Weak dollar fails to lift U.S. automakers

[girl gone mad]

Currency boon eludes U.S. automakers
By Shawn Langlois, CBS.MarketWatch.com
Last Update: 12:02 PM ET Dec. 14, 2004

SAN FRANCISCO (CBS.MW) -- Despite what would appear to be a financial windfall internationally, the benefits of the falling dollar are not making their way to U.S. automakers.

At the same time, foreign manufacturers, the ones most at risk, have more or less adapted to the relative strength in their currencies.

Ordinarily, a weaker dollar bolsters the bottom line for exporters. They make a product for less at home and sell it for more somewhere else.

But that basic rule has eluded some of the nation's largest manufacturers. U.S. automakers, for instance, have seen their market share tumble to record low levels in recent months.

To put the currency shift in perspective, the U.S. dollar has plunged about 50 percent vs. the euro since 2000 and has touched on levels not seen since 1995 against most foreign currencies.

Then why aren't U.S. automakers and their investors rejoicing?


http://cbs.marketwatch.com/news/story.asp?siteid=bigcharts&dist=bigcharts&guid=%7B6328FB7B-4CE7-4DE6-A5FD-F666230CFC54%7D

[phantom power]

1. Kind of early for that, isn't it? The dollar hasn't been falling for

more than a few months. They can't seriously expect that to turn the auto industry around so immediately.

[nadinbrzezinski]

2. Usually you see the effect pretty fast

but US Automakers are NOT competitive at the structural level.

Think of it this way... in Mexico having a Ford or a chevy was a symbol of wealth. Today people rather have a honda, or toyota or wolkswagen. This is the problem for US automakers

[DBoon]

3. They outsourced their production abroad long ago

Or as the article says, "U.S. automakers, for the most part, deal in "stable currency," which means they make cars in the countries in which they sell them rather than ship them abroad."

[nadinbrzezinski]

6. Yes and even then, they are not competitive with

other companies. To quote my father, who used to be a Ford owner for most of his life.... (until we got a Honda 20 years ago here in teh States and he saw the difference, these days they drive Toyotas)... Ford makes crap, why buy crap?

[phantom power]

4. Interesting. I do expect the weak dollar to help U.S. manufacturing

but I had expected it to take closer to a year before the effect really kicked in.

I've always thought that the biggest problem for the US auto industry is that they just don't make very good cars. They're behind the curve in almost every category that people care about, except maybe size and horsepower.

[nadinbrzezinski]

5. Think HYBRID

They are way behind the power curve on that one, and Ford is using the First Gen power plant they bought from the Japanese, my Civic has a Third Gen power plant

[phantom power]

7. Oh yeah, the Japanese are gonna clean their clocks in the hybrid market.

And really, there may not be any *other* kind of market in a few years.

[goforit]

26. Not only behind the curve.....But a majority of Americans are pissed!!!

And they ain't gonna pat no CEO US automaker on the back.

They'll go buy foriegn first.

[billbuckhead]

8. The dollar has fallen from .8 Euros to 1.33 to a dollar since 2000

4 years is forever in the car business. These American carmakers are losing marketshare all over the world because they put short term profit ahead of good design. In Europe, Detroit's Euro holdings aren't doing any better than it's American performance. SAAB, Opel, Land Rover and Jaguar are all struggling. In China, Volkswagen is in first place and sells more cars there than in the US or Germany. One wonders if the "domestics" will ever design a car or even a engine or a transmission that they can sell around the world ?

[girl gone mad]

9. There should be at least some immediate effect.

For instance, Volkswagen sales are already down in the U.S. Also, the dollar has been declining against the Euro for well over a year.

[billbuckhead]

15. But in 4 years, VW has responded, they're ready to bring in Mexican cars

What's New - November 2004
Volkswagen Jetta

Volkswagen have released the first official photos of the all-new fifth generation Jetta, which is to make its worldwide public debut at the Los Angeles Auto Show in January. On sale this coming March in the U.S. and Canada, the Jetta is Volkswagen's most popular model in the U.S., accounting for about 40 percent of the brand's overall volume in this market and is perennially the Number 1 selling European nameplate sold in the U.S.

--------------snip-----------------------

Volkswagen will also offer its revolutionary transmission called DSG - an automated manual transmission system offering the inherent efficiency and economy of a manual with the ease of operation of an automatic. Other new technology includes an electro-mechanical steering system, ESP and new-generation ABS brakes. The new Jetta will be built at VW's Puebla, Mexico plant.

<http://www.cardesignnews.com/news/2004/041105whats-new/>

[54anickel]

23. Actually, the dollar has been falling for several years, at an accelerated

pace the past 2 years. It's only been making the news for the past few months.

http://quotes.ino.com/chart/?s=NYBOT_DXY0&v=dmax

[kysrsoze]

30. It's actually fallen 50% since 2000. We should have seen something by now

It's cause the cars just pale in comparison to Asian and European cars. If people want absolute quality and fuel economy, they go for Japanese cars. If they want flashy, stylish and fast cars, they go European or Japanese. Aside from a few Chrysler and Cadillac models, the American choices are pathetic.

[Name removed]

10. Deleted message

Message removed by moderator. Click here to review the message board rules.

[phantom power]

11. But we already pay more for foreign cars. And the weak dollar

will make them even more expensive.

