The car industry is heading for collapse.

[*Jess♥]

http://www.zerohedge.com/news/2014-05-16/where-worlds-unsold-cars-go-die

 

 

I can't believe how many unsold cars they have.

I don't even have a car and I could surely use one, but I can't afford one. it seems crazy that there are so many stockpiled that will probably never be sold and then there is me with no car.

I can't see an easy fix for this. I can only see this industry collapsing.

How many more industries are seeing situations like this?

are there warehouses full up with televisions?  computer components? how much stuff is there that is being produced and wasted? We could all have brand new everything, but this stuff is probably just sitting and rotting away.

I make do with second hand goods, while there is brand new stuff just left idle.

My chair was something i found in the shed. There is probably a warehouse full of brand new office chairs unsold.

[*Chernaudi]

Reminds me of tales of Daewoo in the UK when they didn't originally bother with an actual dealer network and they stored their cars at old airport hangars, then on runways because they sold so few. Opinion on Daewoo became so bad in the UK and EU that they took advantage of their joint venture for car making with GM that Daewoo became branded as Chevrolet in 2004.

There's also a general automotive thread I started on here talking about cars, the auto industry and auto racing if you'd like to join in there.

But one thing that has kept the car industry going is planned obsolesce and the fact that people want "newer and better". That is until a car becomes a classic and a collectable. Recycling and stockpiling old parts and selling them to car restorers is one thing that keeps the industry profitable.

[*guyverfan]

to tell you the truth yuki, i thought the car industry in the UK collapsed years ago and the only manufacturer still there is rover!

 

i don't know if the news has reached anywhere else in the world, but here in australia we only have 3 manufacturers, GM,FORD & TOYOTA. who have all announced late last year that they'll be closing down their manufacturing facilities by 2017 and moving production overseas and will only be importing vehicles to australia for sale. just the other day GM announced that they may be bringing the closure forward to early 2016. so that means production will wind down in 2015 and just the cleanup crew and machinery dissassemblers will remain to cleanout the factories and ship everything out.

 

apparently there was a few seminars held by some leading analysts from the UK for the highup brass knobs. to show them that what ever they think the fallout will be when industry closes, to multiply it by 10, as they've seen it first hand in their own country.

 

fact is, our economy has been falling for many years but its suppressed in the media, as government want people to keep on spending. they state that the unemployment rate has only now risen to just over 6% and some US officials were praising our government for keeping it that low. but what they and many others don't know is that here, if you are paid minimum for 1hours work in a week(yes, thats right) you are classed as employed!

but, to tell you the truth, i've read somewhere that there were 800,000 new jobs, people employed in the US. this was roughly a short time after some aus/US conference where our polly's received the high praising.

so it looks like to me that the US may have taken up the australian statistics modelling to employment data.

[*Chernaudi]

Now that's kinda bull right there!  You're considered employed if you get paid the equivalent of minimum wage for one hour's worth of work.  I've rarely heard anything so stupid about labor laws ever aside from areas that don't have any.

 

The British car industry collapsed because of, in a space of time from 1968-2005, British Leyland/Austin-Rover/Rover being mismanaged and having constant strikes, being semi-nationalized, being privatized and sold to BMW who only wanted the Mini brand as their own, and now MG-Rover is owned by a Chinese conglomerate. 

 

That all being said, Ford, GM (Vauxhall), Nissan, Honda and Toyota build cars in the UK, most F1 teams are based in the UK, XTrac builds most of the gearboxes used in F1 and sportscar racing and rallying, and the Williams F1 team builds the flywheel hybrid system used in the variants of the Audi R18 e-tron quattro that have raced at Le Mans since 2012.  Also, Ricardo builds parts for the Bugatti Veyron and though owned by Volkswagen Group and BMW, Bentley and Rolls-Royce still build their cars in the UK, and Aston Martin is now majority British owned by a consortium lead by Prodrive founder/owner David Richards, in conjunction with Ford, who still own 12% of Aston Martin.

 

They still build cars and such in Britain, though a lot of the companies are under foreign ownership.

