As the Detroit Auto Show opens its doors to the world's press today, there's good and bad news from the car industry, but from an English point of view it looks like proof of the maxim that Britain and America are two nations divided by a common language. While UK new-car registrations were a depressing 4.4 per cent down, their lowest level since 1994, over the pond, Americans bought 12.7 million new cars compared with 2010's 11.6 million, up 10.2 per cent.
Ah, lies, damn lies and statistics. Look closer at the US figures and you see that the market is still depressed. Before 2009, the last time new light-car registrations were lower than last year was 20 years ago in 1991, when new registrations were 12.3 million.
But it's the direction of sales that points to consumer confidence; UK sales are on their way down, while those in the US are headed up. Is this proof of that American adage that by bending down and tugging hard enough at your socks, you can pull yourself off the ground?
"It sure looks that way," laughs David Cole, emeritus chairman for the Center for Automotive Research. "But you need to remember that this is not a normal recession, it's still a depression in sales volumes, but because of all that's happened in the last few years, the industry has reduced its break-even point to about 10.5 million sales, which is pretty remarkable and that means that at 12.7 million sales last year, they're making profits."
But are Americans such starry-eyed folk that they dig into their wallets for the good of the economy, while the surly Brits grumpily mend and make do? It's not so simple. After three or more years of steering clear of the showrooms, American buyers have been pushed back in there as they realise their cars won't last forever. Easing their passage has been better access to credit and low interest rates. What's more, the cars are better, as US car makers have been forced to update their ranges as well as their cost structures.
As for the big three US car makers, Cole reckons that some are more equal than others. "Chrysler/Fiat is the most interesting as neither was survivable over the long term," he says, citing lack of product and geographical spread. "So the marriage makes sense, far more than DaimlerChrysler ever did. But this is still work in progress and there's a feeling round here that perhaps Fiat needed Chrysler more than the other way round."
Cole reckons the group have done the easy bit of cleaning up the existing product portfolio and improving interior quality, but the test will be the integration of those products, which we will see the first results of at Detroit with the Chrysler Dart, the US iteration of the Alfa Giulietta chassis platform.
Ford had the dubious benefit of being almost bankrupt six years ago, which means it sorted its financial house early, although it is still saddled with massive debts to service. "With One Ford [Ford's strategy of building and selling the same model line up across the globe], it's doing very well and making profit thanks to the lower break even," observes Cole. Although there are still question marks about the long-term profitability of the non-premium sector where Ford sells its cars, and the company's luxury Lincoln division continues to look rudderless.
General Motors actually went bankrupt and in that process it shed a lot of debt. "Its product portfolio has improved and its integration of functions across the globe is going well, too. It's probably two years ahead of Ford in that respect and it's got high volume, good economies of scale and a genuine world presence," says Cole.
So a leaner, meaner motor industry, but not much cleaner as customers vote with their wallet away from the fuel-saving technology. Nissan's Leaf and GM's Volt (Vauxhall Ampera) have missed their 10,000 sales targets (the Volt by miles) and sales of "alternative power source light vehicles" according to Wards Automotive, were up by just 2.3 per cent, less than a quarter of the overall rise. While US government requirements are mandating ever more fuel-efficient vehicles, the public aren't keen on paying for what they see as expensive planet-saving technology in the middle of a recession.
There are other problems ahead, too. "We've seen an exit of the boomers," says Cole, referring to the massive layoffs in the motor industry of Fifties and Sixties born engineers, who haven't been replaced. "In the US it is estimated that in five years time the economy will be short of 10 million skilled people and by 2015, that figure will be more like 30 million. So this could be a double hit, as the industry tries to re-grow, it gets hit by the skills shortage".
Not that the financial sector is particularly supportive of manufacturing of any stripe, particularly car making. "They're more enamoured with the software industries, where they get quick and high returns with low tooling up cost and low numbers employed," says Cole. "There's been some renewed enthusiasm for manufacturing in this country from the investment community, but we need a lot more to fuel a real return".
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