By Christopher Tan , Senior Correspondent
"The Americans are arrogant... They always ask, 'We make great cars, why can't you sell them?' They have no idea what the market wants...I'm glad it's over."
Those strong words from a Daimler executive - uttered right after the maker of Mercedes-Benz divorced Chrysler in May 2007 - do not underscore all the ills of American car companies, but they speak of an insularity that has crept into what was once the United States' greatest export after movies.
In the post-World War II years, American cars - typified by regal cruisers like the Chevrolet Impala, Lincoln Continental and grand Cadillac - shared the roads with Rovers, Jaguars and Austins from Britain.
These carmakers had no competition as the automotive powerhouses of today - namely the Germans and Japanese - were struggling to get back on their feet after their countries' crippling defeat in the war.
But instead of capitalising on their global positions, the American companies retreated to the home market, which was then undergoing explosive growth.
Car enthusiast and retired Chevrolet dealer Lee Chiu San, 63, recalled: "General Motors was so profitable in those days that they could just focus on their own backyard."
As they stayed home, the world changed.
The Japanese began exporting cheap compact models, which no one took seriously at first.
But by the early 1970s, the acceptance of Japanese cars had soared, fanned by the ensuing oil crises that curtailed the world's appetite for guzzlers from the two war allies.
It was around then that cracks appeared in the British car empire.
Beset with labour woes, ancient and inefficient plants, stagnated quality standards, a dearth of new, relevant products, and most importantly, fading cost competitiveness - all the maladies that would visit the US car industry three decades later - the great British automotive engine began to sputter.
It was also around this time that the Americans began an acquisition trail aimed at shoring up their flagging image.
General Motors bought Lotus and Saab, Chrysler bought Lamborghini, and Ford Motor acquired Aston Martin, Jaguar, Land Rover and Volvo - only to let them go (except Volvo) over the next 20 years.
Meanwhile, to rescue its car industry, the British government did what Washington is doing now: bail them out.
It was an attempt at preserving jobs as the industry hired over a million people, or 5 per cent of the British workforce.
The medicine failed to revive the English patients, and a slew of ownership changes followed.
Land Rover, for instance, went from the British government to British Aerospace to BMW to Ford and now resides with India's Tata.
Mr Simon Rock, a 23-year Land Rover veteran who left in 2000, mused: "I don't think any brand can prosper if it went through so many owners."
Mr Rock, 51, now managing director of Singapore BMW agent Performance Motors, said: "You don't have consistency, and you need consistency - for strategy, investments, product planning - to survive."
Other British marques went through ownership changes too.
By 1999, the last of the mainstream British brands rolled into foreign garages when BMW bagged Rolls-Royce and Volkswagen snared Bentley.
(Aston Martin came full circle when UK racing company Prodrive bought it from Ford in 2007.)
Today, the British automotive industry ranks 13th in the world - after Russia.
In its heyday in the 1950s, the country was the world's largest automotive producer, accounting for over half the world's car exports.
Will the American industry face the same fate?
Mr Graeme Maxton, long-time analyst of world automotive trends, said Ford - which recently overtook GM as the biggest producer in the US - may be the only major American manufacturer to stay American.
Despite the Obama administration having given Chrysler US$12 billion (S$17 billion) and GM a whopping US$50 billion in aid since the financial meltdown, the two companies could eventually be foreign-owned - at least partly.
Fiat of Italy has already taken control of a restructured Chrysler while other foreign companies - including Fiat - are bidding for GM's European business.
"GM will become a much smaller company and it will be struggling for a long time," Mr Maxton said, adding that the once mighty giant will forever be tarnished by what has happened.
What about brands like Hummer, Opel and Saab (brands which GM is selling off) and other long-struggling names like Seat, Volvo, Proton, Land Rover, Jaguar, Jeep and Dodge? Will they live?
A few might, as the industry has had its comeback kids.
Porsche returned from the brink of insolvency in the early 1990s, with some help from Toyota, to become the world's most profitable car company today.
Fiat was in near collapse as recently as five years ago, and was in fact partly owned by GM for a brief period.
Then Mr Sergio Marchionne took over its helm in 2004.
He was its fifth chief executive in two years.
In four years, he turned the Italian company around - largely by sacking a whole layer of senior executives and empowering lower-rung managers.
Other examples of resuscitation include Hyundai (merged with smaller Kia) and Nissan (hooked up with Renault), proof that mergers and alliances can work.
These comebacks however are rare.
And it would be harder now that world demand for cars has tanked since the economic crisis hit last September.
Despite cash incentives by governments for car owners to trade in their old clunkers for new vehicles, and despite signs of green shoots, some analysts reckon global car sales will take more than 10 years to return to 2007's peak of 71.9 million units.
"We're trying to save too many companies. So the industry will still be very fragmented, and there will be no cost-savings," said Mr Maxton, whose books Time For A Model Change and Driving Over A Cliff? touched on production overcapacity and product overlaps endemic in the industry.
He said the industry on the whole needs to cut capacity by at least 25 per cent.
Exceptions to the rule include the likes of BMW, Volkswagen Group, Porsche and Daimler.
These European players have either established themselves as luxury leaders or perfected the art of platform sharing to keep profits fat and costs thin.
With the UK and US carmakers having gone from boom to bust within 30 years of each other, could the same destiny await the Asia-Pacific manufacturers, however remote that seems right now?
Toyota Motor now ranks as the world's top manufacturer.
Tata has launched the world's cheapest car.
And the Chinese companies like Chery, Geely, Brilliance and SAIC are basking in a robust domestic market.
Mr Maxton admits China is the only healthy large car market in the world right now.
Even crippled GM sold a record 814,442 vehicles there in the first half, up 38 per cent from the first half of last year.
Indeed, industry watchers expect China to become the world's biggest car market in the next five years.
It is now No. 2, after Japan. But pitfalls are aplenty.
Notably, China is experiencing a cost spiral on the back of quantum leaps in wages, and Toyota seems to be a little overwhelmed by its own size and has been grappling with quality issues.
If, however, the Asia-Pacific companies can avoid the potholes that broke the UK and US industries, they will one day share the world market with the Europeans - notably German groups like Porsche- Volkswagen, Daimler and BMW.
christan@sph.com.sg
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