Technology plus style equal success

In the UK, most mainstream media coverage of the automotive industry is currently focused on Rover — a very British corporate disaster.

Here in the UK, most mainstream media coverage of the automotive industry is currently focused on Rover — a very British corporate disaster story that is reaching its sad conclusion in the teeth of a general election campaign.

But a look across the Atlantic at the difficulties of those giants of the global market, General Motors and Ford, gives a clearer indication of the challenges facing everyone connected with the sector.

The finances of GM in particular are in a bad way, and the company this week unveiled a not unexpected but still jaw-dropping $1bn (£0.5bn) loss for the first quarter of 2005.

Producing cars and trucks has become, for the moment at least, an unprofitable sideline to the chunk of GM’s business that is actually making money — lending people cash to buy its own vehicles, mortgages for their homes and credit cards for just about anything else.

In the stark language of the balance sheet, GM has turned into a pretty successful financial services business that just happens to run the world’s biggest automotive company — at a loss.

Of course, making cars is what GM is really all about, and it is not alone in its troubles. Ford is confronting the same set of issues. Although the problems are concentrated in the US, to a certain extent they are replicated around the ‘developed’ world where car ownership has long been taken for granted.

Consumers want to pay less for their cars and get more in return. They are increasingly interested in fuel efficiency, possibly on altruistic environmental grounds, more likely because of strain on their wallets at the pump. They are far less likely to be loyal to a particular car brand, let alone manufacturer, than 30 years ago. And many of them want to own a car that reflects something of their own aspirations, and how they wish to be seen by others.

All this might sound obvious, but juggling all these balls at once is proving mighty difficult for the automotive sector’s big boys. Many attribute GM’s woes to its inability to see off more nimble competition from Japanese rivals in its own US backyard.

The answer, as ever, ultimately lies with the engineering, design and technology research and development teams. GM itself is going all out to build advanced systems into cars such as its new Cadillac STS. It is entirely possible to create well-designed, technically-advanced vehicles that aspirational consumers in particular niche markets will literally queue up to buy. See BMW and the Mini (built in Oxford, by the way).

It is also possible to build a successful mass-market car that appeals to a wide range of consumers and gains a reputation for efficiency and reliability. See Nissan and the Micra (built in Sunderland, by the way).

The message seems to be that if the engineering, design and technology are right it is still possible, however tough the going, to achieve success in this most cut-throat of global markets.

Andrew Lee