No Quick Fix for Automakers

If I’ve learned one thing in my time in past companies, one step away from the executive suite — and now interacting with senior leaders at client companies — is that until you deal with all the moving parts as you move from strategy to tactics yourself, there is no way you can understand.

It’s simple to be a Monday morning quarterback and analyze how things could’ve been done better in the past. It’s even easier to be a blogger putting out a post like this with a bunch of high level recommendations. I love ya Scoble, but you haven’t managed anything bigger than a discount camera store and I’m guessing you haven’t done a major analysis of the automotive value chain, so many who have will undoubtedly think your post is kinda cute.

Like Scoble, my last post was a personal rant about the ‘bailout’ since there is something fundamentally wrong with the automotive business, and is one that certainly needs a complete restructuring (which, to be fair to Scoble, was one of his suggestions) and this overhaul is exactly what a bankruptcy would create.

Few of us can appreciate the magnitude of the problems the big three automakers are facing and a reorganization isn’t going to fix overwhelming systemic problems. Combined with the lead-time necessary to design a new car platform, coordinate and orchestrate the entire supply chain, deliver product through the channel, create a global campaign to launch it and put the car into production, and you have a multi-year change needed at a time when capital isn’t flowing and credit markets remain paralyzed.

Coupled with all of those challenges is the sheer number of countries and companies in the automobile manufacturing game. This Wikipedia article about the automobile industry says this:

In 2007, more than 73 million motor vehicles, including cars and commercial vehicles were produced worldwide.

In 2007, a total of 71.9 million new automobiles were sold worldwide: 22.9 million in Europe, 21.4 million in Asia-Pacific, 19.4 million in USA and Canada, 4.4 million in Latin America, 2.4 million in the Middle East and 1.4 million in Africa. The markets in North America and Japan were stagnant, while those in South America and Asia grew strongly. Of the major markets, Russia, Brazil, India and China saw the most rapid growth.

About 250 million vehicles are in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007; they burn over 260 billion gallons of gasoline and diesel fuel yearly. The numbers are increasing rapidly, especially in China and India.

Someone is buying all of those cars, and to think “I’m going to just buy American” (or if you’re Chinese, “I’m not buying a Buick, but rather a China-made car” is ludicrous. It’s a global playing field and people will act in their own self-interest. For many, it’s a sin to act ‘un-American’ by buying “one of them foreign vee-hick-ells‘, but motivations for vehicle choice is something the automakers are pretty adept at determining, and the strategic choices they’re forced to make (again, years out from actually delivering a vehicle), is something I can’t appreciate since I haven’t been near any automotive executive suite and had to make the tough, strategic choices.

I’ll admit to feeling a twinge of sadness, however, when I remember a time when America made a lot of stuff and ruled the automotive world, and when a parade celebrating General Motors selling the 50 Millionth vehicle was cause for a parade:

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About Steve Borsch

Strategist. Learner. Idea Guy. Salesman. Connector of Dots. Friend. Husband & Dad. CEO. Janitor. More here.

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