 

As for the deal with Australia, I know that Ford wanted to kill the Falcon, and that it was them wanting to stop manufacture there that would do it.  It would be replaced with the Mondeo (EU/UK version of the NA Fusion) and a RHD version of the Ford Mustang.  The Holden Commodore is sold in the US as the Chevy SS, and the Buick Park Avenue is sold and built in China based off the Commodore's chassis.  So that killed the Australian built Commodore.  And Toyota sell a similar line up in Australia as they do in Europe and NA, so that killed Australian production.

 

The problem is economics and that it's cheaper to import similar cars into the area than build them there.

[*guyverfan]

Now that's kinda bull right there! You're considered employed if you get paid the equivalent of minimum wage for one hour's worth of work. I've rarely heard anything so stupid about labor laws ever aside from areas that don't have any.

yep, thats right. if you're hired somewhere as casual staff, life can sometimes suck.

but this also stretches to any paid volunteers. eg.75year old pensioner helps out at a school fate and gets paid for it.

The problem is economics and that it's cheaper to import similar cars into the area than build them there.

hit the nail on the head, hence why i left the industry some 10+ years ago

i saw the start of it when our previous government before last(about 18 years ago) lowered the import tariffs on everything.

[*Chernaudi]

The problem is also that various areas of the world have their own twists and turns on automotive regs/vehicle construction regs.  Ford was one of the first to try and tackle this with the "world car", the 1993 Mondeo (US Contour), but the current Mondeo/Fusion is a true world car that can easily be made to suit RHD/LHD, emissions regs, all the other stuff that eff'd up similar World Car attempts.

 

In fact, it should be noted that Holden Commodore variant built in China (Buick Park Avenue) is currently being built from knock-down kits built in Australia.  But the Zeta platform is a "world car" for GM for rear wheel drive cars, just as the Opel/Vauxhall Insignia and Buick Regal is the same for FWD/AWD cars.

 

These cars can be made easily and fairly cheaply and can be built anywhere, including in developing automotive nations such as China.

[*Chernaudi]

@ Yuki, on my end, we have to make do with used cars, because we can't afford a new one.  At least the old cars we have can be fixed fairly easily and parts are common for them.  I do wish that we could have a car newer than 1995, but unless we get rich soon, that's not gonna happen.

 

But we do have new flat screen TVs at home, mostly because we paid like $250 for them.  That's cheap compared to even some of the "old style" TVs we've bought in the past.

[*Jess♥]

yeah the thread is mainly about the state of industry, rather than cars specifically. but there is some good info here, I'll have a proper read later when i got a bit of time.

[*Chernaudi]

The car industry is in a bit of a state of contraction to boost profits and simply logistics.  Things are trending towards "world cars" whose platforms can be built anywhere in large numbers and can underpin a large number of models.

 

For example, at Audi their Modular chassis in longitudinal engine form underpins the A4, A5, A6, A7 and A8 in various forms, as well as the S and RS variants.  The Modular transverse engine platform underpins the Audi A3/S3, VW Golf, VW Jetta, VW Passat (EU)/CC (worldwide), and various other transverse engine/FWD/AWD cars by Skoda and SEAT. 

 

The Ford Mondeo/Fusion is a world car (also sold in NA and Asia as the Lincoln MKZ), as is the Buick Regal and Vauxhall/Opel Insignia.  The Kia Optima and Hyundai Sonata, and other Kia/Hyundai cars share the same platform (Hyundai and Kia are the same company), and BMW and Mercedes-Benz's RWD/AWD cars all share long and short wheelbase platforms with each other.

 

It's all about economics, profits, interchangeable parts and logistics at this stage.  Not a bad thing when done right, but I'm not so sure it's a 100% good thing, either.

[durendal]

I don't know about you guys, but the trend in Asia is different.  Car manufacturers over here has an astounding double digit growth.  Currently the brands that are being sold over here are Toyota, Mitsubishi, Hyundai, Honda, Nissan, Ford, GM and Subaru, which are only some of the most popular brands.  Then mix them in with some luxury cars as BMW, Mercedes, Audi, Porsche and Volvo.  And believe it or not, we also have the china made Chery QQ, and a new one only costs around $4,000.  Not to mentioned that all these considering our unemployment rate is above 10%.

