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Originally Posted by drudis:
Ford and GM will never have the lion's share of the market, but they wont go under either. Smaller, fewer millions of cars sold, more limited selection (Ford wont make Freestar).
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I agree, Drudis, and I voted that way.
The days of
any domestic car company capturing nearly a third of the U.S. new-car market is long gone. Today, if a domestic car company can hold a 20% market share, they are doing pretty well. Actually, domestic auto manufacturers new-car market share has been dropping for some time, so Ford is hardly alone in it's troubles. Ford currently has a 17% market share which is predicted to drop in 2007. That means many millions less income from sales and a proportionate drop in Ford's profits, as expenses continue to rise every year. Toyota currently holds about a 15% new-car market share in the U.S. and that share is expected to rise slightly in 2007. Honda's U.S. new-car market share hovers near 10%. Apparently, any American car-buyer's aversion or hesitancy regarding Japanese cars has now vanished. Excellent build quality, good selection, high value retention and a fair base price, as well as a reputation for getting high gas mileage, will do that. It certainly isn't your father's domestic auto market, any more.
Meanwhile, as reality sets in at the corporate offices, decades of union contracts that were negotiated and signed by Ford execs on the confident (and short-sighted) assumption that 'The Big Three' would
always have 95% of the U.S. new-car market - and the resulting profits - have be jettisoned - at a cost of billions to Ford, as well as GM and Chrysler. This will change the scope and 'generosity' of future contracts with the UAW and Ford, as well as those negotiated by GM and the restructured
DaimlerChrysler AG.
Oh, salaries may stay fairly high to attract and motivate good workers but the days of a basically low-skilled auto worker making three times what he would have made in another job will be over. Auxiliary benefits (health and other insurance, pensions, etc) will also be cut drastically and if they have a brain, the union bigwigs will look at the company's (anemic) balance sheet, stop whining about executive compensation (which is really a stockholder issue and just a straw-man to justify higher wage/benefit demands from the unions) and take a reasonable deal for their members. I believe that a union strike in the near future could bankrupt Ford, which would be unfortunate for everyone concerned. I trust that won't happen.
Meanwhile, expect the cost of a new V-8 Mustang to go into the $30,000. range - while quality may or may not improve. We'll see. One can hope, anyway.
