Management problems, the burden of retirees and the financial crisis has caused the U.S. auto industry to lag behind its Japanese and European competitors, an expert said.
"There are a number of management problems that we have witnessed in the last 20 years," Kristin Dziczek, a senior project manager at the Center for Automotive Research, a non-profit research organization, told Xinhua in an interview Monday.
"The U.S. market tended toward large vehicles, sports utility vehicles, very large seven-passenger, nine-passenger cars ...They (auto makers) made a lot more money selling a large vehicle than they did selling a small one. So there was a sort of an addiction to profit," Dziczek said.
"In about 2006, we started to see gas prices climb and consumer preferences for those large vehicles take a U-turn. And they weren't ready with other models, with fuel efficient vehicles in the pipeline. International producers, Honda and Toyota particularly, had more of those vehicles in the market," she said.
In 2008, Toyota surpassed General Motors, which had been the world's top car seller for 77 years. GM's global sales plunged 10.8 percent last year to 8.36 million vehicles while Toyota moved ahead with sales of 8.97 million vehicles worldwide.
On the retiree burden, Dziczek said: "The Detroit Three (GM, Ford, Chrysler) have labor contracts with the United Auto Workers (UAW), which the international producers do not.
"The international producers which make their vehicles here pay similar wages and benefits in order to avoid a unionization attempt. So the wages in a Toyota and Honda plant are not all that different from the wages in a Detroit Three plant. What's very different is that the Detroit Three companies have been in the business for more than 100 years. And they have a big retiree burden."
Since its founding in 1935 in Detroit, the UAW has been consistently developing innovative partnerships with employers and has negotiated industry-leading wages and benefits for its members. The UAW has about 513,000 active members and more than 575,000 retired members in the United States, Canada and Puerto Rico. Since the 1950s, UAW members have become one of the best paid groups of industrial workers in the United States.
Dziczek said: "At General Motors, it is about every five or six retirees to one active worker. And those retirees draw pensions, and are entitled to healthcare."
But the major factor, Dziczek said, was the collapse of Wall Street and the financial markets last fall which made it impossible for the U.S. auto industry to borrow to finance business. She said when Wall Street started to crumble, consumers got really nervous.
"All of our producers, not just the domestic producers, have been suffering at the sales front," she said.
U.S. auto sales tumbled 37 percent in March. GM said its U.S. sales slid 45 percent, Ford's declined 41 percent and Chrysler about 46 percent. Toyota's deliveries to the United States declined 39 percent. Honda and Nissan dropped 36 percent and 38 percent respectively.
"The domestic auto makers went into this crisis a little weakened from their international competition here in North America. They were trying to get new products out but were a little bit behind to be more flexible in their manufacturing," Dziczek said.
Dziczek said the big lesson for U.S auto makers is to "be flexible." "The producers in this market that are the most resilient are ones that are the most flexible, the ones that can switch from vehicles, switch from consumer demands," she said.
"I think there is a possibility for the U.S. auto industry to be competitive in the new landscape, but there will be one, possibly two, domestic automobile makers going forward," she said.
Source: Xinhua
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