 

I think the Japanese car manufacturers are now conquering the automotive market.  Probably due to the cost to manufacture them since most of the part came from china.  Their cars are also designed to be built less expensive due to the bulk.  Mileage may also play a factor.  the Honda Jazz is probably one that has the best mileage, with a reported 16km/liter (or 37 miles/gallon).  People here change cars like they are clothes.  I guess one factor is that some company also subsidizes the purchase of a car.  My neighbor just bought a Toyota Altis through his company payable in 5 years, with the company shouldering around 30% of the cost.

[*V Guyver]

 Cars are kinda like the steel industry in the US. The costs of labor and economic value of the company eventually starts to force that labor overseas. What happened to cars is what happened to the steel industry, companies went under, or went on strike, and this caused a need to import. Once people learned that you can import steel from japan at a far lower cost than being mined locally, they switched. Same happened with the cars, material bought in several countries, brought to china, and assembled, important parts assembled in korea or japan for better quality control, then imported to china to also be assembled. Eventually you ship them out back to whatever country.
 
 It's even more lucrative when you realize that even if labor in the US got cheap enough to attract companies again, the cost of exporting thanks to tariffs would raise the prices again. You see this sort of stuff constantly hit every industry, every niche. Even traditionally made products like Shemagh's in small corner venues got killed off by chinese labor. It's it's not china, it's korea, if it's not korea, it's mexico, if it's not mexico, it's jamaica, if not that... you get the idea. 

The issue with cars and everything else is cost vs profit, all companies seek it, and someone always pays the price. It's become more apparent as you see the economy in countries like the UK and the US see a larger gap between rich and poor. The reason is because all those jobs, labor, and money are eventually going to other countries. Now, these countries, like India, China, Korea, and the more are coming back with that money, buying up US and UK assets, buying up companies, the decades result of our money and labor being pushed in there and raising their standards of economy. Just look at the UK, several major companies, even entire ports owned by India or China. The US has had similar results, even protests over some plans to sell them overseas due to security risks. 

It's kinda weird that the rich call themselve job makers. They aren't, they never invest back into our local economies, thus leading to these problems. People are buying cars precisely because these job makers sit on their money or send it overseas. =/

[*Chernaudi]

That's an issue.  Toyota build more cars in the US than Ford of GM does.  Many of their products come from Canada or Mexico, and they build just about as much stuff there as in the US. 

 

And we have to look at British Leyland in the UK to see problems that are still endemic today.  Car makers are to blame because they want cheap labor and not wanting to deal with American unions--the deals with BL in England taught them that.  The Unions are to blame because what started out as an idea to protect workers' rights has evolved to the point where Union leaders are basically CEO's of what is basically a private limited company in all but name--and guess where the union dues go, the union bosses.  Both sides have more than their fair share of corruption there and the Government is afraid to upset the status quo out of fear of failing to make both sides more rational and fair. 

 

It can be argued here that capitalism sucks, but as Clint Eastwood said in the Dirty Harry film Magnum Force, "I hate the g**damn system!  But until someone comes along with changes that make sense, I'll stick to it."  Socialism isn't any better, because it limits choices and opportunity, though it can be argued that capitalism does much the same thing though economic Darwinism--the strongest stand the best chance of survival. 

 

For example, the tire situation in sports car racing.  The IMSA TUSCC series has Continental as exclusive supplier in three out of four classes, as a series endorsed spec tire supplier (similar to what NASCAR has with Goodyear, Indy Car has with Firestone, and F1 with Pirelli).  In the FIA WEC, though an open tire formula, Michelin is default tire supplier to every entry in three out of four classes. 

