The waning days of 2010 offer an opportunity to look back on what might charitably be described as a “learning experience” for much of the auto industry — though there are some who managed to squeeze lemonade out of the year’s many lemons.
“This is definitely a year we’d all like to put behind us,” says Mark Fields, Ford’s President of the Americas.
The challenges of 2010 will persist in 2011: rising fuel prices, soaring costs for raw materials, a still-uncertain economy and the promise that competition will only get more intense.
The other big story of 2011 will likely be what share of that volume is captured by the new wave of “electrified” vehicles, such as the Nissan Leaf and Chevrolet Volt. Both makers claim strong initial demand. But will it hold, considering the trade-offs in terms of range and price that go along with battery power? The coming months could begin the wholesale shift away from petro-power, or they could show that we will be dependent on oil for the foreseeable future.
As the year wraps up there are some surprising winners and losers. Among the losers is the humbled Japanese giant, Toyota. The world’s largest automaker has seen its once seemingly bulletproof reputation for quality and reliability tattered.
Toyota has recalled more than 11 million vehicles over the last year, the vast majority in the U.S. Its executives have been berated before Congress and the company has paid out a series of record fines for failing to order recalls in a timely fashion.
Yet, every time a senior Toyota executive promises the worst is over, another recall is revealed. The latest was announced just two weeks ago for 100,000 2010 model Sienna minivans.
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Going into 2011, Toyota can only pray that it has finally seen the end of its safety and quality-related problems — and that the process of rebuilding its reputation can truly begin. But all signs point to a continuing decline in sales and market share, and not only in the U.S.
While it seems unlikely to happen soon, further setbacks could position Toyota to be overtaken by the very ambitious Volkswagen, whose CEO Martin Winterkorn is openly declaring his plan to make VW the world’s largest automaker.
To pull that off, VW will have to count on two critical factors in the year ahead: first, a resurgence in the U.S. market. The maker is slowly making headway, and 2011 will bring the launch of its new assembly plant in Chattanooga, Tenn., the first time VW has assembled vehicles in the U.S. in a quarter century.
New models, such as the 2011 Jetta, are gaining traction but the real make-or-break model will be the first to roll out of the Tennessee plant, a 4-door designed specifically for the U.S. and codenamed the New Midsize Sedan.
Equally essential for Volkswagen will be the continued growth of demand in China, now the world’s largest national automotive market. But the same could be said for a number of other makers, notably General Motors. Significantly, in October GM became the first car company ever to sell more than 2 million vehicles in China in a single year.
Ironically, that strong demand is centered around Buick, a traditionally American brand that might otherwise have been abandoned when GM emerged from bankruptcy last year. Instead, it’s getting a flood of new products that has begun to reconnect with American motorists. Can the new Regal and soon-to-debut Verano sedan maintain that momentum?
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Going into 2010, GM was itself a hobbled giant and many analysts questioned its long-term viability. But as its rising sales, market share — and earnings — now suggest, GM is entering 2011 in a very different position. Recent offerings, such as the Buick LaCrosse, the Cadillac SRX and the Chevrolet Equinox have won surprisingly strong kudos, notably from influential sources like J.D. Power and Consumer Reports magazine.
“More than anything, the perpetuation of excellence, and the destruction of mediocrity will be the most important things that will enable us to win,” contends GM President Mark Reuss.
GM’s turnaround was rewarded by investors who made its long-anticipated IPO a big success in November, but the carmaker shareholders love is Ford, which has seen its stock surge from a 2008 low of barely $1 to recent highs in the $17 range.
Keeping that going will also depend on “recognize(ing) this isn’t a static world and find(ing) ways to continue driving change through the organization,” even when the crisis is over, stresses Bill Ford, the maker’s Chairman and great-grandson of founder Henry Ford.
Among Detroit makers, the real question mark hovers over the corporate head of Chrysler, the other domestic maker struggling to put its 2009 bankruptcy in the rearview mirror.
Now controlled by the Italian maker, Fiat, Chrysler will be steadily ramping up its much-needed product roll-out through 2011, though the real assault won’t hit until 2012. But the coming year will still be a critical one. On the product side, that will include the launch of a new flagship, the redesigned Chrysler 300 sedan and the debut of the 500 microcar. The latter will mark the return of Fiat to U.S. shores after a two-decade absence.
Among the other brands to watch this coming year, are the Korean siblings Hyundai and Kia. The former marque will end 2010 with record sales and a reputation far different from that of just a few years ago, when it was best known for low-cost, low-quality econoboxes. Today, it is offering top-rate reliability and some surprisingly lavish offerings, like the popular Sonata, where the active term is high-value, rather than low-price.
Hyundai will bring to market a variety of models, including a new Elantra compact, but it could either burnish or tarnish its image with the imminent launch of the Equus, its first premium luxury model, which will go up against such benchmarks as the Mercedes-Benz S-Class and Lexus LS460.
Kia, meanwhile, hopes that the new midsize Optima sedan will let it come out from the shadow of its bigger brother.
There are a variety of factors that could cause the automotive world to shift in unpredictable ways. Rising commodity costs are among the potential problems. Then there’s petroleum, which seems to be defying gravity despite the economic downturn. These days, $4 a gallon seems a certainty. The only question is when. A rapid run-up, as we saw in 2008, could send the economy spiraling downward, dragging car sales with it.
The outgoing year will see a reasonably sizable jump in volumes, the market closing at around 11 million a year, about 15 percent higher than a disastrous 2009, but a pale shadow of the record 17 million the industry used to enjoy. Forecasts by J.D. Power and Associates, among others, call for the numbers to climb back into the 12 million to 12.5 million range in 2011, and perhaps surge past 14 million by 2012. But there are plenty of experts, including GM’s sales chief Don Johnson, who caution that we may fall short of the peaks set during the last economic cycle.
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