[nadinbrzezinski]

16. You do realize that Toyota has a factory in

Tennesee... don't you?

So you are going to tax American vehicles?

Oh you are also aware that most fords come from Mexico? Fine tax them, while you are at it

[hatrack]

17. And the Nissan plant in Tennessee?

And the Mazda plant in Michigan? And the Toyota plant in Marysville, Ohio? And the Honda plant in Alabama? As far as I'm concerned if American workers can make good money putting together Japanese cars within the USA, that's good enough.

And the corporate Big Three? They can go pound sand. You may not have seen the news story, but the big announcement today was the DC and GM are going to jointly develop (Wow! How innovative!) hybrid engines. They might even have one ready for market by 2007 or 2008, by which time Toyota will already have sold its one-millionth hybrid car.

Way to "compete", you titans of American industry - after all, you'll only be ten years late. :puke:

[nadinbrzezinski]

19. Hey Hat... I love my Civic, Hybird

and once any of the boys at the forefront develop an SUV (yes we do need that carrying capacity from time to time) we will get rid of the Toyota Extra Cab and replace it for the hybrid.

[hatrack]

21. I've heard nothing but good things about them

The Civic is just a really solid car, and the hybrid system seems to be working w/o too many hiccups (cross fingers!). Happy trails! :hi:

[goforit]

27. I love mine too.......

How many miles are ya averaging?

I'm doing about 44 mpg right now.

[Stella_Artois]

18. They do ?

Which countries. The EU ?

[leesa]

12. Good. They don't have a product that the rest of the world will

want. Other countries have higher gas costs, why would they buy the gigantic, gas-guzzling crap our industry puts out?

[Benhurst]

13. Our auto makers need to take advantage of our new world

image.

What Frenchman wouldn't rush out to buy a Dodge Fallujah. Or consider a Dutchman confronted with the confusing mix of international cars from which to choose. What could be more appealing than a Chevrolet Shock and Awe? And there is not an Italian alive who could resist a Ford Abu Greab.

Yes, the world has come to know and love us through The Leader. Now it's time to take advantage of this when marketing our products abroad.

Hey, what about a Hummer Bushmaster?

[Chico Man]

14. What American exports are successful at the moment?

Besides exports designed specifically to end human life?

Inquiring minds like to find out.

[no_hypocrisy]

20. I thought American automakers would have a problem with the European

market.

First, how much of their inventory is compact cars and sedans? It seems to me that the manufacturers have invested a lot of their tool and die to SUV's, minivans, and huge trucks. Gas (Petrol in Europe) is 2-3 times the price we pay. Why would there be a European market for gas guzzlers.

Second, many streets in the cities of Europe are narrow. The big and wide products that the manufacturers offer to sell would not fit for easy manuevering for themselves, let alone sharing the road with another vehicle.

Third, American motor vehicles are designed to break down and require constant repair in order to sell spare parts and to encourage replacement of the product every few years or so. Europeans respect products that last. I can't see them chosing American over their own countries' stock.

Lastly, isn't the world still mad at *? And wouldn't an informal boycott be a passive-aggressive way of reminding him of its hostility?

[xchrom]

22. outside of the pt cruiser or the new thunderbird

the big three can't design a cool car.
and their engines aren't as well designed as the japanese or europeans -- the problems aren't insurmountable -- they genuinely don't seem interested.

[Chicago Democrat]

24. Depressing and suprising....

I see American vehicles everywhere.. Especially Big SUVs. GM and Ford need to step up and take advantage of the weak dollar..

OK now I'm saddened.

[rucky]

25. That's because nobody can stand us.

sad but true.

[Anakin Skywalker]

28. Bushie 3:16 Says

"The economy is strong", baby! Yeah! So no worries.

[VegasWolf]

29. bush thinks a weak dollar philosophy will help the economy, just

like his return from the dead resurrection of trickle down
theory "tax cuts for the uber wealthy", and outsourcing
of jobs. I moved my money and assets out of the country.
Let these fools that voted for bush get what they reap.
Screw em.

[teryang]

31. With 72 month financing the SUV fleet has to age

...as rates dropped buyers moved into increasingly improvident purchases. The game of musical chairs is about to end. Nobody really wants the used SUVs on a trade in, meaning the dealers. It's easier to sell the new ones because of lower interest rates, but the buyers are stuck with the ones they bought a couple of years ago, in fact they are upside down on the equity and nobody short of a bankruptcy court or repo man is going to relieve them of the burden. Thus they are stuck. If they had any liquidity they could take the loss, but who wants to take a $5,000 plus additional loss on the trade, in addition to the usual haircut you get?

People who can afford to buy expensive imports are less likely to be affected by substantial price changes.

[Rochambeau]

32. Generaly, europeans consider US cars suck. They use out-dated tech,

especialy on engines, they are not well made (quality of manufacture?), they are not reliable, they are far too expensive compared to the quality even with the low $, they are less cool and good-looking, and finaly, even if we can't really blame the manufacturers for that, they are not designed for and adapted to our market.

[Zorra]

33. The world is punishing America for Bu$h.

Who could blame them?

[Anakin Skywalker]

34. I Sure as Hell Don't (blame them)!

And when some freep@$$ complains about this boycott, I'll just fly this in his/her face: It's the free market, stupid! Hah hah! :)