What a difference a year makes. It’s 2010 and the auto industry is beginning to recover.
After an incredibly tough 2009, consumers seem to be coming back. For the first time in recent memory, Americans’ perception of domestic automobiles seems to be on the mend (Business Week 4/23). Ford’s bet that Americans will buy smaller, fully featured automobiles looks like it may pay off. GM’s product plan created by soon-to-retire Bob Lutz is leading a resurgence for the General. Hyundai and Kia, supported my excellent product quality, have taken advantage of recessionary sensibilities and grown share of market. Audi , Subaru and Mini have come out of the recession on a tear.
On the other side of the ledger, Toyota continues to struggle with recalls and concerns about quality. This has led to unprecedented incentives by Toyota and the predictable response by competitors to match them. So a good number of consumers who had been sitting on sidelines during the recession have come back to dealerships looking to for a good deal. After 2009, it’s a relief to see traffic in the stores but at the same time if the incentives continue that will not be good for the industry long term. In 2009, some progress had been made at reducing the use of incentives, but the moment Toyota jumped in to defend its franchise, that opened the floodgates again.
So the good news is that customers are returning to the stores, but are they coming back for the right reasons?
