At half-staff

Grief and uncertainty seize industry, nation


FRANKFURT - It could serve as a symbol of the state of the American auto industry at this crushing moment: At the entrance to the sprawling Frankfurt exhibition center, where senior executives of the world's automakers gathered last week to strut their stuff, the ranks of flags now fly at half-staff.

A global industry mourns for a tragedy too great to express. And the global industry braces for what well could be the end of the era of confidence.

This week, automotive analysts and executives face the unexpected challenge of trying to determine just how badly a handful of terrorists have disfigured the future of the industry by crashing three hijacked jets into the Pentagon and the World Trade Center.

Not just the U.S. industry, but the world industry.

The fallout was immediate:

  • Several auto factories and parts plants shut down as trucks full of Canadian, Mexican and U.S. parts sat backed up for miles in long delays at U.S. borders.

  • Air freight deliveries of parts were grounded as U.S. air service ceased for most of the week.

  • Several automakers' shares on the Tokyo Stock Exchange tumbled their daily allowable limit as investors expressed their concern about the industry's future.

  • Auto executives were stranded around the globe by the ban on U.S. flights, including dozens who could not return home from Frankfurt. About 450 auto dealers and state association executives were stuck in Washington when their annual legislative conference was suspended there. Another 450 Nissan dealers, about 400 spouses and 100 corporate representatives were stranded in Las Vegas, where they had gathered for the brand's national dealer meeting.

  • Some companies put temporary holds on overseas travel. (See story, Page 4.) A long-scheduled September trade meeting between U.S. parts makers and Japanese automakers was postponed until March.

  • Automakers and retailers canceled TV advertising schedules in an effort to avoid appearing tactless. The cancellations come at a sensitive time, since manufacturers are introducing the year's new models and dealers are clearing out older inventory.

  • Motor show organizers in Tokyo, Detroit and Chicago made plans to step up security. Tokyo organizers are considering more security for next month's event. Detroit show officials said they probably will require next January's visitors to pass through metal detectors.

    Where from here?

    Many auto industry executives worried aloud last week about potentially lasting fallout from the New York attack.

    "We must not allow this act of violence to stop our lives, our businesses and the economies of the world," said J.T. Battenberg III, CEO of Delphi Automotive Systems Corp.

    Wolfgang Bernhard, Chrysler group COO, said he could not begin to assess the effects of the terror on the company's business.

    "We have no idea if consumer confidence will go down even further," Bernhard said. "Or Americans could rally together and want to buy American."

    But it is not just U.S. firms pondering the future. For the past decade, the fortunes of automakers everywhere have become increasingly tied to the flow of new cars out of American dealerships. Questions with no clear answers now hang over many companies.

    There is luxury importer Porsche AG, for example, which has been riding high on bullish U.S. buyers. "If yesterday morning it was cool to buy a Porsche, by yesterday evening it was not cool to buy a Porsche," said Fred Schwab, president of Porsche Cars North America, at the Frankfurt auto show the day after the attacks.

    There is Honda Motor Co., which counts largely on its beefy U.S. profits; Renault SA, buoyed now by brisk sales of Nissan trucks to young Americans; DaimlerChrysler AG, whose global health depends critically on the well-being of Dodge and Chrysler brands; Mitsubishi Motors Corp., whose hopes for Japanese recovery await the expected new success of its U.S. subsidiary; and Toyota Motor Corp., whose ever-expanding network of North American factories depends on a continuous flow of U.S. prosperity.

    Now all are potential victims of a rupture in the fabric of American peace of mind.

    No answers

    As last week ended, there was only uncertainty. Analysts and executives, asked for their forecasts and outlooks, universally had little to say. With eight months of robust sales already on the books, industry economists have predicted U.S. sales of 16 million to 16.5 million new cars and trucks for 2001. With just 15 weeks left in the year, chances are the final tally will not slip much below that.

    But there are now new longer-term issues to consider. Chief among them: war.

    A very real potential exists for what the White House is calling "sustained war."

    War obviously interrupts auto shopping. It causes market uncertainty, transforms consumers into soldiers, pulls reservists out of businesses and off of assembly lines and, depending on the needs of the military, potentially creates a new competition for employees in an already tight U.S. labor market.

    To some in the U.S. industry, the current circumstances may seem hauntingly familiar. It was a decade ago that a different President Bush found himself confronted with a slowing economy on one front and a Middle Eastern war on another.

    That combination pushed the U.S. auto industry down a steep trough in 1990. Struggling General Motors was pushed toward bankruptcy, and a boardroom coup by directors swept out top management. Import brands Peugeot, Sterling and Daihatsu disappeared from the weakened American market.

    Such dramatic turns of fortunes were not even a topic of industry discussion one week ago. But after the cataclysmic events of Tuesday, Sept. 11, the auto industry could be preparing for a changing scenario.

  • You can reach Lindsay Chappell at

    ATTENTION COMMENTERS: Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

    Email Newsletters
    • General newsletters
    • (Weekdays)
    • (Mondays)
    • (As needed)
    • Video newscasts
    • (Weekdays)
    • (Weekdays)
    • (Saturdays)
    • Special interest newsletters
    • (Thursdays)
    • (Tuesdays)
    • (Monthly)
    • (Monthly)
    • (Wednesdays)
    • (Bimonthly)
    • Special reports
    • (As needed)
    • (As needed)
    • Communication preferences
    • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.