Pump the Brakes before Crashing into a Bankrupt US Subsidiary


The American auto industry has had more than its fair share of ups and downs in recent years, with General Motors particularly attracting public attention.  Companies targeting domestic vehicle sales land on two sides of the market share spectrum: the high end or the low end.  Considering that American car sales boast growth unseen in other international regions, this market seems like an ideal target.  However, gaining ground against sizeable and established competitors is no small feat and it shows that not all companies follow the old adage of not throwing good money after bad.   These businesses could be grappling with a number of obstacles, but above all, they cannot contend with the effects of the open global market.  A recent article in MarketWatch urges these floundering automakers to put an end to the delusion and exit the US.

Specifically mentioned in the article are Mitsubishi, Volvo, and American Suzuki.  It is not that these manufacturers, in their entirety, are poorly operated or produce subpar vehicles; the problem is that they will not survive as guppies in an industry of sharks.  To sell cars, a company needs a number of things: powerful marketing, public relations, an extensive dealer network, and most importantly, a well designed product.  The aforementioned brands don’t have these things and, without continued and substantial financial support from a parent, will try to tread water until they eventually drown.  Volvo is targeting a line already dominated by BMW, Lexus, and Mercedes, while Mitsubishi missed the move into the American market decades ago when its Japanese competitors started the initiative.

So when is it time to put an end to the optimistic, yet delusional, forecasts and bottomless pits of marketing and PR budgets?


Link to article: http://www.marketwatch.com/story/car-makers-that-might-as-well-back-out-of-us-2012-10-06?pagenumber=1

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