Study Says: Japan Troubles And Sub-Prime Consumers Golden Opportunity For U.S. Car Industry
A study of A.T. Kearney Management Consultants (for what such a study is worth) foresees that 13.2 million cars will be sold in the U.S. this year. It could be more, but the consultants reckon that “in the aftermath of the earthquake and tsunami, parts shortages will impact 2011 U.S. new vehicle sales by 200,000 units.” In the disaster, A.T. Kearney sees a golden opportunity: “Given what we know about production downtime, in 2011 we see 328,000 U.S. customers of the affected brands up for grabs, and more if the time to wait for a particular brand begins to extend.”
Dan Cheng, head of A.T. Kearney’s American automotive practice, told Reuters that GM, Ford, Chrysler and Hyundai “stand to capture most of the consumers who defect from the Japanese brands.” Now that’s one revelation that must have required extensive research. (In related news, shares of Hyundai and Kia jumped today “on speculation May vehicle sales will be strong,” Bloomberg says.)
Kearney sees a much bigger prize out there: “15 million new sub-prime consumers.” Of those, approximately 530,000 car customers will not qualify for a loan. “This represents a $3.2 billion contribution opportunity for the auto OEMs,” the study says and hopes that “auto lenders who understand that lending has more nuance to it than a FICO score” will jump at this golden opportunity.
Circle the vultures!
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Do GM or Ford have that much excess capacity and parts availability to fill the gap?
This sub-prime lending thing sounds like an excellent idea! I wonder why nobody's thought of it before?
If I were car companies in today's marketplace, I would eschew all the sub-prime "buyers" and let someone else have the hassles. Why? Because some friends of mine - who are in their mid 50's and who've never bought a new car - ended up with a new car because used car prices are "horrendously high" right now. If you can sell every car you can build to people with decent credit, why even bother going after the sub-primers? Besides which, didn't Mitsubishi show everyone how WONDERFUL the sub-prime market was and nearly go bankrupt for their trouble? (Answer: Yes)