Could the Detroit 3 Become the Detroit 1?
The proposed $14 billion bailout of America's ailing automakers is dead in the water thanks to both Senate Republicans and the United Auto Workers. The automakers' sole hope for relief now is to appeal to the White House to provide it with funds from the Troubled Asset Relief Program.
But that will only be a band-aid, not a permanent solution to Detroit's ongoing problems. The bailout's detractors say a federal rescue would only temporarily postpone inevitable bankruptcies, and even key Democrats have publicly questioned the viability of individual auto firms. During an appearance on CBS television show Face the Nation on Dec. 7, the head of the powerful Senate Banking Committee, Senator Christopher Dodd (D-Conn.), said Chrysler probably ought to merge, eventually, to save itself.
Which raises the question: Does America really need three major carmakers? For that matter, does it need two? Should the Detroit 3 become the Detroit 1? In a global economy, where the competition comes not from within the U.S. but from outside, a single carmaker might actually be better positioned to compete against the Toyotas (TM) and Hyundais (HYMOF) of the world. After all, that model seems to have worked pretty well for Boeing (BA). And, since Ford (F) CEO Alan Mulally is a former Boeing exec, maybe he would be the right guy to head up the company. (What to call it is another question. General Ford?)
And if such a radical step were taken, what cars would a consolidated Detroit sell, exactly? Because Ford, Chrysler and General Motors (GM) all have uneven product lines, each with its share of winners and losers, they should pick only the best cars in their stable and jettison the rest. But which brands and models would be kept and which killed?
In some cases it's easy to speculate. In others, almost impossible.
One of the easier choices is selecting the Chevrolet Malibu. After years of neglect, Detroit has begun investing in its cars again. The Malibu has been more than well-received by the auto cognoscenti and was named one of the best cars of the years for 2008 by both Car and Driver and Automobile magazines. Ford, meanwhile, is bringing to market a redesigned Fusion, available next year as a 2010 model, including a hybrid version for which it turned to top design firms for help. Those two would likely stay.
But both companies have run into snags bringing smaller vehicles to the U.S., even though both have had success with subcompacts in the rest of the world. Ford will release the small Fiesta, popular in Europe, in 2010 as a 2011 model. Strapped for cash, GM may have to delay the introduction of its small Cruze until 2011. If a merged company were to place emphasis on these new models, vehicles like the Chevrolet Aveo, Chevrolet Cobalt, Ford Focus, and Pontiac G3 would likely be no more.
SUVs would likely remain in the picture, though not as the heavy trucks and SUVs that generated record profits during the 1990s.
Detroit's conversion from purveyor of fuel-thirsty truck-based SUVs into greener crossovers based on car-like platforms is already under way. Ford's popular Edge and GM's new-for-2009 Chevrolet Traverse are two recently launched examples. Even well-known truck-based SUVs—including vehicles such as the Cadillac Escalade and Ford Explorer—could eventually be built on crossover platforms, shedding the eco-baggage while retaining brand equity.
Some entire brands, however, would certainly not make the cut. Such a trimming is likely even under the conditions of the current bailout plan. GM is already looking for buyers for poorly performing brands, including Saab and Hummer. The company is reportedly mulling killing Saturn, the niche brand established in the early 1990s to win over import customers. And lackluster nameplates, from the heavy Lincoln Navigator to the underperforming Pontiac G6, would likely be cut.
But the toughest place to make production cuts would in fact be in pickups and sports cars. If there's one place Detroit has excelled, it's at engineering heavy-duty pickups.
Choosing between Ford's best-selling F-150 and still-popular vehicles such as the Chevrolet Silverado would be difficult, to say the least. As would deciding between performance icons like the Mustang and the new Camaro. If the auto companies have their way, those choices won't have to be made at all.
We aren't really joking around, entirely. Maybe a single automaker is an idea worth considering.
Click here to find out which cars and trucks we chose for the new Detroit One.
If you want to express your outrage at our choices, please leave a comment below.
Business Exchange related topics:BailoutU.S. AutomakersGreen Cars