Monday, December 26, 2005

Predictions for 2006

I've decided to be ahead of the curve and make my predictions for the 2006 calendar year for which car companies are going to do well, and which ones aren't. I think making predictions for the upcoming year is relatively easy, any time period beyond that becomes very difficult. Some might disagree with these predictions but they are based on what the companies have announced will be introduced in the next 12 months.

General Motors--For America I do not see General Motors doing well. The lynchpin of their turnaround plan are large SUVs and that market is dwindling rapidly. Buick's sole new model for 2006 is the Lucerne, which is a decent car in some respects but not enough to save the brand. Car brands that have two cars in their stable tend to disappear and it would not surprise me if the current Buick lineup is the last we see from Buick. I can't find the quote but I distinctly remember Bob Lutz saying at one point that he didn't know what to do with Buick. It wouldn't suprise me at all if Buick disappears in the next five years. Though it is a success in China, GM could merely rebadge Cadillacs over there to continue that profitable enterprise.

Opel is doing well largely because of the new Astra, which is a beautiful vehicle. But even though it is in the black after years of red, it's simply too small of a subsidiary in too competitive of a market to boost up the entire company. Holden is suffering because fuel prices have affected Australian buyers' habits and the result is people turning to Toyotas. Holden needs to update their small and mid size car lineup with the latest from Opel and decontent them appropriately to fit in with their cheaper prices. A new Commodore for 2007 will help things but 2006 will probably be more of the same fall. GM needs to make better use of Holden's talents and import more heavily from it for the US market.

Ford-- Ford's new Mustang and Fusion are going to turn things around, and just in the nick of time. Ford still does not have a small car solution for the US market: they need to take the Fiesta, decontent so that it is affordable and sell it in America. In a move of rare foresight, GM has taken the lead and delivered to America the Aveo. Currently only Toyota and Mini compete in this area. Ford has a vehicle that is ready, they just have to sell it.

Ford also needs to sell a hybrid Focus, but their move of introducing a hybrid SUV was brilliant. In terms of luxury, Ford has two major albatrosses, Lincoln and Jaguar. Jaguar just recently received an enormous cash infusion, but unless the next generation of product looks remarkably different, it won't sell. The new XK series are bland and will not help the brand significantly. Volvo, Aston Martin, Land Rover should continue to do well. However as with the rest of their luxury lines, if fuel prices go up dramatically, they will all suffer. Land Rover, which is a remarkably well run company is in constant danger of losing sales to high gasoline prices. They need to update the Freelander quickly. Overall though I see Ford doing quite well as they move away from SUVs and towards sedans. Hopefully they will wake up and sell Jaguar to another company so that they can concentrate on their money making luxury brands. This will be the surprise story of 2006.

Daimler/Chrysler: In 2005 the Chrysler Group performed admirably with great sales of the 300c and the Dodge Charger. It's truck sales fell, but not as dramatically as they did for Ford and GM. However they fell to such an extent that it has become clear that SUV sales are tied directly to the price of gasoline. Any car company that relies primarily on those sales faces incredible problems.

Chrysler's embracing of the sedan has helped them tremendously and should keep them afloat. Unfortunately one of their big moves in the small vehicle department is the new Dodge Caliber. While the Caliber is fuel efficient, it is still an SUV. Consumers will see other small car alternatives and prefer them over yet another SUV. I admire Chrysler for attempting to think outside the box and offer a truck where most companies would have a car, but I feel that this money could have been better spent replacing the utterly outdated Dodge Stratus and Chrysler Sebring sedans. I think the momentum of the 300, Charger, and new Challenger will help things, but Chrysler, like the rest of the Big 3 needs to understand that the age of the SUV is over, no matter how small.

Coming soon: The European Brands, Including ones only sold in Europe and abroad.

If you are interested in European brands, there is a new book: "Enduring Passion" by Leslie Butterfield. It is informed by the very latest brand thinking, thanks to marketing expert Leslie Butterfield. He tells the history of the company from the very beginning in the late 19th century and poses a number of key challenges for the brand today.

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