Affairs

Automotive

2010: A look under the bonnet— London

Preface

At the beginning of 2009 pretty much every industry commentator was predicting auto-armageddon for the world’s car makers, but a combination of gadzillions of government dollars and wildly successful cash for clunkers programmes has worked miracles for the American, European and Japanese automotive industries.

Business

27 December 2009

At the beginning of 2009 pretty much every industry commentator was predicting auto-armageddon for the world’s car makers, but a combination of gadzillions of government dollars and wildly successful cash for clunkers programmes has worked miracles for the American, European and Japanese automotive industries.

In the US, Toyota’s US plants are running at full capacity and taking on another 800 workers; VW is riding high after winning a mighty corporate arm wrestling contest with Porsche; Ford is thriving; and General Motors fighting, if not terribly fit. Sadly, Chrysler is still making cars (we can’t have it all, I suppose).

The big question for 2010 though is, to what extent did all that taxpayers’ money distort the real demand picture? “2010 is going to be a crisis year,” says Dr Peter Wells, a leading industry analyst from the Cardiff Business School. “There are major concerns about sustainability once these cash for clunkers schemes stop. Really, they were a waste of money. They just kept the old industry going for another year.”

As a result 2010 is likely to bring an almighty hangover – at least in the West and Japan. The schemes will have sucked virtually all demand from a market which will now have to face up to continued economic austerity, increasing environmental pressures and serious competition from India and China.

“They would have been better off investing in new technology,” continues Wells. “Peugeot-Citroën is on a knife edge. And you are going to see a kind of death by a thousand cuts in companies such as Opel.” Of the old guard, only a handful of mega-corporations – such as VW, Toyota and Ford – will be left, as the Chinese, who out-produced the Americans for the first time this year making 13 million cars, and Indians continue to expand to western markets with cars that you might even actually want to buy.

Only one hope remains: the electric car. Biofuels were scuppered by their impact on food supply, and hydrogen programmes are being quietly sidelined: right now every manufacturer is investing in plug-in hybrids or fully electric vehicles.

GM will be aiming to make amends for having “killed the electric car” back in 1999 with the launch of its ambitious Volt and Ampera ranges in 2010. Meanwhile Toyota will be trialling a plug-in hybrid Prius. But the Chinese are ahead of the game here too: Build Your Dream (BYD – seriously, that’s the company’s name) is heading this way with a proper electric car. The technology is improving fast but infrastructure challenges remain. If the future really is electric, we are going to need a whole new way to buy, service and repair cars.

Meanwhile, I will be lighting a candle for Saab, currently being cannibalised by the Chinese, and will not last long in this world I fear. If the reaper crane does finally descend to lift it to the great scrapyard in the sky, then perhaps Saab might finally shock the Swedes into doing something more proactive to stop the same thing happening to Volvo.

And if you are looking for a totem of automotive resurrection, how about Michael Schumacher back on an F1 grid? Stranger things have happened.

Monocle 24

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