of another car that has shrunk during it’s life span). Compare that to the American big three and all the companies they’ve owned, or to the PAS group. Even VAG struggle to compete against that ammount of sensible, responsible motoring. Honda will be alright, in my humble opinion, because if I had to buy a car tomorrow that would still be fine in 10 years I’d be straight at their door.
yes, producing the clarity was an excellent yet inevitable move that might do what the civic did if reasonably priced. As for reliability, I´d buy a Toyota anyday perhaps even a Nissan but def. not a Honda purely because of it´s price. They are after all in the Polo-Golf, 207-307 price range with not quality but gadgets to offer admitedly for an irrelevant less one gets seemingly more car, if you´re thinking ten years down the road though they stand no chance against the euromobs : quality, maintenance, depresiation etc.. so sorry I´m not with you on that. As for reasonable, they´ve produced the brand saver with absolutely no infrastructure to support it. Hmmm…
I´m still convinced their presence will not be missed.. not in the 4 wheeled dept. anyway.. sorry.
Not in the 4-door dept. anyway, very true. Trouble is, US don’t know how to design & build a high-quality car. Whatever they promised, they can’t deliver. Those cars are all a bit like the toys your kid gets for free with his HappyMeal: there may be chromed plastic and a battery involved, but it’s hardly what he dreamed it would be before he got it. With a gift toy who cares? But in a US-car I feel cheated and insulted.
The thing I don’t understand there is that GM and Ford have European arms that have made leaps and bounds in the quality department, both real and perceived, in the last 15 years. Why can’t they second some of the engineers from Ford Europe and Opel to Detroit and learn a thing or two. They’ve also been making small, fuel efficient cars over here for donkeys years too, something else they could perhaps take notes from…
because mr. eat all you can from butt fk idaho wants BIG so that´s what he gets. see the hummer succes if we can call it that. And the us economy regardless obama is still in the hands of a self selected few who wear vesco boots made from an extinct reptiles back side and massive white rimmed hats witha red ribbon to match their black armanis and oil´s the bisniss and gass guzzler´s are good for business. Besides where would you hang your pump action shutgun in a focus ? So just because some guy in SanFran buys a beetle and hollywoodians park a prius next to their hummers the avreage american whose great grandfather had a big car and so did his grandfather and his dad… see my point ?
and Tak there are more 40+ year old us cars still running today than brand new bmws so they can do quality but if the need for it simply isn´t there why bother ? ask any american and they´ll swear to the corvette and the gulf state arabs to the hummer and honestly they were/are the market not us ie(the rest of the world, including europe)
in the two door dept, I hope you´re refering to the NSX and not the best of the rest…
oh and take your kid to burger king ..much better..
but agreed compared to a luxurious euromob ami cars suck, compared to a mondeo or anything vauxhal i´d take the v8 howl, the auto everything and the same dodgy plastic anyday..
sorry and no i´m not from there it´s just common sense..
Maybe the days of the car as a ‘cash cow’ for the goverment is over?
If the goverment wants to stimulate the industry, lowering taxes and a stop to the ‘milking’ of motorists is needed.
besides, the tax money they are losing now due to lower sales, unemployment, handouts, and lower car usage is costing them more anyway. But then, thats logical, and everyone has seen the mess the ‘economic experts’ have gotten the world into….
has any1 else noticed the stig in the 118 advert
Okay… so the US car makers were turning things around, were they? Erm, no. They were still churning out 17mpg SUVs and convincing themselves that they were right and the rest of the World was wrong. Now we hear that Chrysler as joined forces with Fiat, so what will be the end product? Cars with crappy handling that won’t start when it’s raining, that’s real progress, not….
They can’t give new SUVs away in the US right now and asking them to build cars that will do 45mpg just won’t compute to the US car makers, they can’t make a battleship do more than 25mpg. Even the average rapper won’t live with 8mpg from a Hummer in these hard times, as the punters aren’t spending cash on tunes, they are too busy buying food and keeping a roof over their heads.
