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:
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 answersAs 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.