The news that General Motors has found a buyer for its gas-guzzling Hummer brand marks a symbolic moment in the history of the global automotive industry.
Loved by premiership footballers and Arnold Schwarzenegger but derided by many as the embodiment of automotive excess, the Hummer is a potent symbol of where GM – and the US car industry in general – went wrong: slavishly backing the big and thirsty SUVs of the past, while Japanese firms Honda and Toyota wrestled the market share with nimbler, more fuel-efficient models.
There are important lessons here for the UK. While the US auto industry had perhaps the furthest to fall, its fate should act as a sobering warning to our own government that if it’s going to help ensure the long term survival of a UK automotive industry, it needs to look beyond the short term and help develop a sustainable approach for the future.
GM – and also Chrysler – have arrived at their current situation largely through complacency: overly confident of their status as part of America’s national fabric they took their eyes off the business of engineering, continued to back the wrong vehicles and paid the price.
With this in mind, resources in the UK must be deployed strategically. Ensuring the survival of a UK auto industry must be about more than knee-jerk responses and last-ditch rescue packages. Our engineers should be given the chance to develop develop the step-change advances of the future.
This will be of little or no consolation to the thousands of UK auto workers wondering whether they’ll still have a job at the end of the month, but in the longer term a global car industry where technology takes precedence over branding would be a good thing for the UK.
Meanwhile, in another telling sign of the times, Hummer’s prospective buyer has today been revealed as Chinese firm, Sichuan Tengzhong Heavy Industrial Machinery Company.
Reportedly close to agreeing a deal of between $150m and $250m to buy the brand, the deal would make it the first Chinese company to own a US car maker. It’s unlikely that it’ll be the last.
Jon Excell, Deputy Editor
For China, it has been a Long March to Vehicular Victory.
See:
http://notionscapital.wordpress.com/2009/06/02/the-ink-is-red/
Dear Jon:
You write: ‘The Hummer is a potent symbol of where GM – and the US car industry in general – went wrong: slavishly backing the big and thirsty SUVs of the past, while Japanese firms Honda and Toyota wrestled the market share with nimbler, more fuel-efficient models.’
Rather unfair, don’t you think, to tar all the US car makers with the same brush?
This month, for example, its new products helped the Ford Motor Company achieve its highest market share in three years.
Ford, Lincoln and Mercury sales were 155,954, up 20 per cent versus April, representing the highest sales for any month since July 2008.
Those figures include sales for the Ford Fusion – that’s a new hybrid vehicle by the way!
I find the editor’s comments about the UK auto industry slightly odd. Apart from the LDV, and some small volume companies, the UK is largely manufacturing for foreign multinationals in some of the most efficient plants in the world. The UK Auto industry has, as a whole, gone through the pain of over-capacity and a home market not interested in the products that we made.
The main problem in the UK at present is the decline in the European market, brought about by the credit crunch. In my opinion, it is very different to the situation in North America where decades of poor corporate management left two of the big three with massive over capacity, models that customers did not want to buy and legacy commitments that cost thousands of dollars per car sold.
This is a very different situation to the one that we have in the UK. Yes, the government needs to do more to help but only for the right reasons. They would be supporting an industry that has worked very hard in the last decade to position itself towards the top of the tree and it now feeling the pinch thanks the banking crisis.
With the right support many of the UK’s automotive consultancies stand to gain from the break up of the North American giants and build on the work already being brought home from the Eastern markets.
On the whole, I just felt that the feeling was a little off. Yes, we need help but to build on the solid foundations and sustain the recovery that we are starting to see with jobs in Sunderland and Honda starting up again. It is not the end of Rover all over again.
Just my thoughts.
James
I was under the impression there are no indigenous volume car makers in this country anymore. Foreign companies may have facilities here but I see no reason for UK taxpayers to support their research & development activities. Government should focus funds on British companies working in areas of greatest potential benefit (such as low carbon emission power generation).
The demise of the motor industry in the US will follow the same pattern as that in the UK, namely a guaranteed failure when the government tries to run a business.
Ford had the top selling brand in the US last year at 470,000 vehicles and guess what it was? It was an SUV.
And who is buying the Hummer? A Chinese company that can probably operate with less government interference than GM can. And it would be really funny to find that it became the biggest import item into the US.
Long term, strategic planning over short term gains. Nope, sorry, you’ve lost me.
I hope that other industries also learn that ignoring the long-term strategy carries big penalties. Currently too many decisions are being made for the short-term because bonuses are assessed in the short-term.
Heads of industries take note; the change of emphasis from the short-term back to the long-term must come from the top if industries are to survive.
It is well known about the woes suffered by the British car industry, and its inevitable decline through overproduction of poor quality products. This has been further exacerbated by the World market’s volatility in recent years.
Britain is still at the forefront of automotive technology, supplying this technology to foreign vehicle manufacturers, this is where we as a country ought to begin manufacturing vehicles again. Lessons from the past should have been learned, and the pitfalls well documented.
I personally would like to see a British car industry catering to the masses, and not the minority interests. Such an industry could compete with the World’s manufacturers, but would require long term strategies over profit related short term gains.
I doubt I would ever see a major British car manufacturer producing vehicles in my lifetime though.