Are European automakers the new Ford and GM? Part 1
Change is afoot in corporate offices in Europe’s automakers. GM and Ford have struggled for many years now with the harsh realities of the global auto market. Now those realities are knocking on the doors of the European automakers. About two-thirds of Western Europe’s carmakers have seen changes in the executive suite in the last two years.
The reasons vary, e.g. BMW’s Helmut Panke left due to age restrictions, yet the BMW board failed to grant him a waive to allow him to drive the ultimate machine longer. The fact remains though that boardrooms and shareholders, alike, are concerned about increasing competition from the Far East.
Once a joke to respectable manufacturers, the Chinese automakers – led by Shanghai Automotive Industry Corporation (SAIC) and Nanjing Automobile – are increasingly competitive. The Chinese are increasingly developing more and more sophisticated facilities and borrowing more and more from the Europeans. Take American Axle and Manufacturing. AAM has been setting up new factories at breakneck pace. Indeed some of the intellectual property has been sold to the Chinese as well.
What all of this means is that the Chinese now have a way to produce good quality cars, yet sell them for next to nothing. Therein lies the problem not just for Renault and Peugeot and VW. Mercedes-Benz and BMW must be careful in their strategies since companies like Chery, is planning to bring their “luxury” automotives to the U.S. market soon. At $20,000 Mercedes and BMW are tracking the company, you can be sure. In the end, automakers will find difficulty in beating the Chinese on price. They must find other ways or they will falter as Ford and GM have done.
The next part in this topic will deal with possible strategies that the European automakers might develop to combat the competition from the east.