SOURCE: Industrial Info Resources

November 04, 2009 05:15 ET

U.S. Automotive Sector Reinvents Itself, a "Navigating the Currents of Change" Webcast on

SUGAR LAND, TX--(Marketwire - November 4, 2009) - Researched by Industrial Info Resources (Sugar Land, Texas) -- The past two years have certainly not been kind to the automotive sector in the United States. This year has been especially hard on the sector, with automotive sales in the tank, financing almost impossible to obtain, and the federal government stepping in and forcing both General Motors Corporation (GM) (Detroit, Michigan) and The Chrysler Group LLC (Auburn Hills, Michigan) into bankruptcy proceedings. Now both companies have emerged from the proceedings as shadows of their former selves, reborn as new companies and ready to step forward and reclaim their place in the U.S. automotive landscape.

Even before the bankruptcies, much of the past two years was dominated by layoffs and cutbacks at both automakers. GM and Chrysler were trying to reduce costs in order to avoid bankruptcy, something they obviously did not accomplish. Both companies also renegotiated their contracts with the union in order to receive additional concessions to help the companies survive.

Survive they did, but only after the government was forced to step in and make things happen. Once they emerged from bankruptcy proceedings, Chrysler and GM attempted to rebuild their sales, but because of a bad overall economy and consumers' lack of faith in companies that have declared bankruptcy, the government was forced to step in once again to help out the automakers.

Thus, the "cash for clunkers" program was born. Marketed as a method for removing older, less fuel-efficient vehicles from the roads, the program's true aim was to boost automotive sales. For a month, it worked. However, the program also caused many additional problems, mainly downstream, once the vehicles were traded in and disposal was arranged.

Vehicle sales were increased by the "cash for clunkers" program; however, similar sales numbers have not been repeated since completion of the program. A few jobs were even created. As automakers were not prepared with the correct models of vehicles, shifts were added at key plants in order to assemble the smaller vehicles that were eligible for the program.

Overall, "cash for clunkers" could be considered a success for its limited run. Automotive sales were increased; some older, less fuel-efficient vehicles were taken off the streets; and some jobs, at least temporarily, were created. But at a cost of more than $3 billion for a single-month program, it was not very cost-effective, and certainly not something the government would want to continue. In addition, the method used to determine if a vehicle was a clunker was not well thought out, leaving many true clunkers on the streets.

What's next for the automotive sector in the U.S.? Where will things head in 2010? Click here to join David Pickering, Vice President of Research and Industrial Manufacturing Group Manager for Industrial Info, as we examine some of the highlights of 2009 and discuss the future of the U.S. automotive sector on the latest edition of "Navigating the Currents of Change" on

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