Facing a harsh truth

Browse pages
Current page

1

Current page

2

Current page

3

Current page

4

Current page

5

Current page

6

Current page

7

Current page

8

Current page

9

Current page

10

Current page

11

Current page

12

Current page

13

Current page

14

Current page

15

Current page

16

Current page

17

Current page

18

Current page

19

Current page

20

Current page

21

Current page

22

Current page

23

Current page

24

Current page

25

Current page

26

Current page

27

Current page

28

Current page

29

Current page

30

Current page

31

Current page

32

Current page

33

Current page

34

Current page

35

Current page

36

Current page

37

Current page

38

Current page

39

Current page

40

Current page

41

Current page

42

Current page

43

Current page

44

Current page

45

Current page

46

Current page

47

Current page

48

Current page

49

Current page

50

Current page

51

Current page

52

Current page

53

Current page

54

Current page

55

Current page

56

Current page

57

Current page

58

Current page

59

Current page

60

Current page

61

Current page

62

Current page

63

Current page

64

Current page

65

Current page

66

Current page

67

Current page

68

Current page

69

Current page

70

Current page

71

Current page

72

Current page

73

Current page

74

Current page

75

Current page

76

Current page

77

Current page

78

Current page

79

Current page

80

Current page

81

Current page

82

Current page

83

Current page

84

Current page

85

Current page

86

Current page

87

Current page

88

Current page

89

Current page

90

Current page

91

Current page

92

Current page

93

Current page

94

Current page

95

Current page

96

Current page

97

Current page

98

Current page

99

Current page

100

Current page

101

Current page

102

Current page

103

Current page

104

Current page

105

Current page

106

Current page

107

Current page

108

Current page

109

Current page

110

Current page

111

Current page

112

Current page

113

Current page

114

Current page

115

Current page

116

Current page

117

Current page

118

Current page

119

Current page

120

Current page

121

Current page

122

Current page

123

Current page

124

Current page

125

Current page

126

Current page

127

Current page

128

Current page

129

Current page

130

Current page

131

Current page

132

Current page

133

Current page

134

Current page

135

Current page

136

Current page

137

Current page

138

Current page

139

Current page

140

Current page

141

Current page

142

Current page

143

Current page

144

Current page

145

Current page

146

Current page

147

Current page

148

Current page

149

Current page

150

Current page

151

Current page

152

Current page

153

Current page

154

Current page

155

Current page

156

Current page

157

Current page

158

Current page

159

Current page

160

Current page

161

Current page

162

Current page

163

Current page

164

Current page

165

Current page

166

Current page

167

Current page

168

Current page

169

Current page

170

Current page

171

Current page

172

Current page

173

Current page

174

Current page

175

Current page

176

Current page

177

Current page

178

Current page

179

Current page

180

Current page

181

Current page

182

At times as bad as these, it is important to keep a level head and, if you are a captain of our rapidly imploding industry, watch very carefully the words that come out of it. You can bet that, now more than ever, any words a senior executive might utter in public have been scrutinised in advance and in forensic detail to make absolutely sure they contain no hint of hyperbole, no suggestion of painting a picture worse than the distinctly unedifying one that now presents itself to us. So here for your perusal is a selection of just a few of these painstakingly thought out, ‘unalarmist’ and entirely considered comments coming out of the industry at the moment.

Volkswagen boss Martin Winterkorn claims “we have never before seen this kind of crisis”, while Toyota vice-president Mitsuo Kinoshita describes the current situation as “an emergency of a magnitude we have never seen before”. Mercedes-Benz boss Dieter Zetsche brings the historical perspective into painfully sharp focus by calling it “the worst crisis since World War Two” while his opposite number at BMW, Norbert Reithofer, feels no need to qualify it. He states simply that we’re looking at “the worst crisis BMW has faced in its history”. Given that BMW very nearly went bust 50 years ago, that’s some statement.

What is chilling about these comments is not the words so much as the companies they are attributed to. If that’s what blue-chip companies like VW, Toyota, Mercedes-Benz and BMW are saying in public, just imagine the conversations going on behind closed doors at Ford, GM and Chrysler right now.

What we know is this: Aston Martin has laid off a third of its workforce, Ford has put Volvo up for sale, General Motors is considering the sale of Saturn, Saab, Pontiac and Hummer, Jaguar/Land-Rover has gone cap in hand to the government and GM’s Rick Wagoner is warning of three million job losses in the US if the Big Three are not bailed out and the American auto industry collapses.

Even the catastrophic sales figures that plunge the industry into ever-deeper depths of despair when they’re published each month fail to reveal the true picture. The numbers tell us of the many companies that are 40, 50 and even 60 per cent down on sales for comparable months last year; what they don’t reveal is the transaction prices for those few new cars that are actually finding homes in the UK. As journalists we have largely anecdotal evidence which is not normally to be relied upon, but as every day turns up stories of large SUVs being sold for less than half price, supercars losing £30,000 the moment they’re driven out of the showroom and the most absurd deals being available on nearly new second-hand luxury saloons, there is undoubtedly truth in there somewhere.

It is tempting to resort to generalisations at a time like this, and revert to the oft-peddled assumption that this is a problem more perceived than real and all that’s happened is that confidence has fled the market. After all, as I write and hopefully as you read, oil is cheap once more, interest rates are on the ground and inflation is falling. Sadly it is not as simple as this. The unappetising fact is that almost all new cars these days are bought on credit, and there is no credit any more.

So what good news is there to brighten the darkness? Well, no one is yet suggesting that the survival of the big well-run German and Japanese companies is under threat: the strength of their balance sheets will get them through in the short and medium term, while the strength of their product will ensure that, when recovery comes, they will be in the vanguard. But even these players must accept that this is no savage but short blip. When the industry emerges blinking into the sunlight once more, it will be smaller, leaner and different in shape. What is happening now will change the cars we drive, our attitudes to them and the way we go about buying them forever.

And what of those companies in less enviable positions, not least the Detroit Three? It must be galling for those working in Ford and GM’s largely very well run and profitable divisions around the world in general, and in Europe in particular, seeing their parents in what some are predicting to be their death throes. The truth is that these companies are the architects of their own downfall. They have presumed the American public would always prefer a mediocre American car to a good Japanese one, and they won’t. They have presumed the world would never change, and it has, while unrealistic deals with unions and pension fund payments have strapped financial millstones around their necks. Of course the unions are now falling over themselves to help because their members have twigged that some job is better than no job, but time – and not very much of it – will tell whether their gestures amount to much more than throwing a cup of warm water on a blazing building. For what it may be worth, I cannot see the US Government letting either Ford or General Motors go to the wall. But Chrysler is by far the smallest and weakest of the trio and the political case for its survival much more shaky.

But if any of them is to survive not just the next few months, but long enough to recover, they must be reborn in a new image. The fact is that with remarkably few exceptions, American cars have been crap for years and those who decided they should be that way had been found out long before the credit crunch and sub-prime crises. So instead of intelligence-insulting gesture politics such as selling their private jets and offering to work for $1 per year, their leaders should take the one step that really might make a difference: step aside and make way for a new breed who can tell the difference between a decent car and a pile of junk.