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DATE News (chronologically)
05/01/08
automotive
Big Three shifting priority to profits
For years, the American auto industry had it both ways. It was the biggest player in the game and it made money consistently.

Not anymore.

General Motors Corp. lost $3.3 billion in the first quarter and $38.7 billion last year. Ford Motor Co. made $100 million in the first three months of the year, but lost $2.7 billion last year.

Chrysler LLC lost $1.6 billion last year; it's unclear what its early 2008 numbers look like because the now private automaker doesn't divulge those details.

All three have seen their share of the automobile pie eaten away by Asian automakers.

Arrogance dictated that there was no way the "Big Three" could be unseated, but it happened.

Toyota methodically rose to the top and likely will stay there.

Sure, the Japanese automaker has had its share of financial hiccups recently.

And if you look in enough garages around enough corners it's possible to find a few thousand more GM vehicles that were sold last year than Toyotas to uphold the Detroit automaker as No. 1 in the world. But that's fleeting.

And that's a good thing because it has forced a new way of thinking in American automobile circles.

Size doesn't matter. Profit does.

Big Three can't afford flops
To be sure, companies of all sizes and in all industries in America operate unprofitably.

They expand too fast, get into new markets or add new products that squeeze the bottom line into oblivion.

No matter how obvious the signs, it happens. And it clouds executive judgment.

Witness the Pontiac Aztek; the Ford Mustang II and the Plymouth Horizon, to name a few.

I doubt such atrocities will surface again, because the automakers can't afford anymore flops.

But you never know.

End game is profits
If the attitude coming from Detroit's automakers is any indication, times are changing.

Ford Chief Executive Alan Mulally has said repeatedly that Ford isn't as fixated on regaining lost market share as it is in making money.

GM's chief operating officer, Fritz Henderson said Wednesday the company had "no other choices" but to learn to make more money on its vehicles.

And it's clear that Chrysler's new private equity owner certainly puts profit on top.

That's the end game -- as it always has been -- only now it's a matter of survival.  Detroit News

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