Automakers Suffering, Regardless of Their Business Model
Tuesday, December 16, 2008 at 12:40 pm
In a move that spells nothing but bad news for Detroit’s struggling automakers, Toyota announced yesterday that it’s suspended plans to produce its Prius hybrid in the United States.
Why is that bad news for the Big Three? Because there’s been this line of argument that Ford, General Motors and Chrysler would be performing splendidly right now if only they’d focused more resources on the production of gas-sippers instead of gas-guzzlers. While there’s certainly truth in that criticism, Toyota’s announcement indicates that auto companies are suffering across the board, regardless of what models they’re able to produce. Indeed, Prius sales in November dropped more than 48 percent relative to the same month a year ago.
So even if GM were shooting its plug-in Volt off the assembly line like Pez, it still wouldn’t solve the company’s troubles because the credit crunch and lack of consumer confidence means no one’s buying anyways. That’s a tough message for supporters of the Detroit bailout, who’ve been arguing that the Big Three will be fine if they just get some help retooling their factories to make higher mileage cars.
As David Cole, chairman of the Center for Automotive Research, said just a few minutes ago in what’s probably an understatement, “All automakers are in big trouble right now.”
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