For US automakers, a year they would rather forget
The US automobile industry is limping out of a year it would much rather forget. Because it cannot forget, because of the heavy losses all four domestic carmakers sustained. Chrysler Corporation, gasping for breath, racked up losses of more than $1.5 billion for the year and its future is still hanging in the balance, despite the federal government's $1.5 billion guaranteed-loan program which the first session of the 96th Congress voted a year ago.
Chrysler now is appealing for a second infusion of US-guaranteed funds and for further concessions from the United Automobile Workers union. On Dec. 16 it asked the union for a wage freeze until September 1982, which the company says will save it $600 million. Ford Motor Company also may ask for UAW concessions because of its strained condition.
American Motors is pinning its hopes on the French government-owned automaker , Regie Nationale des Usines Renault. AMC stockholders this week approved making Renault their principal owner, granting the firm a 46.4 percent stake in the US auto company. This, combined with Renault's plans to purchase additional AMC stock, will give it control over the US carmaker.
AMC and Renault will produce a jointly developed car in Kenosha, Wis., in the 1983- model year.
Total before -tax losses for the four US automakers will run from $7 billion to $8 billion, Lee A. Iacocca, chairman of beleaguered Chrysler Corporation, noted.
Further, the near-term future continues bleak for the domestics, who are battling not only consumer lethargy in the marketplace but historically high interest rates and an economy that cannot seem to shake its slugginess.
It is at this time that General Motors Corporation is changing the guard as both its chairman of the board, Thomas A. Murphy, and its president, E. M. Estes , prepare to step down. Mr. Murphy retires at the end of December and Mr. Estes a month later.
Succeeding them at the GM helm are Roger Smith as chairman and F. JAmes McDonald as president. They will face a massive job in piloting the deficit-ridden automaker into the black again.
The extent of the domestic auto industry's bind became clear at the end of October when GM, the world's largest vehiclemaker, reported a third-quarter loss of $567 million, the company's second consecutive quarterly deficit.
Ford Motor Company followed GM's loss report with a third-quarter red-ink entry of $595 million, the largest quarterly net loss in the US auto industry and one of the biggest three-month deficits for any US corporation in history.
Chrysler Corporation's third-quarter loss was $490 million.
Bad news piled on top of bad news was the automotive game plan for the year 1980.
Some market analysts don't see any significant improvement before the start of the 1982-model car year next fall.
Indeed, sharply higher sticker prices and skyscraping interest rates appear to be the leading causes for the sharp drop in US auto sales, down some 8 percent from the 600,000 domestic passenger cars sold in November 1979. In the first 10 days of December, volume dropped 7.5 percent from a year ago.
To get car sales on the move again, Chrysler and Ford have devised rebate programs in a drive to turn car lookers into buyers. Prices of many new cars, including some of the compacts and subcompacts -- sent from the factories loaded with options -- are in the $8,000 to $10,000 class, a hard situation for many potential car buyers to accept.
Feeling the impact of the severe shortfall in new-car sales are the tens of thousands of union workers now on indefinite layoff. Ford and Chrysler are even forced to cut back output of their new highly touted fuel-efficient automobiles, the Ford Escort/Mercury Lynx and the Chrysler K-rd Escort/Mercury Lynx and the Chrysler K-cars, the Dodge Aries and plymouth Reliant.
Chrysler's game plan for solvency relies heavily on the success of the K-cars.
When the new Ford and Chrysler low-end cars went onto the market, the manufacturers tried to get as much for them as they figured the market would bear. Hence, the K- cars were expected to sell at retail for an average $7,500, according to Jerry Pyle, says manager.
The high prices clearly have kept many potential buyers at home.
To compound the problem for the domestics, the International Trade Commission (ITC) turned down a request by Ford Motor Company and the UAW for temporary protection against Japanese auto imports while the domestic industry implemented its $80 billion conversion to small, fuel-efficients cars.
Instead of finding for Detroit, the ITC ruled that the imports were not the main cause for the sharp decline in domestic auto sales. Now the domestic companies will try to get relief from Congress when it reconvenes after the first of the new year.
Meanwhile, GM's outgoing chairman, Mr. Murphy, remains the most bullish of all the domestic auto-company executives in predicting auto sales in 1981. While others have talked about total sales, both domestic and import, in the 10 million range, Mr. Murphy is sticking to 11 million.
Car sales in 1980 will check out at about 9 million, including some 2 million imports.
Indeed, US carmakers have little to shout about as the new year draws nigh. Even the prospect for 1981 is clouded by the uncertainties of high interest rates and the nuclear policies of a new presidential administration.