Over the last few years, there has been a significant shift in the automotive industry, and its big three superstars Ford Motor Company, General Motors (GM), and Chrysler. These three major auto retailers have hit a financially devastating pothole that has seemed to not then out quite yet. GM, Ford, and Chrysler have been the big men on campus for what may seem as forever within the halls of the auto production. Their sky-high sales and stock ratings are now a thing of the past and have come to an abrupt stop after the start of the recession. The recession has put a heavy damper on the Big 3’s sales and has substantially strained the financial capabilities, forcing GM to let go roughly 10,000 workers in the U.S and Canada combined, with Ford and Chrysler the following suit.
General Motors downward stock trends from December 2007 to November 2008 in the New York Stock Exchange (see below)
Ford Motor Company stock trends on the New York Stock Exchange (NYSE) see below
Sales have dropped in such a harsh manner that Ford, GM, and Chrysler have joined together with Ron Gettelfinger (President of the United Auto Workers) to plead for their own bailout from the government. It has been said by many that this is has been the worst sales since World War II. In other words, these well-known companies are on the verge of either bankruptcy or higher layoff figures.
Along with the devastating blow from the recession, another notable fact about domestic dealers against imports is the fact domestic dealers like the big 3 cannot really sell their vehicles in other countries besides North America because of the sheer size of the vehicles they sell. Whereas the foreign import brands have the ability to sell their products in their own countries and also in foreign markets while still making a profit. Import brands such as Toyota and Nissan have become the forerunners within the auto industry, and have begun to leave the original Big 3 behind. This is a fact that is surely very sobering to the North American auto producers. It looks like the there has been a dramatic change in supremacy in the auto industry, having the tables turn in favour of import brands and against domestics.
Moreover, as time has passed, the criteria and methods by which consumers buy products (cars especially) have been altered as well. Now because of the recession consumers are more aware of how and what they spend their hard-earned dollars on. Therefore big-ticket items such as a vehicle take great contemplation and meet most if not all of the standards they have. After hearing the thoughts from some members of the public, it has been a sort of consensus on what criteria a vehicle must meet before they commit to placing any money on the table. A car must be reliable, gas conscious, and affordable.
The reliability of a car is an essential criterion that is probably on in the top 5 on most car buyer lists. To have a reliable car takes a sizeable amount of worry out of the driving experience. By not having to think about if a car will break down or fall apart soon. Take Mearle Hodgins for a prime example, with his 1992 Scottsdale Chevrolet 1500 half-tonne truck. Hodgins is a retired from a 20-year managerial position with MSA (Mine Safety Appliances Company). This was a job that had him traveling on a regular basis, sometimes for extended distances. For 17 of those 20 years at MSA, he owned the Chevy truck (made by General Motors). When asked about the longevity of his vehicle he said, “For the 17 or so years I`ve had that truck, besides the routine check-up every few thousand kilometres I haven`t spent any money on repairs or things like that. It has really been the best car I`ve driven, besides my old Corvette” he chuckles.
In addition to the reliability of a vehicle, it must be a gas conscious car, not a guzzler. For 18-year-old high school student Thanuya Mohanathas, this is even more so important because of her extremely busy schedule. She currently owns a Honda CRV, sports utility vehicle. She candidly explained why she decided on her purchase of the CRV instead of another brand or vehicle; “First of all, I need the space because I`m usually the drop off the person of the family and I like to go out with a few friends every now and then. And have you seen how high the prices of gas were a few months ago when I just bought it. I needed something that would get me where I needed to be, on time, and still let me keep some money in my pocket for important things like food” she laughed. Though gas prices have lowered recently, it is still one expense that can be kept at a more desirable rate for a driver.
Furthermore the third on the top 3 criterion a vehicle must have is affordability. This is something that is a concern for most consumers, not just because of the recession but just in general. By having an affordable vehicle, it allows consumers to free up cash, which would otherwise be wasted away on the purchase of this big ticket item. Consumers are in a time where funds may be either low or just cannot be spared because of other bills and things of that nature. Affordability is a dynamic very high on University of Guelph-Humber student Kristina McGarry, who currently owns a Nissan Xterra, but is searching for a new smaller vehicle, possibly an Acura 3.2 because the expenses for her current SUV are getting too high. “I’m looking for something that won’t kill off my bank account since I am a student and all. Because I love my Xterra but I’m just not feeling how it`s just taking a huge portion of my paycheque, do you get me”? She said. I suppose by her new choice of car which just happens to be an import brand as well, domestic brands maybe are too highly priced especially for students, and new drivers.
By the slope domestic auto retailers are slipping on, it appears to be that they are not meeting the standards potential customers are looking, which is forcing them to domestic brands that probably give more for their dollar, and even possibly more tailored to them during this time of financial strain. It may not be so much that domestic brands are not meeting some of their needs, not at the same level of their foreign counterparts.
Financial Post. Market Snapshot: General Motors. 20 November 2008. 20 November 2008.
—. Market Snapshot: Ford Motor Company. 20 November 2008. 20 November 2008.
Praet, Van Nicolas. “Automakers must plead their case again.” 20 November 2008. Financial Post. 20 November 2008.