Speaking at the Automotive News Congress in early January, Dan Akerson, General Motors CEO said, "We cannot take two of America's big three automakers through the acid bath of bankruptcy, to call for huge sacrifices from our suppliers, dealers, investors, employees and retirees and then be content with a small version of the same old industry."
Akerson's seeming call for innovative forward movement is typical of the rebounding American auto industry. Hints of caution linger, however, with most companies sticking to shorter-term strategies that include greater options for flexibility in relation to fickle consumer demand and unpredictable fuel prices.
Currently, General Motors is counting on small cars, specifically the Chevrolet Sonic and Buick Verano, to bring in good profits for the year with an overall goal of improved competitiveness. Both GM and Ford, however, are aware that unionized autoworkers who accepted wage concessions at the height of the industry crisis will be negotiating new contracts during 2011 and will expect to be rewarded.
This sets the stage for some delicate balancing between keeping labor happy but expenses low as new products like the all-electric Chevrolet Volt lead the way into the auto industry of tomorrow. All three American automakers want to capitalize on Toyota's woes after being toppled from its position of unquestioned dominance by a year of disastrous recalls that totaled more than 14 million units worldwide.
At the Detroit auto show, Toyota showed off two additions to the Prius line, a roomier Prius V and a compact Prius C (still a concept) that clearly show the Japanese giant is not ready to roll over and play dead. Toyota has been the unquestioned king of hybrids since the Prius debuted in 1997 and has no plans to lightly surrender its crown. The company is eating a healthy dose of humble pie and emphasizing enhanced safety measures, which could play well with buyers.
In general, however, although aware of concerns about labor and the foreign competition, a sense of optimism has begun to be felt in the U.S. auto industry. That mood was quite evident at the Detroit show which opened on January 15. GM and Ford are now lean and profitable, major companies who were forced to go on a diet and are back in a market that expects to move 1.5 million more cars in 2011 than in 2010.
Buyers are being confronted with an impressive array of sizes, styles, and fuel choices with gas mileage numbers steadily climbing according to federal mandate. Ford has already come back with a 19 percent sales hike over 2009 and General Motors, even in the face of bankruptcy, picked up a 17 percent. The stage is set for excellent numbers this year. If gasoline prices continue to inch toward $4 a gallon as many pundits believe they will, small, fuel-efficient cars should start moving off showroom floors at a steady clip.
General Motors has also done a good job of positioning itself competitively in the China market where auto sales shot up 53 percent in 2009 and continue to climb. Through November of last year, 16.4 million units were sold in China with 18 million total expected by year's end. GM wants as big a slice of that pie as it can possibly grab.
It seems that going into a crisis companies are reluctant to say a problem exists. Coming out the other side, they are equally reluctant to say good times have returned. However, when the history of 2009 and 2010 are written for the auto industry, the crisis may well prove to have been Detroit's salvation. Bloated and over-confident from years of success when they were taken to their knees, the auto giants have come back chastened but wiser and are playing smarter hard ball than we've seen in decades. All in all, 2011 should be a most interesting and profitable year for the American automotive sector.