Blog: Dave LeggettTough times in the US

Dave Leggett | 5 June 2008

It really is shaping up to be a tough year in the auto industry in the US. Both Ford and GM are doing the right things, downsizing to get North American operations at the right scale and rejigging capacity and the product offering to reflect the rapidly changing market environment. But it's tough when that environment shapes up like it has done in the first half of the year. As far as I can see everyone is suffering in the US - even Toyota can't shift its Tundra pickup.

Are there any silver linings? Perhaps the corporate structural changes being enforced by seismic market shifts will be good in the long-run, a kind of wake-up call (if the Ford F-Series not number 1 in May isn't a wake-up call, I don't know what is). And could the weak dollar lead us to the possibility of the US exporting cars in big volume? Cars that wouldn't be laughed at in Europe?

Big picture - the US is still one heck of a sizeable market and an extremely fragmented one in terms of brands and market segments. Let's say that it becomes a lot leaner in terms of brands, segments and products over the next ten years. For example, large pickups and SUVs decline to become a smaller niche with much fewer offerings.

At the same time, small and mid-size cars and car-based crossovers (vehicles on global platforms and with footprints that would work in Europe and Asia) become very much more popular in America - diesels too, even. The scale economies available for Ford and GM with more consolidated lines could be very, very considerable indeed. And with the North American product much more in line with what's made outside North America, exports become a real possibility.

On one level, yes, Ford and GM are being weighed down because of the problems in their home market. But that's still a 15m-17m annual market and Detroit has a big share. That's actually a pretty good opportunity, too (just ask Carlos Ghosn).  

GOLDING’S TAKE: Be careful what you wish for


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