Why Are Foreign Automakers Planning For ‘Bloody’ Summer?
If selling cars is like war, foreign automakers are stockpiling weapons and planning for the type of bloodshed that hasn’t been seen in many years. Car sales are expected to exceed 15 million units this summer, which will force Asian and American automakers to engage in intense combat to get an edge in the ongoing battle for supremacy.
The American International Automobile Dealers Association was in Washington this week to talk shop and look ahead to what most consider will be an exceptional season, as reported by The Detroit News. Dave Zuchowski, who is VP of sales for Hyundai (HYMLF) in America, noted how every company is set with their lineup of cars. Because the existing stock will shift the power into the consumer’s hands, the competition will be fierce. “Summer’s going to be bloody,” Zuchowski told a panel discussion in Washington.
Bill Fay, a vice president for Toyota (NYSE:TM) in America, used less graphic words to predict the same result. Calling for more of the same “good sustainable industry growth” seen in recent years, Fay hit the high end of most automaker estimates, with 15.3 million sales in his vision. Tom Loveless, an executive vice president for KIA Motors (KIMTF), agreed with Fay’s number and mentioned how many more incentives car makers will be forced to introduce to win buyers.
While Asian automakers are optimistic about sales and somewhat concerned about overall profits, the West seems focused on production and aggressive marketing. Mercedes-Benz, for instance, is launching “its biggest product offensive in history,” according to Bernie Glaser, its VP of U.S. marketing. Mercedes will unveil a new car about every three months for the next seven years, which is indeed a remarkable clip.
U.S. automakers are taking the same bullish approach to production and tabling concerns about sales quotas for a later date. Instead of the annual summer auto plant shutdown, GM (NYSE:GM) and Chrysler are keeping factories churning through September, employee vacations be damned. As The Wall Street Journal reported, Detroit’s slight edge over the Asian automakers this year has given American automakers confidence and incentive to keep pushing.
Ford (NYSE:F) is taking the same approach to the 2013 summer season. Instead of shutting down production for several weeks, the company will close for a single week at many plants. Would Detroit automakers risk overstocking and thus suffering in the revenue department? Because of the U.S. dealership contingent, additional production immediately means additional orders from the dealers. That worry can be saved for a later date.
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