 

In TUSCC, Conti is sole exclusive supplier to Prototype, LMPC, and GT Daytona though a spec tire deal.  In the WEC, Michelin is sole supplier in LMP1, GTE Pro and GTE Am, supply half the LMP2 class, only in GTE Am are they close to being a spec tire supplier (The FIA and ACO encouraged this as a cost cutting measure, though it's not a full-on spec tire deal yet).  The other cases are though Darwinism as the teams voluntarily signed Michelin as their supplier.

 

Every system as pros and cons.  But I'd rather see a system where people get rewarded for doing a good job than having to have people in positions of power prop them up. 

 

Problem is, the current system on all sides is flawed, but people are also afraid of screwing up trying to shake things up.  Only when things are dire will anyone budge.

[*Jess♥]

I think people are missing the point here.

This is not just in one country, or two... it's in all countries.

[*Jess♥]

read the article, there are more cars on the planet than people.

cars are just being abandoned because they will not sell.

[durendal]

I think people are missing the point here.

This is not just in one country, or two... it's in all countries.

 

I would think that there is an exception in that.  Perhaps all the countries in the western hemisphere of the world, but might not be applicable to some nations in Asia.

 

The article actually doesn't make sense to me.  At least in a business sense.  If there are too many cars, why would a company simply write them off?  It would be preferable that they sell them off at below cost, at least they would somehow recover their losses.  It's common sense, if you can't sell something, better to sell them cheap than throw them away.  Not to mention the carrying cost of maintaining such inventory.  With that many cars, you need space, and space is not cheap.  It does not sound like a proper business practice to me.  If companies keep doing that, they would have ceased operations already.  There is no way a company could afford the insane salary of a CEO if they keep losing money like that.

 

I feel that the article is biased somehow.  I don't think the author is showing the whole picture.  Actually a lot of writers manipulate the data to prove their point despite getting the facts skewed.  As I always say, take anything from the internet with a grain of salt.  A lot of people get in trouble because they believed the wrong information.

[*Jess♥]

the article does cover that peculiarity,

it says that the companies won't sell them cheap because it reduces their products market value in the long run.

If they sell 2014 model for 6k instead of 15k, then 2015 model will not sell at 15k.

that is their reasoning according to the article.

 

I don't know what the case is in some Asian countries, there are more people in places like indonesia, china, india etc. I don't know what the case is, but it is possible and likely that there is a similar thing going on. the reason I say that is because if there were a market in Asia, then the cars from the UK and other countries would be shipped to the place where the market is performing well.  shipping them is surely cheaper than the alternative, right?

[*Chernaudi]

The big problem is that car makers, like all businesses, want to make money.  They have to pay workers, pay taxes, invest in their company, all of that stuff to keep the wheels turning. 

 

I brought up the British Leyland stuff because that whole mess is a good example of how to run a car company into the ground.  BL didn't help matter by building cars that, though popular at the time, have since become ridiculed for unreliability and poor manufacturing quality, even by 1970's standards, when it seemed that anything made by anyone in the car industry sucked ass.

 

Car makers probably see more value in scraping unsold cars, either cannibalizing them for spare parts, or recycling them for more steel and other metals and materials, than to sell them at a reduced price.  Usually, it's up to car dealers to slash prices, but one only has to look at the Edsel debacle to see what could happen there.

 

As far as importing vs building locally, both things are sort of a gamble and is a test of what the market will bear.  Armalite designed the AR-18 rifle as a simpler, easier to make version of the AR-15/M-16 family of rifles.  But it was cheaper for people to buy AR-15s from Colt for their armed forces in the short and long run than to set up a factory to build AR-18s.

 

With the car industry, most of the big companies now have tentacles all over the world, so it might be easier for them to set up local manufacturing and save/make them money in the long run vs importing cars.  There's some conditions to that, too.  Audi said that they'd build a factory to build cars in North America if worldwide sales exceeded 1 million cars.  Audi's parent Volkswagen Group already builds a NA version of the VW Passat in Tennessee, because market demands made it seem like a good idea, and one that's paid off for VW.

 

It does come down to economics, cost, economy (both for the maker and the market, not to mention where the cars are built), and balancing all that out to suit all needs and desires.

