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Editorial- Rover: Ailing Carmakers: Sudden Death

Author: Peter Frey

Publication: Motor Und Sport

Date: April 13, 2005

Abstract: Rover finished, Jaguar crisis-ridden, Smart shut down? Terrible news like that can almost be taken for granted these days. But the latest rumors about ailing automotive giant General Motors even topped that. GM boss Rick Wagoner commented: We will earn 10 dollars per share. The question is when.

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GERMANY / UK --- Rover finished, Jaguar crisis-ridden, Smart shut down? Terrible news like that can almost be taken for granted these days. But the latest rumors about ailing automotive giant General Motors even topped that. GM boss Rick Wagoner commented: We will earn 10 dollars per share. The question is when.

The automotive world is full of contradictions - it's all about business and there's no room for sentimentalities. But without sentimentalities, the entire car business would be lost. What's really menacing is the accumulation of alarming signs. Can this all be a real existing threat? Nowadays crisis candidates have two things in common: a great past - and a highly uncertain future. The issue is not their right to exist but their survivability.

Rover has reached the end of the road. Even for Shanghai Automotive Industry Corp. (SAIC), the traditional British carmaker is too hot to handle. There also won't be any money coming from the government. Jaguar as been under the banner of Ford for 15 years and has burnt billions of cash ever since. Saab, now a GM subsidiary, is facing an uncertain future. Mitsubishi, shaken by recall campaigns and DaimlerChrysler's withdrawal, managed to raise €3.5bn in order to deal with a sales collapse of more than 40%. Fiat and Lancia are also ailing. Smart has at least the most solid parent company. The supervisory board will decide on the future of the company at the end of April, but it's certain that the roadster will be canceled and the Formore won't even be manufactured.

Mark Fields, Executive Vice President Ford of Europe and PAG, sees the fight for survival in an elemental, biological way. He compared the destiny of companies to the nine lives of a cat: The question is how many lives have already been used up.[/b]
 

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1. Manufacturers are making too many new cars.

2. New cars last too long.

For the consumer 1. means good deals and 2. cars no longer rust after 3 years nor need an engine rebuild every 60k (remember the 70s? I do).

Result. Manufacturers, if poorly managed, suffer.
 
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