Lutz: No Carmaker Can Survive 11m P.a. Market

Robert Farago
by Robert Farago
lutz no carmaker can survive 11m p a market
“To dial the industry back to a point where it’s viable at 11m is going to be hard – though we’re going to try,” GM Car Czar Bob Lutz promised at the don’t call it the Detroit Auto Show [via just-auto, sub]. “But there’s a question as to whether any car company in the world can survive on an 11m market for a sustained period of time. If it continues I would imagine you’d see massive consolidation in the industry, massive plant shutdowns, massive layoffs and much smaller product programmes.” Needless to say, Maximum Bob doesn’t like that idea one bit. OK, well, a little. “A better proposal is not to get it back up to 17.5m because on a sustained basis you could argue that was an unrealistic number with a financial and housing ‘bubble’ effect,” Lutz said, taking no responsibility for helping to create that self-same bubble. Anyway, thatleaves us… “I don’t think it’s unreasonable to expect an industry level of 13 or 14m – with the restructuring we’re undergoing, that’s going to be OK.” When asked if that was a PR-oriented asessement or a promise to stay away from the federal bailout buffet, Maximum Bob showed NFL-quality broken field running. “Talk to Rick Wagoner- I don’t do money,” Lutz demurred. “I do product development – I only spend it.” How great is that?

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  • Windswords Windswords on Jan 13, 2009

    wsn: "Auto sales have been down by 30% and the combined market share of GM and Chrysler is 30%. So, everyone will be back to normal after they are gone." No, no, no WSN. You got the script wrong. The script is when CHRYSLER goes out of business "everyone (GM) will be back to normal". Even though Chrysler's market share split between the two remaining domestics is not enough to make GM viable without the restructuring the "best and brightest" say needs to happen. This script of course assumes that ALL of Chrysler's sales (last year, 1,450,000+) go to GM and Ford, which they won't. A significant amount will go to Toyota, Honda, Nissan, Kia, Hyundai, etc. So the "dead cat bounce" will be minimal. Of course GM going under would allow everyone, including Chrysler to be viable but those here just can't seem to wrap their brains around a world without GM like they can a world without Chrysler. Go figure.

  • Menno Menno on Jan 13, 2009

    Imagine a 4 million per year new car market. As I've mentioned before, that's the equivalent of what happened in the US between 1929 and 1932. The market cratered to ONE FOURTH of it's pre-depression level. How many car companies would survive THAT scenario? I'll guess - in the US market - only a handful. Toyota (certainly not Scion maybe not Lexus Div). Honda (probably not Acura Div). Hyundai-Kia (perhaps only as Hyundai, though). Ford - MAYBE - if GM and Chrysler collapse soon enough to allow Ford to soak up some of the "US cars only" buyers (of course, these same folks conveniently "forget" / "don't notice" that many of Ford's products for the US are built in Canada and Mexico, ditto Chrysler, and many GM products are from Canada, Mexico and even South Korea) One of my colleagues even went so far to take note of that fact, then change his story of "only buying US" to "where the HQ is". Sad, eh? So I replied that Honda was sick of Japan Inc and rumors had it that they might be moving to the US. He was speechless...

  • Akatsuki Akatsuki on Jan 13, 2009

    I agree with thoots. Lutz is a moron and the ultimate hype machine with nothing to back it up. I think we should just give all that bailout money to Ford which could at least responsibly use the money. As for comparing to the Z or the other sports cars, you get to play in that sandbox when your core products are solid. Sure there is room for a bit of sportiness... look at Mazda who has sold based on that rep plus good looks (new 3 with braces not included).

  • Thoots Thoots on Jan 13, 2009

    OK, this has passed along to the back pages, but I'll go ahead and reply to my replies, if anyone wanders back here to see them..... James2 : Even though it doesn’t make a “V8 musclecar” even Toyota feels the irrational urge to burn rubber occasionally, witness the IS-F and on/off LS-A supercar. They think throwing cubic money at NASCRAP and F1 ($400 million per annum! Zero wins!!) will help build credibility as a maker of sporty cars. Yes, but the IS-F is mainly one engineer dropping a V8 engine into an existing vehicle. It's "budget dust" compared to the dough it has taken to bring Camaro and Challenger and such to the market. LS-A is just a few more specks of that dust -- a few prototypes. "Winning" in F1 is a tough nut to crack. The top few teams are so entrenched that they've won virtually every race, for decades. At the least, Toyota has improved yearly for its efforts -- look at Honda to see what "failure" is all about, as its F1 team truly embarrased the company. Toyota in NASCAR is really a strange development. There's certainly no "research and development" to be performed there -- it's really just "advertising" and not anything else. And with all of the Big 3 Toyota Haters going ballistic, plenty of the publicity has been negative. In the end, though, it sure has created a ton of publicity! As an aside here, the really odd duck of motorsports is Honda powering the IRL. In a collapsing economy, this becomes even more nonsensical. Advertising that "they won the Indy 500" seems to be the only thing of value, and the Big 3 Honda Haters aren't any happier with it than they are with Toyota in NASCAR. ....perhaps they were just lucky that Ford stopped caring about the Taurus and let the Camry take over as the #1 seller. Oh, please. That's Big 3 apologism at the extreme. The general history of the Big 3 has been "they ignored 'cars' in their zeal to build more trucks and SUV's" -- meanwhile, the imports just continued to improve and refine their cars. This is what is so wrong with Lutz and the other "geniuses" at the Big 3 -- they just let these vehicles become outdated and mediocre, and didn't do a thing to make them more reliable. Camry and Accord have beat their butts for entirely good reason. What about the $2 billion Toyota arguably burned build the hulking new Tundra and its Texas plant? That doesn’t sound like smart business, does it? Didja read what I wrote in my original message? Something about "building cars that LOTS of people want to buy." Don't forget that the full-size truck segment has always been a huge portion of the consumer vehicle market -- it's very most definitely a segment for which you can build vehicles that LOTS of people want to buy. Toyota certainly found that this market didn't want its previous, smaller "big" trucks, so it needed to enter the full-size truck market with everything it could throw at it. Of course, four-dollar gas and the credit collapse have hurt all truck sales, not just Toyota's. But the segment should continue to move a lot of vehicles over the years to come. Bottom line: rage all you want at the Mustang, Camaro, etc. but if the market was strong, I bet Toyota would be scrambling to resurrect the Supra. In a big, diverse market such as ours, there’s plenty of room for Priora and Mustangs. Umm, well, gosh, but the market was very strong over the past few years, and Toyota didn't lift so much as a finger to resurrect the Supra or the Celica or the MR2 or the 2000GT. But yes, I agree with you that there is room in the market for V8 muscle cars. I'm just saying that the relatively paltry amount of sales to be made with them isn't likely to earn the manufacturers much in the way of profits.