American carmakers could take a page out of their European divisions' playbook if they want to revive the ailing U.S. auto industry.
While their parent companies in the United States are losing tens of billions of dollars, GM and Ford’s European divisions are making money. And although 2008 has not been a good year for European carmakers, Ford nonetheless made $1.6 billion in profit in Europe through November. GM of Europe was in the black through the first half of the year.
Some believe the European market would be insulated from the fall of the American auto giants, but tens of thousands of workers are employed at Ford and GM's European divisions. (Chrysler assembles only a relatively small number of American cars in Europe.)
American carmakers in Europe give two reasons for their success — better cars and streamlined operations.
Ten years ago, the European automakers were perennial money-losers. But they streamlined management, cut deals with unions and closed plants. At the same time, they started building cars with the attributes Europeans demanded: fuel-efficient, space-saving, well-designed and high-quality vehicles.
“The quality of the product now is second to none,” said Nigel Gray, managing director of GM’s Vauxhall’s GMBodyworks dealership. “It’s absolutely terrific.”
U.S. companies are trying to capitalize on the success of their divisions abroad. They’re taking their share of the profits, and they’re bringing cars that are successful in Europe to the American market.
“The guys running the companies in North America should really take a look at the European product and learn a few lessons,” said Car Magazine editor Phil McNamara.
GM's much-touted Chevrolet Malibu is simply a dressed-up Vauxhall Vectra from a few years ago, and Ford’s Focus has been a money-spinner on both sides of the Atlantic for many years now.
“What we’re looking for is a stylish car with the right package which will appeal all over the world,” said Roelant de Waard, chairman of Ford U.K.
Maybe the hardest lesson for Detroit to learn will be Europe’s brand of belt-tightening. American car chiefs have claimed in the past that it's hard to compare the two regions. The unions are said to be generally weaker in Europe, and the governments are more generous with benefits.
Some in Europe might see gains from the failure of U.S. carmakers. Car giants like Volkswagen and Daimler Benz are well-positioned to pick up the business slack if the American companies fail.
But with the growing interdependency of the industry, there’s also a lot of solidarity being expressed in Europe. And there's hope that possible moves by the U.S. Treasury could bridge the carmakers' funding gaps and breathe more life into the ailing industry.
“Hopefully America will pick up,” said Jeff Ball, a worker at GM’s Vauxhall truck plant in Luton, England. “Without America picking up, everybody is in trouble, aren’t they?”