Tweet

Into the Sunset - The Past, Present, and Future of the American Auto Industry

Guest post by: Matt Harrison

Article Overview: Despite the attempt of the American car lobby to convince us otherwise, the laws of the universe apply to them as much as everyone else. The evolutionary selection process of the marketplace must be heeded. To survive, Detroit doesn't need the sympathy of patriotic Americans or the fiscal coddling of Congress. They just need to make good cars again.

Into the Sunset - The Past, Present, and Future of the American Auto Industry

Once upon a time, American automobiles were the pinnacle of excellence. Whether one was seeking performance, luxury or convenience, the best choice was to buy domestic. An example of such innovation was the 1957 Cadillac Eldorado Brougham: a 345 horsepower luxury sedan with air ride suspension, automatic transmission, power windows, power doors, six-way power seats, power brakes, air conditioning, radio, cruise control, memory seats and electric clocks in the back seats. Its industry-first quad headlights were capable of automatically dimming so they wouldn't blind passerbys on a mountain incline as well as automatically turning on at night. All this in 1957.

Today, however, the domestic options are far inferior. As evidenced by the Big Three pathetically pleading for taxpayer bailouts, the American automotive industry is largely in shambles. Faced with sagging profits, spiraling costs and cutthroat foreign competition, American car companies seem to face a very dark future.

Why the dim outlook? American car companies face the unfortunately predicament of peddling a product that most people just don't want. In contrast to their glorious past, U.S. automakers now excrete a soulless amalgam of inferior-quality vehicles, and in most relevant categories are currently being flogged by Japanese and European competition.

For that reason, American buyers have demonstrated a strong inclination toward foreign automakers, whose cars happen to provide more useful technologies. This competition, while it certainly causes some heartburn in Motor City, gives fantastic options to the consumer: from the reliability and usability of Honda Accords and Toyota Camrys, to the unmatched performance capabilities of the Nissan GT-R or BMW M5, just to name a few.

But there are glimmers of hope in the landscape of American engineering. The Corvette Z06, Cadillac CTS-V, and the Saleen S7 are some examples of dominant American vehicles that remain not only competitive, but actually turn heads. These shining examples arose, as one might expect, not because of protectionist support, but rather competitive Yankee innovation.

For example, Cadillac's new CTS-V was developed and tuned on the Nurburgring, a German race track. The Nurburgring had long been the home testing ground for BMW's M-division sports cars, a fact which BMW smugly argued, contributed to the Bavarian company's competitive advantage. But Cadillac wised up and went to Germany to engage in extensive testing and modification of their new sports sedan on the 'Ring. After it was released, the CTS-V achieved a Nurburgring lap time that beat BMW's iconic sports car, the (much more expensive) M5.

If the Big Three want to stay in the game, they need to step up their performance. It's time to demolish the Studebaker factories in Flint, Michigan, and replace them with factories capable of building twenty-first century vehicles. Of course 1950s-era factories are boarded up. That's like complaining about the lack of demand for a telegraph repair business.

Nostalgia is understandable, but it's not cause for inaction or conscious stagnation. In Downtown Los Angeles, an area experiencing the type of urban renaissance that defines American federalism at its best, its once-common ghost towns are slowly disappearing. One can still visit the 1930s-era hotels and factories that once stood here. But only the buildings remain, for in them are gorgeous renovated luxury lofts, housing lawyers and artists alike, generating millions for the local economy and revitalizing the downtown neighborhood.

As the Big Three undergo distress-induced restructuring, their few profitable technologies will find buyers. The few glimmers of hope in Detroit-the aforementioned CTS-V, or the concept plug-in Chevy Volt-do not justify the rescue of the entire corporate behemoth.

For example, my personal bank, Washington Mutual, was a casualty of the credit crunch of 2008, thanks to its toxic mortgage portfolio. But since WaMu has above-average customer service, free checking and other convenient banking features, it was quickly purchased by the well-capitalized JPMorgan Chase. As a customer, I didn't notice a single change except for a letter telling me I'd be receiving a new JPMorgan Chase-branded debit card in the mail; even my account numbers and online banking logins stayed the same.

Just as JP Morgan's bank customers preserved their WaMu account features after bankruptcy, the Big Three's corporate successors have every incentive to preserve the great ideas (if any) that are left in the Detroit Rust Belt.

