Weird Al Yankovic wrote a funny song called 'Everything You Know Is Wrong.' In the auto industry, it's not so funny. Much of what people knew just two or three years ago has been tossed on the scrap heap. On the eve of the millennium, the pace of change takes your breath away.
One clear trend has emerged. Call it B&F: bigger and fewer. Bigger and fewer suppliers will provide bigger and fewer systems and modules to bigger and fewer automakers, who will sell bigger numbers of vehicles off fewer platforms, through bigger and fewer dealers.
Like all trends, this one will run its course eventually. And it will create new opportunities for niche players. But for now, conventional small or mid-sized players have to feel as if they are on the endangered list.
In just one issue, last week's (May 25) Automotive News carried 10 stories that would have been unimaginable three years ago. Let's look at some of them in light of the trends, particularly B&F.
1. 'Republic aims to rule retail.' A massive public dealership group expects revenue of $60 billion within five years and to brand all its stores as AutoNation. Everyone knew dealers would be local entrepreneurs, and automakers would never allow a really big 'megadealer' (quaint concept, that) to amass enough power to challenge the factory. Now Ford Motor Co. and General Motors have embraced Republic because it enables them to have bigger and fewer dealers.
2. '65 shareholders, 1 dramatic scene.' Chrysler Chairman Bob Eaton explains to a Holocaust survivor why Chrysler was taken over by a German company. Of course, DaimlerChrysler will be barely German. Companies' nationalities are becoming irrelevant.
3. 'AIADA rethinks 'what we're all about.' ' And 'AAMA: Less clout with 2.' Am import-dealer group and an all-American manufacturers' association say they can't possibly continue in their current roles in light of DaimlerChrysler. There is no 'American vs. Import' anymore. We're all one big ... what?
4. 'Ford consolidates Salt Lake City stores.' Dealers, who originally wanted to run their stores and pass them on to their heirs, come back to No. 2 automaker and say, 'On second thought, we'd be happy to sell our stores to a big corporate entity.'
5. 'Ford plans pioneering plant in Brazil.' This is another plant where the suppliers do most of the work, in this case providing the rolling chassis among other big systems.
Everything you know is wrong? Not quite. In the same issue with all the B&F stories, there was this one: 'Automakers know whom to blame for the staggering load of incentives and discount coupons: themselves.'