2012: A good year or not so good?

 

Ford Motor, like the other domestic automakers, have had a pretty good year with modest sales improvements.   Recalls, however, have become an issue, especially for Ford with the popular 2013 Escape.  Between July and September, the all-new crossover has been caught up in four recalls ranging from bulky carpets to engine fires.  Brisk sales of the popular vehicle appear to be unaffected, however, as Ford has quickly acknowledged the problems and issued quick fixes or provided loaner cars.

How would I describe, with few words, the domestic auto business in the past year?  How about:  Not so good.  Good.  Pretty good.    

The not so good news?  Sluggish Sales:  Vehicle sales have continued to show improvement over the course of the past year, but the SAAR (Seasonal Adjusted Annual Rate) figure expected at the end of December is still only about 15 million units sold.  While way better than the 11.4 million vehicles sold in 2009, it is still two million short of the glory days prior to the Great Recession when automakers routinely sold almost 17 million vehicles annually.

Broken cars:  Recalls have been a common occurrence in the auto industry since the government made them mandatory way back when.

The year 2012 had the fairly typical number of recalls.  In Dearborn, however, the folks at the top must be scratching their heads over the four-in-succession recalls posted by the National Highway Transportation Safety Association since the introduction of it Ford’s all-new 2013 Ford Escape crossover.  

From stuck carpets to engines catching on fire, it has been a rough year for Ford since the first recall on July 6 and the last on September 5, 2012.  Fortunately for Ford, sales of the enormously popular utility vehicle have not been affected too much.  This might be because the company responded to each recall forcefully by acknowledging the problem, finding a fix and going out of the way to accommodate buyers of the Escape by offering loaner cars. 

Auto brands struggling:  Another not so good situation for the auto business in 2012 was the inability of several marques in the U.S. to make much headway in becoming financially viable in the highly competitive auto business.  I’m talking about Buick/GMC, Lincoln, Mazda, Volvo, Jaguar and Mitsubishi.

GM dropped Pontiac, Saturn, Hummer and Saab in 2009 so they could focus on the remaining Cadillac, Buick, GMC and Chevrolet brands.  The decision seemed to make a lot of sense.  It’s far easier to create and promote four brands than eight. 

Cadillac is still struggling but making progress with a raft of new product. Buick, while sales have improved slightly, is still a little wobbly.  The division that once sold 800,000 vehicles struggled this past year to reach 200,000. 

Will the upcoming all-new Buick Encore mini-crossover help to improve sales?  That is the unanswered question.  If Buick does eventually falter, heaven forbid, then I see GMC joining Buick and meeting up with Olds, Pontiac and the others in car heaven.  

The post-bankruptcy GM built its dealer organization combined the Buick and GMC outlets, for the most part, as a single dealer group.   If Buick is gone, GMC sales aren’t large enough for the truck-only dealer groups to survive.   Being a twin of the Chevy trucks, it would be logical to drop the now 101-year-old GMC brand.

I’ve written about Lincoln’s plight in a recent column.   Once selling as many as 230,000 luxury cars and trucks a year (1990), now Ford Motor struggles to sell 100,000 of the luxury brand.   Let’s hope the fresh, new product in the pipeline succeeds in resuscitating this once proud marque.

Imports Jaguar, Mazda, Volvo and Mitsubishi are also struggling to build sales and are fighting to stay viable.  I sincerely hope they all succeed but they all need a boatload of new buyers in their dealer’s showrooms.  Don’t be surprised to see a merger or two involving these brands in 2013.

 The good news?    Improving car sales:  In all the gloom and doom, there is good news, lots of it.  Car sales are on the upswing.  

Quality improvements:  Vehicles are getting better (if we ignore the pesky recalls of late).  The quality numbers for domestics are nearly matching the better imports and for the most part, all cars sold today are vastly improved over the poor quality we suffered through in the 70s and 80s.

Cars are safer:  New safety features, happily, really do work.  I know, because each day that I drive my new Verano I’m reminded.   There are chimes to signal that something might be behind my car and I should stop.  There are blinking lights in my rear view mirror to warn me that a car is in my blind spot.  I’m even warned, with a noisy beeping sound while backing out of my driveway, that a car is approaching my driveway from either direction. 

It’s all these wonderful passive safety features that caused my car insurance to actually be LOWER than what it cost to insure my 11-year old Neon. 

Lots of options:  I think it’s good news also that so many new power plant options are now available to consumers.  Want performance, Camaro and Mustang have reasonably priced models that approach super car numbers.   Want economy, you have an amazing variety of powertrains available – from all-electric cars like the Nissan Leaf, Tesla and Fiskars to hybrid models like the segment leader Toyota Prius and many others.

Then there is the plug-in Chevy Volt hybrid that eliminates “range anxiety” by offering all electric power for over 35 miles, with a back-up gas engine available to charge the batteries in the sedan if needed.

So it has been a pretty good year.  Depending on what happens in Washington regarding a resolution to the so-called “fiscal cliff,” auto sales are expected to continue to improve in the New Year.   If taxes do rise dramatically, this will undoubtedly affect car sales but no one can predict what the impact will be. 

The folks in the auto industry have probably been holding their breath this past week, hoping that the representatives and senators in Washington do what they were elected to do and take care of the people’s business. 

This car guy would like to see the playing field be level next year for the automakers, providing them a whole year of no drama (no higher taxes, no earthquakes, no floods, no tsunamis, etc.)   Then just maybe we’ll see U.S. auto sales again attain the 17 million-level and jobs will be created and more safe cars will be bought and enjoyed on our highways.

Permit me to use this year-end column to wish all readers a Prosperous and Happy New Year.

Good auto news in 2012 was the wide variety of power trains available in showrooms.  In addition to the traditional gas-powered, internal combustion engines, car buyers also had options to purchase all-electric, hybrid and plug-in hybrids.  Some, like the Chevy Volt, eliminated electric car “range anxiety” by having a gas engine on board to re-charge the batteries on the go.