It’s entirely possible that 10 years hence, automakers, especially European companies, will view 2009 not as the great cataclysm our headlines now trumpet but with the regret of a long-lost opportunity. Of course, with the economy in free fall, tens of thousands of skilled autoworkers out of jobs and the worldwide cost of the automotive bailout possibly reaching US$100-billion, looking forward to future hindsight is a luxury reserved for automotive columnists desperate for this week’s column and those few with still-healthy Swiss bank accounts.
While General Motors has announced plans to shutter some 14 plants, chop the number of brands it sells in North America by half and reduce its payrolls to levels unthinkable in 1979 when it employed more than 600,000 workers, the rest of the automotive world (save, perhaps, Chrysler, which has turned to Fiat, of all companies, as the saviour to show it how to build cars Americans want) seems to be blithely ignoring the fact it is an industry capable of building about 90 million automobiles but currently selling only about 55 million. According to the Financial Times, not a single European auto manufacturing plant has been closed permanently since the economic crisis began.
GM, for instance, in its ambition to rid itself of non-core brands, is selling Opel. With a great deal of influence from the German government, GM chose a conglomerate of Canada’s Magna Corporation and Russia’s Sperbank over the more established and extremely ambitious Fiat. GM’s choice isn’t because Magna offered the best long-term solution but because Sergio Marchionne, the Canadian-educated CEO of the Italian automaker, was more realistic in his prognosis for Opel and admitted that as many as 9,000 German autoworkers might have to lose their jobs. It wasn’t the kind of news a fragile German government wanted to hear going into an election four months from now.
Even more curious is the case of Saab, another General Motors cast-off. Sad to say, since I consider the 1986 9000 as one of the milestones of the modern automobile, the Swedish marque sold but a paltry 93,000 cars last year. That might be enough for Porsche and a good year for Jaguar, but Saabs don’t command the price points to make such piffling numbers profitable.
In what must surely be a triumph of irrational nationalism over economic logic, Swedish boutique automaker Koenigsegg has raised enough money to purchase Saab from troubled GM. Never mind that the European Investment Bank (backed by the Swedish government) has kicked in $600-million in aid to sweeten the deal, but are things really so desperate that people who know absolutely nothing about the mass production of cars are now considered saviours?
Koenigsegg does make cars. Last year, it sold 18. Sure, they each cost more than $1-million, but what does hand-building supercars for rich Middle Eastern potentates have to do with mass producing quirky sedans for a hard-hit middle class? After all, the ability to make a great homemade pizza does not imbue its chef with the ability to run McCain’s frozen food empire.
European governments seem hell-bent on resisting any downsizing that might rankle voters. French president Nicolas Sarkozy has lavished public funds on the country’s automakers as long as they don’t shut down manufacturing facilities within the country. Germany, meanwhile has propped up its car market with an extremely generous scrappage credit that sees consumers given §2,500 if they trade in their old, polluting clunkers for cleaner, more environmentally friendly new models. Even Porsche, not so very long ago acclaimed the most profitable car company on the planet, is seeking a §1.75-billion bailout because of adverse market conditions. Of course, a skeptic could find that just a little duplicitous since it recently incurred a §9-billion debt burden as a result of its — dare I say greedy — attempt to purchase a controlling interest in Volkswagen, a company that, you guessed it, wants to increase production so it can over take Toyota as the world’s largest automaker.
If, as has been much discussed, the United States doesn’t need its three core automakers — GM, Ford and Chrysler — then surely France is oversupplied with Citroën, Renault and Peugeot and Italy with Fiat, Alfa Romeo and Lancia, not to mention Ferrari, Lamborghini and Maserati.
Even the rarefied market of über-expensive exotica has become grossly oversupplied with not just the Italian marques but Aston Martin, Bentley, Rolls-Royce, Maybach and Porsche pumping out their four-wheeled trinkets in numbers unthinkable even a decade ago. The world is truly building too many cars and, like justice, downsizing delayed is right-sizing denied.
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