Auto Industry Meltdown, a Consumer Analysis

This year the auto industry has suffered a massive meltdown and crisis, which has caused many ripple effects. The recent slump in economy has done well to shine a bright light on all of the flaws that were previously hidden in the dark. For most people now, buying a new car is the last thing one their mind. That is something that the top 3 automakers never took into consideration of ever happening. With such economic uncertainty, not very many people would even like to consider the idea of another monthly payment. Most Americans would like to keep their current mode of transportation and at best keep it in good shape.

The condition of the big three automakers at this point, in my opinion, is just a reflection of their attitudes. A serious economic downturn did not prompt any of them to consider taking action on any new or practical ideas. The time for action to prevent the current situation has obviously come and passed and I agree with Congress's concern that a bailout would not produce positive results at this point. Up until this point, none of the automakers have taken into consideration the state of the economy, the needs of the consumer, or the practical solutions that have always been present.

In the years preceding this "crisis" the writing has been on the wall for over a decade that this would come about. The hay day's the automakers had from the 1950's through the 1980's were bound to come to a stop if no one adjusted the way business was done. A car or truck is a major investment that does not need replaced every year or two. Even in the 1980's, country singer-songwriter Merle Haggard said "I wish a Ford and a Chevy would still last 10 years like they should" in one of his hit songs. If you look around your hometown, you will probably note that the used lots are overflowing. Throughout the 1990's demand was high, and was met, and now the demand is nowhere near what it was even a few years ago. That demand can be more easily met by consumer's cost effective measures such as a solid used vehicle. Even with the "Certified Used" programs offered by all three, most consumers have found that cheaper used vehicles, even from the classifieds were a better choice price wise.

After the major economic downturn, the fuel price skyrocketing and all of the other things in the last few years, Americans are becoming wiser. Most people now, myself included, would rather keep their current paid off car, in what ever shape it's in, and just rent a new one if they plan on taking a long trip. That type of strategy has dampened sales for all automakers quite a bit. Humans are creatures of habit, and after we broke the habit of driving just to drive when fuel went through the roof, Americans have new habits now, which don't involve driving as much. That has also put a big dent in the demand. All of this leading up until now has many people with the attitude of "If I'm not going far, why do I need a new car?" which is a legitimate question to ask. The answer to the question is simply you don't and that's not something they want to hear.

Over production has been a problem with American auto companies since their beginnings and has never been addressed. Simply put in terms of practicality, a coupe is a coupe, a sedan is a sedan, and a pick up is a pick up. GM has been the worst offender of the group. a Buick, a Chevrolet, an Oldsmobile, a Pontiac, a Cadillac, all do the same thing. To me, it would make more sense to just make Chevrolet for instance and produce a few varying models instead of 30 cars a year that all do the same thing. Producing millions of cars each year is a wasteful concept that has never been addressed. Even last year's models are already filling the used lots as fast as the trucks can haul them in. This has been done for so long now, that there is no demand for the next years how ever many million. However, that fact hasn't stopped production of them!

It has been said many times in the past "If you can make something, someone else can improve on it" and that is exactly what has happened with the big three. Regardless of the vehicle's age, aftermarket companies make so many better replacement and improvement parts that it's unreal. There seems to be more demand now in resurrecting an old Junker and restoring it to like new condition than buying something new off the lot. It seems as though the big three would have better luck simply offering newly produced older models that were popular and liked instead of reinventing the wheel every single year for decades. Many aftermarket and replacement parts markets are tough competition for them and that was never considered in the business plan either.

The sad truth of the matter is that right now, things are tough all over. I do find the prospect of lay offs and job losses serious, however autoworkers that think they are immune from the economy are not wise. Workers in every industry, white collar, and blue collar are all facing problems and are looking for new work. I don't understand the attitude that the auto industry would be any different. I hardly think that keeping up production with no demand just to keep people working is a good strategy. I feel as though that's how they got where they did, and with no care or concern for the rest of working class Americans. For cities that rely on Ford, GM, or Chrysler as their entire budget I think they need a wake up call as well.

I know that I may sound harsh, however I in no way want any of the big three auto makers to be gone. I do however think that it's time to dramatically reinvent the industry with a more common sense, consumer friendly approach to things. To be honest, the only way I would ever buy a new car again is if things were different and I believe that many people feel the same way. The days of frivolously going $25,000 in debt for most people are over. Americans are developing a very bad taste for credit, myself included, and don't wish to spend their lives working over time for a "status symbol" such as a Lincoln or Cadillac. They also don't want to face the uncertainty of job security and how or if they will pay off their new car. If the big three produced more affordable, long lasting, practical vehicles that were bigger than a Cracker Jack box I think they would be ok.

As to how this situation is going to go, I have no clue. I hope that a major change takes place and things evolve for the better of everyone involved. I think they will have to take action on some drastic new consumer based ideas, price cuts, and restructuring but it's not hopeless. At some point in a few years from now, I would like to take pride and enjoy a Chevrolet or Ford that was as good as some of the older models that I like. I would be really excited if the big three began working on fresh ideas that are a blend of new and old, even with a twist! Hopefully, we will see this happen soon.

SOURCES

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