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Auto Makers Tough Choices: Should We Stray or Should We Grow

Posted in Cars, Concept Cars, Design, Hyundai, Suzuki, Volkswagen by Corey | January 31st, 2008 | Leave a Reply |

kizashi-1.jpg picture by willfusion

Recession? …Here.  Weak Dollar? …Present.  Isuzu?  …Isuzu?  …Isuzu?

Just like the housing market in the US the Auto Industry is not only dealing with their reorganizations from their gluttonous years but also with the economic situation that has gripped this country. As could be expected each auto maker has its own approach to handling such shifts, and it is there strategic efforts that will determine their future. Focusing for a moment on how the foreign auto makers are handling the American economic situation some are adding new plants and assembly factories, some are re-imagining themselves and others may be doing Pres. Bush’s least favorite thing… the cut and run.

To combat a slumping US dollar and to protect themselves from a loss of profit Volkswagen is looking to expand more into North America. While American companies still out-source their jobs over seas to nations with cheaper labor, the Germans are starting to look at America the same way… sorta speak. They can save money and salvage greater profits by moving some more manufacturing and assembly plants into the US.

kizashi-2.jpg picture by willfusionAnother way to gain some market share and garner greater attention in a crowded and complex industry is to re-imagine yourself. Both Hyundai and Suzuki are in the beginning stages of doing just that. These Asian auto makers have stepped up their design and engine choices to stand stronger along the other autos in their segments.
Hyundai already had what might be the best warranty in the business, and now they have some stylish designs to make them even more appealing. With the Genesis Sedan and sporty Genesis Coupe Hyundai has received much attention and praise leading into the 2008 sales year. Likewise, Suzuki is looking to make similar inroads into the mass market with their Kizashi concept that wooed audiences at the Tokyo and Frankfurt Auto shows.

But then there is Isuzu. There efforts in the North American market have been meager at best over the past decade. Rather than spending to much of their time on design Isuzu preferred to rebadge the efforts of the likes of GM and then sell them as their own. The I-Series pick-up truck by Isuzu was strictly a Chevy Colorado that had been relabeled to sell at Isuzu dealerships. Due in a large part to those efforts Isuzu saw their share of the North American auto market plummet into insignificance. In 2007 they sold 7,906 units, which is less than half as many cars as they sold in 2006. Isuzu response to their downturn is to pull-out of the North American market all together.

As much as we like to chastise the auto industry for being slow to respond and stagnent and unimaginative in their production cars, we must also recognize that it is a very challenging industry that is highly competitive and where one wrong choice can cost a manufacture millions-upon-millions of dollars. Will the North American auto market miss Isuzu? …Not in the least. Will the new designs for Suzuki and Hyundai spark new interest in the companies and result in a greater market share? …it seems likely as long as their production quality can match their design quality.

In sports the best Offense is a good Defense. But in business… those that rise to the challenge in troubled times… the best Defense is a good Offense. We shall see in time if the Offensive and aggressive strategies of the likes of Volkswagen, Hyundai and Suzuki will pay off in the years to come.

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