Interesting Read on Car Companies,2012...

[motordavid]

From today's WSJ; yes, the author is Prez of JD Powers and may not
be at arm's length, but a fairly evenhanded view of those companies
that if they "get it done", are poised for the inevitable recovery. He is
a pretty good writer too, or his staff is, and they had their on line
thesauri open. Worth the 3 min read, imo.
BR, mD

The Auto Industry’s Comeback

• 
  By FINBARR O’NEILL

All the righteous indignation, schadenfreude and wishful thinking about the automotive industry have obscured what is really happening. True, sales are in dire straits, but they’ve actually been in trouble for a long time. The claim that we had a 17 million unit market before the recession was an illusion: Manufacturers resorted to dumping cars with rental fleet companies to absorb underutilized capacity.

The true indicator of health in the automotive market is what is happening at retail. By that measure, the industry has been hurting for nearly a decade. Retail sales in the U.S. fell to 12.8 million units in 2007 from 14.8 million units in 2000. In a seven-year period before this recession we lost the sales equivalent of a large car company.

But the prospect of oblivion has a curious way of focusing the mind. The right steps are now being taken. For example, auto makers are paring down to become profitable in a 10 million unit market. So if the projected 15 million unit in 2012 becomes a reality, then the opportunity to return to profitability is there.

How will we know who is doing the right things? Belief in shibboleths such as the inevitable dominance of the Japanese manufacturers may be tempting, but it is not based on facts on the ground. Toyota is losing money and has encountered many of the same issues as its U.S. rivals: quality snafus, cost overruns and sales declines.

The future of any car company is built on the relative success of its new cars. A company only gets to launch a new vehicle once. Between now and 2014 there will be approximately 250 launches of either all-new or significantly redesigned new cars in the U.S.

What constitutes a successful launch? We need to look at five things.
First, we must focus on the true indicators of how well a launch is going. Sales reports are not enough. What are the cars actually selling for at retail? Do the vehicles require incentives? Are dealers earning a profit? How are the residual values holding?

Second, the company must deliver a high-quality product if sales are to be sustained. Getting things right from the start has become the price of admission. Even the most subtle mistakes—like user-unfriendly technology—can kill off an otherwise promising product.

Third, the vehicle must have appeal. Owner delight with the design, content, layout and performance can be objectively measured. Attributes such as drivability, instrument panel layout can make the buyer an advocate and give the launch momentum.

Fourth, the products must have durability and reliability. It takes about three years to get a good reading on how the consumer feels about these two qualities. But we do know there is a direct relationship between a brand’s reputation for reliability and durability and its performance. So part of the assessment should include a look at the reputation of the brand. Where the reputation is strong, the launch gets a boost.

Fifth, we should remember that while manufacturers launch cars, dealers sell them. The dealer’s willingness to put his best sales people on the new product, advertise vigorously, finance, carry and merchandise (a fancy word for trick out) the requisite inventory is all a reflection of the dealer’s confidence in the franchise. Brands that enjoy a high level of dealer confidence and exclusive dealership facilities have a more effective channel for launching a new vehicle.

Can the industry bounce back? J.D. Power believes it can and will.

The demographics are favorable. American motorists are scrapping 10 million to 12 million vehicles each year. There are nearly six million buyers who have been kept out of the market because they owe more on their vehicles than they’re worth. There are millions of consumers who bought the “near new” cars that the daily rental fleets quickly turned over at auction. Now, daily rental companies are holding their inventory much longer (30,000 miles plus), so the “near new” customer will be back in the new car market.

If we are right that the market will be at 15 million units by 2012, the companies that have sized their expense structure anticipating a 10 million unit market should do very well. These companies have the potential for a new golden age. Those who don’t will likely wind up on the automotive rust heap.
—Mr. O’Neill is president of J.D. Power and Associates.

O’Neill: Auto Industry Can Make a Comeback - WSJ.com

[AzNMpower32]

Neat analysis. I agree with many points; we're producing & importing too many cars and then dumping into fleet sales. As a whole, we need to be more cognisant of the true purpose of a vehicle itself. It's not a white good (appliance) that you buy every couple years and thus, it shouldn't be designed and sold like one.

Certain car companies already show the traits above. The reason my family likes BMWs so much is not because we like the brand name or because it comes with a 4 year Free Maintenance. It's because BMW makes a good car that's equally competent tooling around town as it is to drive for a long trip. There are other companies out there that do the same, and they're the ones that should succeed in the long term.