Tuesday, February 3, 2009

U.S. auto industry still refuses to make changes

Auto sales figures released Tuesday demonstrate the effect of the U.S. automobile industry's worsening failure to innovate combined with a weakening general economy. Sales fell 55 percent for Chrysler, 49 percent for General Motors, nearly 40 percent for Ford and 32 percent for Toyota, according to the New York Times. It's more than obvious that things are going to have to change for the major automakers -- how about better small cars, better gas mileage, lower prices? Don't count on it. A statement Tuesday by a top Chysler executive shows just how out of touch the industry is. “These are turbulent, uncharted times in our industry,” said James E. Press, a Chrysler vice chairman, according to the Times. “We’ve got to get our arms around the fact that this is probably normal.” Normal? Automakers usually expect to sell 17 million vehicles a year, this year sales projections are under 10 million. Plunging vehicle fleet sales -- bulk deliveries to car rental companies and large businesses -- exacerbate the problem. So are the automakers trying to make their cars more desirable to justify the billions in bailout dollars they are receiving from the government? No, their response is to cut production and buy out employees to lower costs in the long run but vastly increase them in the short run, with the taxpayers picking up the tab. It could be time to abandon the Big 3 or 4 and start seriously backing the new automakers -- like Tesla, Fisker and others -- that are trying to recharge the industry.

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