Detroit: if you're No. 2, try harder
As 2007 dawns, the US auto industry knows it's losing the battle for global leadership. The world's new No. 1 vehicle manufacturer will soon be Toyota, not General Motors. Detroit's road back will be rugged. But the path to recovery can still be found.
Last week, GM chief executive Rick Wagoner put on a brave face. "I like being No. 1," he said. "I think our people take pride in that, so ... we're [not] going to sit back and let somebody else pass us by."
Keeping the title of No. 1 automaker that GM has held since 1931 won't be easy. Toyota expects to sell 9.34 million vehicles worldwide this year. Last year, GM sold 9.1 million, and its sales trend is down, not up. GM, Ford, and Chrysler saw sales in 2006 slip by 8.7, 8, and 7 percent, respectively. Meanwhile, Toyota was up 12.5 percent and Honda 3.2.
As industry executives, news media, and the public descended on Detroit this week for its 100th annual auto show, the hometown team looks to have huge challenges ahead. GM, Ford, and German-owned Chrysler must negotiate new contracts with their union, the UAW. Worker concessions seem crucial to further cut production costs. A strike would prove disastrous.
At the company with the shiny azure oval, Ford blue has turned into Ford blues. The No. 2 US car company can no longer provide its workers with lifetime job security. Nearly half of its workers, some 38,000, are planning to take voluntary buyouts.
The automakers haven't asked for a government bailout like the one that helped save Chrysler in 1979, and they aren't likely to get one.