Perhaps the answer doesn’t lie with the cars; if they could just make the drivers smaller, they may stand a slim (sic) chance of pulling this off…
I+m noy quite so shure it´s due to mpg factor US manufacturers are in such a bad way.. I mean so what if instead of 90cents it´s over a dollar for the gallon ? I´d think it´s more down to the lack of market capital, inflation, recession etc.. and perhaps the fact that what really separates most of them is a different badge on the grill, back and steering wheel..ie most of them are identical to the point where the concept becomes wtf.. If you´ve got a market where wheelsize and custom colour is the only thing that separates your product fro all the other sooner or later you´re going to have a problem.. Trouble is to keep costs down they were kind of caught in a trap and now their problems have finally caught up with them.. I honestly do not believe it´s because of their size or fuel consumption.. Americanbs like BIG and petrol is only cheaper in the middle east so I´m goin to have to disagree with all those who raise fuel economy and size as the priority issue. sorry..
Well, American Idol, therein lies the problem. You make gas guzzlers and then bury your collective heads in the sand and say because fuel is cheap, it’s OK. That is utter bullpoo.
The only reason car makers in the US haven’t changed is because they had a captive market and there was no incentive to change, as the buyers were too lazy to buy elsewhere. Now that they are in the deepest of doo-doo, all of a sudden they can find the answer to the problem? There’s something wrong in that scenario mate, can you spot it?
This credit crisis is hitting everyone in the pocket and I don’t care if fuel is tuppence a ton in the US, if people can avoid spending money tight now, they will, even if if means downsizing the family car.
Maybe the US Government should tax fuel the same way that the UK does; then you would see real change in the cars made out there.
Some of you might be missing the part where its not just the brands which will go, the more damaging part is the loss of hundreds of thousands of jobs, that causes financial depression! So we can diss any brands, but at the end of the day, they pay salaries, money thats needed to keep the market going.
Without doubt do I think the US car makers have done poorly, and yes the fuel is dirty cheap, but in todays economy we need to see beyond this.
Better cars, smarter production and more economical to run, thats whats needed. If the US gets fuel levies, well tough shit, most of the civil world has to live with that and it has the desired effect which is making people think before they do.
@merlin.. about downsizing.. in a society where the car´s primarily function is to compensate for the lack of public transport, getting rid of one´s 7 seater is going to be “very difficult” to put it mildly.Perhaps the kids will have to keep their mountain bikes shiny for a little longer, take the school bus or possibly even walk to school and mum and dad will be forced to make do with their wheels for the next 5 years instead of the next 3. Were the US gov. to impose a higher fuel tax would probably result in mayhem, where those already streching the buck simply couldn´t afford to get to work..
And back to fuel efficiency… Mini “the gas guzzler” only recently sacked a few thousand employees… hmmmm and so did Honda, Renault just to name those on this TG blog so I don´t see the co-relation but I guess I´m just a bit thick…
ps. and jaguar, aston martin and landrover have just been bailed out and they make some of the better cars on the planet so it´s a value for money issue and if that´s what you´re saying I´m with you however US cars. with the exeption of a select few, are actually very affordable overt there.. but in times where your new car costs #tuppence# but you only barely make that I guess you´re going to have a problem when the banks says “no”.. and therein lies the problem m8…
car manufacturers didn´t start this recession they´re actually one of the victims…
banks go and the markets tied to the two major investments avreage Joe will make in his life, real estate and his wheels will be in the front line of suffering the after shocks and and your after burger milkshake will be sweating at the back hoping things change before ité his turn.. is that simple enough ?
..having said that, yup ami cars have dodgy handling, are made of worse materials than say a bmw and the thechnology is a bit different from what one would call high tech but they get the job done even if they´re a bit out of touch with the TG track and have to squeeze through Kingham…
according to some ..glueing chevy badges on daewoos would be an alternative solution.. what has the world come to..C. Benz is probably turning in his grave the same way Mozart probably does listening to Simon Cowell´s efforts in creating the American Idol…