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SDNews.com
Home La Jolla Village News

Maybe the Wal-Mart approach is easier

Tech by Tech
January 24, 2009
in La Jolla Village News, Top Stories
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Maybe the Wal-Mart approach is easier

What will the future have in store for the global automotive powers? Downsizing to six major companies? Or scaling marketing programs for Wal-Mart-style selling? Well, those are interesting thoughts from Fiat Group CEO Sergio Marchionne as revealed in a recent Q&A Automotive News interview. “Maybe I am completely wrong, but today my gut instinct is to be truly Draconian,” he said in a lengthy report. “In the next 24 months, as far as mass-producers are concerned, we’re going to end up with one American house, one German, of size; one European-Japanese, probably with a significant extension in the U.S.; one in Japan; one in China and one other potential European player.” It’s not a comforting thought for the Big 3, which undoubtedly will be seeking another government bailout around March. Things aren’t that robust at Toyota, either, which announced its first major loss since 1938. “The Wal-Marts of the automotive world, the mass-producers, which is what we are, have to agree there is a new business model required to run our shops,” Marchionne continued. “It cannot continue as it did in the past. Independence in this business is no longer sustainable. “The problem with car guys is that they always thought they were at the upper end of the food chain and, unfortunately, we are all sitting at the bottom. The world has told us so.” The trip along the once-prosperous highway in the 1980s reached a fork. The Big 3 chose the high road of trucks and SUVs while Japan took the lower, economical route. American executives at the time felt they couldn’t make much money with smaller cars. Actually, in 2000, Ford set up a team to design an array of small, fuel-efficient cars to compete with the Japanese. It didn’t get far because no one could figure out how to make money on low-priced compacts with the company’s high labor costs. The obligation for all industry players, according to Marchionne, is to ask: How do I deal with the next 20 years? How do I position my business in an industry that needs to be cleaned up? Keeping within the shopper mood, he said he was referring to the difference between being a Wal-Mart store and Neiman Marcus. “Ferrari can be Neiman Marcus; can Maserati and Porsche?” he added.  GM and Volkswagen are the major players. Under GM’s tent are Chevrolet, GMC, Pontiac, Buick, Cadillac, Saturn, Opel, Vauxhall, Holden, Saab and Hummer. Volkswagen operates with VW, Skoda, Seat, Audi, Lamborghini and Bentley. The latter three aren’t cheap toys. Possibly, the critics were right in stating that the Big 3 leaders were slow to take on unions, failed to invest enough in new products, ceded the car market to the Japanese and were ill-prepared for the inevitable rise in gas prices that would make their trucks and SUVs hard-sell items. *** El Cajon native Jimmie Johnson may have scored a record-tying third straight NASCAR championship, but it wasn’t enough to sway voters at the annual American Auto Racing Writers and Broadcasters All-America banquet in Ontario. Instead, drag racing’s Tony Schumacher received the most votes to earn the prestigious Jerry Titus Award, emblematic as the sport’s Driver of the Year. Schumacher, of Long Grove, Ill., won his fifth straight NHRA top fuel championship in 2008 on the strength of 15 victories. On Sept. 14, he surpassed Joe Amato as the winningest driver in NHRA Top Fuel history with an astonishing 53 career wins. 

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