Think everything will be hunky-dory by, well, 2012? (Watch the  movie.) Fitch Ratings thinks the U.S. auto industry won’t get back on its feet anytime soon. Worse, the industry may be caught in an “airline-style” cycle of repetitive bankruptcies because of weak sales and a glut of production capacity. It is unusual for a U.S. airline (and many elsewhere) to not be in bankruptcy or not have been at some point.

Amongst the rating agencies, Fitch is the only halfway good one. They were the lone voice that had warned against the dangers of the collateralized debt obligations that brought the world to the brink of disaster.

In a report cited by Reuters, Fitch says that high fixed costs, the lengthy periods required to develop new products and chronic overcapacity will leave the industry “littered with failures—plants, product lines, brands and companies.”
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One of the most overlooked arguments during last year’s bailout debates was the fact that America’s automotive industry was not under threat. Sure, a few companies based in Detroit were panhandling at death’s door, but so-called “import brands” have been closing the gap in terms of Americans employed for years. And America’s transplant auto industry is continuing to grow. Even as the Detroit firms have slimmed down their North American manufacturing footprints, foreign firms are moving ahead with American and NAFTA-area plants despite the economic downturn. Not only do these moves signify possible new jobs, they also represent a long-term bet on the fundamental strength of the US economy.
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We weren’t the only outlet to note Volkswagen’s apparent 2010 production volume win over Toyota a few days ago. Not so fast, Toyota tells Automotive News [sub]. Volkswagen’s total included production by joint ventures in which it does not hold a majority stake, Toyota’s didn’t. On an apples-to-apples basis (with minority stake affiliates included) Toyota built 4.9m vehicles in the first three quarters of 2009, to Volkswagen’s 4.4m. And because Toyota cut so much production early this year, while VW rode the European (particularly the German) cash-for-clunker wave, Toyota will continue to gain ground over the rest of the year. And the gap could widen in 2010: VW should see a certain amount of downturn in its core German market now that the abwrackprämie has expired, while improvements in the US and Asian markets should help Toyota. Not that Toyota cares about being number one. “Toyota’s goal is to focus on the customer, so we’re not focused on being No. 1,” ooze the spokesfolks. Well thanks for correcting us anyway.

Senator Corker, rest easy: the imports have your back. Tennessee-based Saturn may be shutting down, but Nissan is bringing the manufacture of their electric car, the Leaf, to Smyrna, Tennessee. Nissan made the announcement today as Rutherford County commission member voted to approve the funds required for the project. Under the scheme, Nissan will get $2.5 billion for the project plus a tax holiday of 20 to 40 years. In return, Smyrna will receive, up to, 1300 full time production jobs. That works out to be about $1.92 million per job. Not to mention a drop in tax revenue for the state. Let’s hope this Leaf is attached to an evergreen project and not a deciduous one.

The Guardian reports that in the first 9 months of 2009, Volkswagen/Porsche made 4.4 million cars whereas Toyota made 4 million. Naturally, the majority of VW’s growth has come from the area which is growing even faster than VW, China. But the lads from the Middle Kingdom weren’t the only modes of growth for Volkswagen. The Wolfsburg warriors were also beneficiaries of European stimulus packages (A.K.A: Cash for Clunkers) where Volkswagen have large market share (Germany, UK, etc). Charity really does begin at home!
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Despite looking at a half-sized Q1 production plan, GM says it will bump truck production in the month of March. Production will be restored and escalated in March at GM’s Flint and Arlington truck plants, meaning there will be more Silverado, Sierra, Tahoe, Yukon and Escalade models. So, uh, why? “As far as our 2008 and 2009 mix goes, we’re significantly down on 2008 models, where most of our competitors have a lot of 2008 to get rid of. So anticipating a spring selling season, we’d like to increase our 2009 inventory,” GM’s Pete Ternes tells Automotive News [sub]. GM’s truck inventory has dropped noticeably, from a 122-day supply on December 1. But with 90 days of light truck supply, there’s still no real reason to increase production. Most industry-watchers consider a 60-day supply ideal. So what’s up?

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