"I've been workin' the numbers, and something's not right."
That's a line from the movie Apollo 13 delivered by Kevin Bacon. It relates to the damaged spacecraft's angle of approach as it limps back to Earth. The problem? Come in too shallow and the ship bounces off the planet's atmosphere, drifting through space for all eternity. Come in too deep and Apollo 13 burns up before it can splash down in the South Pacific. Neither fate's a pretty one, especially for a mission already filled with its share of bad luck.
A similar picture is developing in the automotive industry. Automotive manufacturers are staking their claims on future market share, but the numbers just don't add up. And few would argue with the fact that the auto industry, along with every other major industry, has seen its fair share of bad luck recently. The only real question is: Who will complete a successful mission, and who will drift away (or burn up)?
To illustrate my point, let's look at some recent claims by top executives from the various automakers.
General Motors has been consistently losing market share since the early 1970s. While nearly one in every two domestic vehicle sales used to fall under the GM umbrella, the company's share now hovers around 27 percent (including fleet sales), with substantial erosion occurring in the last five years. Now, of course, there's a new captain steering the ship. Robert Lutz, the former Chrysler visionary who is largely credited with that company's success during the 1990s, says that GM will be back to 30-plus market share in four years. Lutz wants to put the product first (imagine that!) and thinks that GM has already turned the corner.
Anyone who's ever been mired in the corporate politics surrounding GM knows that it changes course about as easily as the Titanic. However, the company has shown signs of life, at least in terms of creative design (Chevrolet SSR) and capable performance (Cadillac CTS). Interior materials and build quality? Hmmm.
Anyway, just for fun, let's say it's 2005 and GM has 30 percent market share. Come on, just go with me on this for a second.
Next up is Chrysler. This is the company that Robert Lutz left after Mercedes claimed it wanted to have a "merger of equals" but really just wanted access to Jeep technology and Dodge Viper V10s. Anyway, DaimlerChrysler soon realized that it can't put all of the good stuff in Mercedes-badged vehicles while leaving the low-grade leftovers (like three-speed Dodge Neon automatics) for the Chrysler brands. The company may even resort to (gasp!) component sharing between Mercedes and Chrysler products to cut costs. Does that mean we can consider buying a future rear-wheel-drive Dodge Intrepid instead of coughing up the extra dough for a more expensive (but mechanically similar) E-Class?
Chrysler wants 20 percent of the American market by 2005. Just for the next few minutes, let's give it to them.
Next we'll discuss Toyota. Unlike GM and Chrysler, Toyota has been increasing its American market share for the past few decades and is on the verge of surpassing Chrysler in total domestic sales (forever altering up the whole "Big 3" reference in the process). Models like the Lexus RX 300 and Toyota Highlander have exploded in popularity, while the Camry continues to be among the best-selling cars in America. But for the sake of argument, let's say Chrysler maintains its razor-thin market share advantage over Toyota, putting the Japanese automaker at 19 percent in 2005.
For those keeping track, we now have 31 percent of the market still up for grabs.
Ford has traditionally been second only to GM in total domestic sales, so we'll move to the Blue Oval now. While the Firestone fiasco has cost Ford some sales, the Explorer is still the most sought-after SUV, while the F-150 pickup continues to be the best-selling vehicle on the planet. Lincoln recently eclipsed Cadillac in total sales; the Focus has successfully stolen market share from Honda's Civic, while the Expedition and Ranger also command top spots in their respective segments. Ford has some management and build-quality issues to iron out between now and 2005, but I don't think anyone sees that company falling below Chrysler (to which we've already given 20 percent of the market) in the next four years. This means we have to give Ford at least 21 percent of the market in 2005.
We now have 10 percent of the market up for grabs, with Nissan, Volkswagen, Honda, BMW and Hyundai yet to take any. All of these automakers have experienced consistent market share growth in the recent past, and all of them show signs of continued growth in the future. We won't even get into niche companies like Porsche, Ferrari, Lamborghini and the like.
Like I said, I've been workin' the numbers, and something's not right.
With Toyota, Honda, Nissan and Volkswagen showing rapid growth in the last five years, and smaller companies like Hyundai and BMW also picking up market share, something has got to give. Who knows? Maybe the Big 3 can increase market share between now and 2005. But from where I sit, the angle of approach looks a little off.
Let's hope the heat shield is secure.