For an example of automotive innovation to which Detroit should aspire, the Indian firm Tata Motors has produced the world's cheapest car, costing a mere $2,500. Tata did not achieve that feat with government subsidies, but rather by utilizing cutting-edge virtual design technology and global teams to harness the most innovative ideas in the industry. If an Indian firm can arise from nowhere to build the world's cheapest car, then certainly Detroit can use its decades of experience to build quality vehicles again.

Despite the attempt of the American car lobby to convince us otherwise, the laws of the universe apply to them as much as everyone else. The evolutionary selection process of the marketplace must be heeded. To survive, Detroit doesn't need the sympathy of patriotic Americans or the fiscal coddling of Congress. They just need to make good cars again.

Related Articles
  Leaders knows the value of present.
  Use Your Past, Future and Present to Succeed
  PAST, PRESENT AND FUTURE TENSE
  What If?
  Being FULLY PRESENT to Life
  Right Now
  Will the Ghost of Harold Kutner Still Haunt the Corridors of the New GM? (Commentary)
  Bad Credit Auto Loans - Proper Solution for Your Online Car Financing
  Business is an Art Form
  Independent Consulting Tips - 3 Steps to Clearly Defining Your Target Market
  Now is the only time that matters
  LEADERS: NOT THE PAST CONSCIOUS BUT FOCUS ON FUTURE
  Auto Stocks In The New World
  Ode To Summer
  Auto dealing franchises
  Automobile Sales Training
  You are Priceless
  Are You an ‘IN’ or ‘OUT’ Leader?
  Stress Buster! Live in the moment.
  Wheelchair Ramps to Help you Succeed

Article Tags: american auto industry, american car, evolutionary selection, matt harrison
Referred by: http://www.westwindcos.com



Related Forum Posts
Re: Welcome New Moderators in Addition to Our Fine Team! - Hello everyone, and Thanks for the introduction Ringo! This is going to be a great experience for me and for everyone in the community. I hope to learn a lot from you and I know there is something I can share with all of you. Past, Present, Future. Before I started my own business I worked in the north Canadian oilfields drilling for natural gas. I worked long hard hours and spent a month at a time away from home. It's when I started to burn out that I realized that there is more to it than wasting my life, secluded away from civilization and the people I cared for most. A friend of mine introduced me to a business opportunity which not only offered me the chance to fire my boss and walk away from a less than perfect lifestyle but it gave me the chance to make an income that was more than sufficient to support me and my fiance. I pounced on the opportunity like a cat on a mouse. Since then I have been working from home helping others break away from their "less than perfect situation" by mentoring them in the ways of marketing. I will continue on this path teaching, helping and coaching until I'm to old to use a computer. I feel honored to have this opportunity to share and grow with the community. I look forward to talking to you all. Dallas.
How to valuate a business - Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out: How Northern Crown Capital Valuates a Business 2008 Financial Projections Earnings Before Tax $5,865,000 Tax Rate 42% Taxes $2,463,300 Net Earnings $3,401,700 Amount Seeking to Raise Today $3,500,000 Discounted Value of Future Opportunity, 5 Years Out 2008 P/E Ratio 15 Value of Company in 2008 $51,025,500 Discount Rate Applied 30% Year 2008 $51,025,500 Year 2007 $35,717,850 Year 2006 $25,002,495 Year 2005 $17,501,747 Year 2004 $12,251,223 Value of Company at Investment in 2003 $12,251,223 Less: Investment Amount $3,500,000 Present Value $8,751,223 Discount for Risk & Private Company 40% Less: Discount for Risk & Private Company $3,500,489 Private Company Value $5,250,734 Present Value (What the Owner Keeps) $5,250,734 60.00% Financing (What the Investor Gets) $3,500,000 40.00% Total $8,750,734 100.00% I hope this helps!
Immigrant entrepreneurs - It's smart to make them have to have a net worth of $300,000 before they can come into the country and some previous experience as an entrepreneur. Past performance is a good indicator of future success.
Future Financial Corporation - I've never heard of Future Financial Corporation is this a new company?
Re: Partner with Sony Pictures.Coca-Cola and Toyota - I've truly always been amazed by small businesses who have big name company's listed on their websites with whom they have done work for or partnered in the Past. Has anyone on the Forum has such a partnership with large organizations or Brand name companies? Would you mind sharing how you were able to set up the partnership without giving away names of people you work with?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

What Type of Business Should I Start?

Selling On Ebay The Good The Bad And The Ugly

Hypotheticals, Scenarios and Foresight

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.