2008 Worst Car Year Ever –But light at the end of the tunnel?

High gas prices, the mortgage crises, the financial market meltdown, and a recession the size of which we haven’t seen in decades created a perfect storm of epic proportions for the auto industry in 2008. Sales slides were steep running from a third to half of what they were a year ago. Chrysler and GM have of course taken incredible hits. Even Nissan, Honda and Toyota sales stagnated with Toyota announcing it’s first ever reported loss as a publicly traded company.

News this week that the economy could stage a recovery later this year, and stronger than expected sales for Ford and Toyota point to a pinprick of light at the end of the tunnel. First quarter sales in the US were certainly boosted by zero percent financing. And with gas prices half of what they were this time last year, a economic recovery in the auto industry could be just around the corner too.

In the News — Thank You!

Hi there, here at ACS8 we like to focus on our clients over anything else. However, we’ve enjoyed attention from a recent press release that we sent out. Here is the link to the press release on REUTERS and just a couple of outlets that picked it up. Thank you to all!

GM Making Initial Steps to Reinvent Brand, Company

GM’s Vice President of Sales and Marketing Mark LaNeve told Car & Drive in an recent interview that GM has the market research which shows that consumers have four main concerns that they want addressed before they will consider buying a new car: “the solidity of the car’s warranty, its safety, the buyer’s own ability to make new car payments, and worries that new cars lose their value quickly.”   GM feels that its current 5-year/100,000 mile warranties reassure consumers, and OnStar gives it a tremendous advantage in safety features over its competitors.

To address the last two concerns, the automaker has developed the Total Confidence program.  This program is additional reassurance to auto buys, because it take over car payments on behalf of the buyer for nine months if the buyer loses their job. “Nine months, all our studies show, is plenty of time to find a new job and resume making the payments,” LaNeve tells C&D.  Buyers worried about their new cars losing their value, can take heart as the program includes an “equity protection clause.  Under the Total Confidence program, buyers can trade in their new car on another GM vehicle, and GM will cover the difference between what a buyer owes on a vehicle and what it is worth, up to $5,000.”

It’s this kind of messaging and goodwill that American car buyers need to see coming from Detriot.  Images of automaker CEOs asking for hand outs have been burned into the American psyche.  But programs like GMs Total Confidence program offer a valuable and needed counterpoint.

1Q09 GM sales slump – Ford and Toyota make gains – Ever Wonder Why?

First quarter auto sales data shows that while GM sales continued to slump, Ford and Toyota made significant gains. Keep in mind that Ford accepted NO bailout moneys and Toyota is Japanese owned. Could it be that American car buyers are steering clear based on principled, ethical reasons – not supporting a company asking for a hand out? Or could it be concern of more practically matters, such as future availability of parts and dealership for repairs, or issues of warranties?

And what happens with GM and Chrysler? There is much talk of them being “smaller, leaner” companies. But could such significantly smaller companies continue to complete with a much larger Ford and Toyota who are already picking over the bones of these all but busted companies? Only time will tell for sure, but remember – American’s love an underdog, not a loser.

Auto Industry Soap Opera – All My Makes and Models? Search for Tomorrow’s Bailout? The Broke and the Bloated?

This week, GM announced that it would be closing 2600 dealerships by 2010 in an effort to shore up the profitably of top performing locations. The Hummer, Saab and Saturn lines are on the chopping block to be sold or shuttered. The once proud Pontiac line has been scrapped.

The daily soap opera continues. This week’s news from GM reads like a sweeps week death of a soap opera heroine. The dramatic scene, the last gasp. But are American auto buyers rolling their eyes instead of dabbing at the corners? With so much up in the air for GM, is there any sympathy left?

GM sales continue to stagnate. While the Total Confidence plan is a step in the right direction, it is hard to restore confidence in a company that is being forced to sell off its brands as if forcing its children to leave. Who wants to buy a car from a brand that may or may not be around in the next six months?

Will the car companies by able to weather the storm? Will they will make it to tomorrow? Will American car buyers care?

Stay tuned, dear reader, for the next episode of Guiding Headlight!