 

But still, car makers it seems would rather scrap the old stock of model-year old cars for spare parts and recycling than sell the off a cut prices.  The only way it'd be feasible for them is if they can make back on what they'd lose per car by volume sales.

[*Jess♥]

it seems it would take a lot more money to shut down a factory and reopen in a few years than it would to waste all these cars.

[*V Guyver]

<p>Even if the cars don't sell and the company eats the losses. We seem to forget there are plenty of government policies in effect that help cover those losses. The companies don't lose much from the cost of construction, they do lose potential revenue, but the cost of building the car is actually not that big. When that small loss is recorded, a company can write the losses off and get reimbursed by government... or governments in some cases.<br />

<br />

Also, just saw this today, and I can't stress just how much this relates to this problem. if you don't figure it out, take a break and think it over, on how a car company that is so big in a country can effect it's economic policies through donations.<br />

<br />

http://youtu.be/gIcqb9hHQ3E

</p>

[*Chernaudi]

it seems it would take a lot more money to shut down a factory and reopen in a few years than it would to waste all these cars.

Usually, it seems that when a company shutters a plant and lays off/reassigns it work force, it's a sign of big issues.  It's also seen as the company not having any short to mid term plans for that plant and that area.  There are times where plants have been halted and it's workers sometimes offered paid leave, but that's usually only for one model of car built specifically at one plant. 

 

Usually, car makers will make up for losses as write offs a VGuyver pointed out, or though selling parts and services to customers.

 

In auto racing, race car constructors for customer teams don't make a lot of money off initial sales usually.  They usually turn a coin on spare parts sales and tech support for customer teams.  Car makers benefit from that on the road car side as well.

[*Jess♥]

with 3d printing coming along, it won't be long before we can print our own components for a kit car.

since I can't afford a car, I would certainly be eager to build one piece by piece.

we may benefit from ordering certain spare parts from the automotive industry, things that 3d printer might currently struggle with.

[*guyverfan]

to tell you the truth yuki, it'll probably cost over 3times the amount than just buying one that a manufacturers already made, and i'm speaking from experience.

just ask anyone or search for anyone that has done a complete bare nut and bolt restoration on a car.(term, nut&bolt= everything)

 

even kitcars eg; ac cobra,probably the most common and popular kit, looks like an easy,straight forward project but there's a reason why so many completed versions go for $40k+, and if everysingle part of the build was done by the owner, they'll still be making a loss at that price not to mention the countless sleepless hours.

 

and with 3d printing of parts, maybe for little interior parts like a/c knobs and switch covers, as internally they still need copper contacts to work.

and current regulatory design laws in many countries would prevent a plastic car i would imagine

[*V Guyver]

The metal printers would make creating customized, improvised, or out of stock replacement cars. But the costs will vary from car to car, and as guyverfan pointed out, the cost can be insane. The reason the Model T was so successful in the first place was because it was built fast and easy with all parts being interchangeable. Before that, all cars were built from scratch by hand, quality varied, cost was much higher, and maintenance was a nightmare. Imagine getting into a car accident and having to replace 55 components just for the fenderbender. or 10 broken components for that once of a kind headlight. See where I'm going?

 

On the other hand, there are plenty of people who make their own cars because they can't stand the industry, or find themselves wanting a challenge or fulfill a curiosity. Me personal wish to build a car is a Doble.A full steam powered car. They were incredibly good, powerful cars powered by steam. Despite their weight, they were fast, and the design allowed the car to be up and running in the middle of a snow storm in less than 2 minutes, which is kinda Ironic since you have to warm up a gas powered car for several minutes before you can even drive for fear of breaking components. 

[*Jess♥]

to tell you the truth yuki, it'll probably cost over 3times the amount than just buying one that a manufacturers already made, and i'm speaking from experience.

what experience? the system I described doesn't exist yet... :-/

[durendal]

I think guyverfan was referring to his experience in building your own car.  And since one car has literally thousands of parts, it may come costly to buy the raw materials used for 3D printing instead of buying one outright.  I am under the impression that a 3D printer is very costly, as well as the materials you need to print in 3D.