30 December 2007

What 2008 Will Bring

I'm no soothsayer but I will have a stab at what I think will be happening on the automotive landscape next year. Rather than evaluate by brand, I thought I would look at some countries.

USA: The big three look vulnerable. GM is fighting hard to stay #1 but Toyota will win that one, either in '07 or '08. Ford and Chrysler are not well. Expect falling sales as they strive to make money.

Japan: Getting stronger. It's hard to say something negative here. Toyota has hit a wall in Europe but they are winning everywhere else so it's hardly noticeable. Basically the success seems driven by a reputation for reliability and reasonable value for money. Expect more good news for Nipponese manufacturers in '08.

Germany: Much the same as Japan but being achieved for slightly different reasons. They don't offer value for money and VW struggles to be a big player outside Europe for that reason. However, the other brands, which are more upmarket, are not affected by that. What they all offer is a strong image, good driving dynamics and ever expanding model ranges.

France: They have been not proactive enough in recent years with product. The absence of SUVs testifies to that. PSA are buying a Mitsubishi 4wd to address that a little. Profitability has slipped as they failed to keep up with the play and profits were eroded as they tried to maintain market share in Europe. They seem to now be focusing on improved product and will take a hit on the sales chart to get profit up, Renault in particular.

China: Most Chinese vehicles are for local consumption for the time being so I don't know much about them. The local market is huge and with protection in place to limit imports, China will make cars aplenty. Despite this, they seem in an indecent hurry to establish a presence around the world. But they will do themselves no favours if they simply copy other designs which they have been doing at times, and if they crumple like tissue paper at the sign of an impact. The car market in western markets is far too sophisticated to buy on price alone. As my dad used to say: More haste, less speed.

Korea: Having established their reputation on price, they are now trying to prove themselves on quality. I must say that they are doing a good job on that front. It's hard to make money at the bottom end of the price market and the Chinese will be there soon enough so the timing is right. It takes awhile to gain a reputation. It won't happen overnight but it will happen, as long as they keep quality as their focus.

Italy: After a rough ride where the Italian (read Fiat Group) lost their way, things are looking better. Product is improving and reliability issues are being resolved. They mustn't take their eye off the ball though, as the car market of today is so competitive. An Italian style must be maintained to offer something different too.

UK: The death of MGR as the last locally owned volume maker could have made the UK's inclusion redundant. However, it still has local brands with a strong identity that is uniquely British.


Land Rover, Bentley and Aston Martin will consolidate but must get their average carbon emissions down, which they are all working on I'm sure. Jaguar will do well with the XF but chasing big volumes isn't where Jaguar ought to be. UK Japanese factories are all getting close to capacity with production so no problems there. I admire their sticking with a high cost country rather than 'doing a Peugeot' and going east. Overall a solid market but reaching a ceiling volume wise.

2 comments:

  1. You are writing some informative articles.
    Which of the US manufacturers are most vulnerable?

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  2. Ford is in a financial mess, hence why they are selling Land Rover & Jaguar and did sell successful Aston. Chrysler only recently was sold off by Mercedes Benz and it is only now coming to light how much they are losing. Even giant GM is struggling with the bottom line. They are weighed down with union deals of health care and retirement payments, something that newer (Japanese) entrants to US manufacturing don't have to pay. It doesn't look good to me.

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