Killing Off Car Maker's Brands

There is a large article in the June issue of Portfolio Magazine on how to save the US car industry. It discusses the problems and potential solutions to reinvigorating the American car makers.

It seems that the former big three, now called the Detroit Three, are stuck in an era when they ruled the industry and had no reason to be innovative. It seems like they have been behind the way in which the industry is moving. It seems that just now are understanding that big SUVs and trucks are hard to sell with gas approaching $4.00 a gallon.

Here is an excerpt from the article:

'How much worse can it get? Try the Dwindling Duo, in which Chrysler is sold to a foreign company—yet again—and smaller versions of G.M. and Ford remain. Or, less likely, the Sole Survivor, in which those two merge out of desperation. The market share the Detroit Three have lost since 2000 is equivalent to a Ford-size company being wiped out. You don’t need higher math to see that such losses aren’t sustainable for long. Another decade like this and the American auto industry could disappear entirely, its factories razed and turned into a lot where people can park all their European- and Asian-made cars.

Yet there is a scenario in which the Detroit companies—at least Ford and G.M.—can emerge somewhat smaller but far stronger. Their size and costs would be based on current realities instead of on pining for the good old days. And their cars would actually be products that people want to buy instead of merely settle for. I’ve been covering the car business for 23 years and have seen corporate crises, ill-conceived acquisitions, boardroom revolts, C.E.O. sackings, and more. Through it all, Detroit’s cycles have been biblical: Prosper, go astray, repent, recover. It’s repentance time now, and there are concrete reasons to believe that the Detroit Three will recover.'

As usual with Portfolio, they have a nice little interactive feature that goes with the story. Below is a screen shot from it, that depicts which brands the article suggests receive the ax.

Source: 'Brands That Should Die', portfolio.com

Unfortunately the auto makers have so many stakeholders and institutional inertia that it will be hard, if not impossible, to make any drastic changes.

Source:
'Who Will Survive?', by Paul Ingrassia, Portfolio Magazine