The Euro View on the Decade
By Michelle Krebs December 28, 2009We know our U.S.-oriented prism is limiting so we turned to Europe's Just-Auto.com for its view on the decade.
With the Just-Auto's blessing, we excerpt here Dave Leggett's take on the Top 10 things - people, events and trends that shaped the automotive decade.
1. Jacques (Jac) Nasser Leaves Ford
Jacques (Jac) Nasser's departure from Ford in 2001 signaled a change in Ford's direction, but more than that, signaled a change in business mood. The dotcom bubble's burst meant it was time for more traditional industrial values to reassert themselves. Nasser's grand vision was to turn Ford into a post-modern provider of multi-branded vehicles and transport-related services. His notion was based partly on the rapid rise of the Internet and the then-widespread notion that the future belonged to the smartest firms that embraced new ways of doing business while amassing high-margin activities with strong synergies.
But Nasser took the fall for Ford's heavy financial loss in 2001 as its reliance on trucks was exposed amid higher fuel prices and increased competition. His failed vision and his tarnished image of his uncertain handling the Ford Explorer-Bridgestone/Firestone controversy led to Nasser's abrupt departure. Ford launched a "back to basics" movement under chair and CEO Bill Ford, paving the way for Boeing's Alan Mulally who big idea said it all: One Ford.
2. Zero-Percent Financing and U.S. Incentives
When interest rates plummeted after 9/11, GM saw an opportunity to 'keep America rolling' with free financing. Detroit got sucked into incentives in a big way through much of the decade. It may have moved the metal and kept plants in operation in the short-term, but it devalued the product proposition in the long term. Arguably, it was a big factor behind the decline of the Big 3 in their home market and left them little room to maneuver in the recent recession.
3. China Comes of Age
China's economy and auto industry shifted into high gear during the decade. The first half of the decade saw China's economic growth built overwhelmingly on exports of manufactured goods. But decade end, China's domestic demand was accounting for more of China's GDP as wealth spread and a sizeable urban middle-class with spending power emerged.
In 2000, China produced about 2 million; by 2009, annual production is running at 12 million units. Much came through established joint ventures between foreign carmakers (such as Volkswagen, General Motors and Toyota) and domestic Chinese makers. But a more significant development is the growth of smaller independents, such as Geely, Brilliance, Great Wall and BYD, names now gaining familiarity outside of China.
4. The Rise of the Green Car
The decade saw the environment take center stage. And the auto industry reacted with green cars in many forms, from gee-whiz electrified city cars to gasoline-electric hybrids to clever innovations like stop-start mechanisms and super-efficient clean diesels.
Consumers, indeed, consider the environmental impact of the vehicle they drive now more than they did in 2000. Higher fuel prices have helped, but so has the regulatory and tax environment in Europe.
5. BMW Redefins Premium Small Car with Mini
In 2000, it looked audacious bordering on foolhardy. How do you take a small car icon like the Issigonis Mini and reinvent it in a way that doesn't tread all over the sensitivities of those who loved the original? More than that, how do you give it a contemporary feel but with a nod to the heritage? And turn a profit?
But it worked. The new Mini became not a utility product but a premium small car.
6. GM Buys Daewoo; Turns Chevy into Global Brand
When Daewoo Motor went bust at the beginning of the decade, few takers for its assets existed. But General Motors grabbed it and used it as a springboard for a new international and value-driven brand - a move that now looks inspired.
Daewoo's small car engineering expertise and production capacity to re-brand Daewoos as Chevrolets worked. The Chevrolet bow tie looks fine on the Chevrolet Spark minicar and other models.
7. Marchionne Revives Fiat
Fiat looked like a firm that could well be heading into terminal decline before a Canadian-Italian (or vice versa) accountant emerged as the choice of the firm's main creditors to be CEO. Sergio Marchionne, indeed, transformed Fiat Auto, streamlining its reporting structure and focusing the company on making better vehicles, accessing international markets more efficiently and becoming better placed to make profits.
Fiat turned a profit in 2005, helped by the success of Fiat Grande Punto, acts followed by another hit the Fiat 500 and the rejuvenation of the Alfa Romeo brand. The year 2005 also was marked by GM's "put option" that garnered Fiat $2 billion when the U.S. automaker cut ties with Fiat.
The question for the next decade will be can Marchionne perform another miracle with Chrysler.
8. DaimlerChrysler Unraveled
In 1998, the "merger" of Germany's Daimler AG with Chrysler was billed at the biggest industrial merger of all time - one that would create a vast corporation to serve as a model for the auto industry. Huge synergies supposedly would be gained in product development, engineering, procurement and distribution.
But DaimlerChrysler fell apart when its board opted in 2007 to offload Chrysler to private equity group Cerberus Capital Management.
In truth, the marriage never took, with many stories of disharmony, lack of trust and cultural clash between Stuttgart and Auburn Hills, Mich. The supposed benefits were never realized. The integration of operations and functions was patchy. And the deal's key architect, Jurgen Schrempp, was replaced as CEO at the end of 2005, a sure sign that of problems with the grand vision.
9. North American Suppliers Pushed to the Edge
When the Detroit Three came under pressure, so did their suppliers. At the beginning of the decade, the North American OEM-supplier relationship was reduced to relentless price pressure imposed on the local supply base, alongside an increasing tendency to look to low-cost solutions overseas. Many US suppliers struggled as a result and many were forced into bankruptcy, the most notable being Delphi Corp., which stayed in Chapter 11 for four years.
Are things better now? Supposedly. Ford, GM and Chrysler claim to be taking a more strategic, long-term and collaborative approach to supplier relations. Still, suppliers remain wary.
10. Demise of MG Rover
The sad MG Rover tale is in many ways a tale of our times, if a small one-- (and one lost on us in the U.S.). There's a sorry catalogue of strategic errors and mistakes that extend back several decades, but the final incarnation of Britain's last indigenous volume carmaker is in many ways the saddest.
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And we still have 2010 to wrap-up this decade.
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