For the U.S. auto industry, 2014 was a year that manifested events from all points on the success – failure spectrum. Though the industry as a whole contained a return to sales normalcy…accented with product innovation (an aluminum Ford F-150) and new leadership (Ford’s CEO), it also felt the piercing impact of multiple General Motors product defects linked to several dozen deaths. The resulting victim claims and product recalls for GM could easily run into billions of dollars of financial consequences.
Here’s the 2014 headlines with greatest impact for the U.S. Auto Industry.
1. Yet Another GM Recall Crisis – Ignition Switches
GM’s battered corporate image had barely begun to recover from bankruptcy and Government bailouts…when new safety protocols cascaded into a host of recalls that spanned over 30 million vehicles worldwide.
2. Takata Airbag Recall Debaucle
Alleged to have caused five (5) deaths globally… The bottom line as Takata describes the issue: an airbag propellant can that degrades with humidity, causing the propellant’s canister to explode during a crash…sending shrapnel at occupants. To make matters worse, The New York Times reported that Takata tested the canisters and then covered up the results. Takata denied the report. Last week, Takata President Stefan Stocker resigned and CEO Shigehisa Takada added President to his duties.
3. Ford F-150 Aluminum-Body Roll Out
When Ford’s top-selling vehicle line in the nation announces a switch to an aluminum body…it big news. The redesigned 2015 F-150 pickup has begun production in its newly retooled Dearborn truck plant. But Ford has spent considerable time and effort in 2014 to persuade dealers with body shops to invest in training and special equipment.
4. Auto Parts Execs go to Prison for Price-fixing
Thirty-one parts suppliers (mostly Japanese companies) that make almost everything from wire harnesses to wiper switches… plead guilty or agreed to plead guilty in the crackdown since 2011. Forty-six individuals, virtually all Japanese, have been charged. The interesting part is this pattern as explained by one executive who did prison time for price fixing: A single exec takes the fall, refrains from naming higher-ups and is guaranteed lifetime employment once out of prison.
5. U.S. Car Sales: Let the good times roll
At year end 2014, the market for U.S. light-vehicle sales looked on tract to surpass 16.4 million vehicles…the most since 2006. Average transaction prices topped $30,000.
Why? The banner sales year seems to be a product of everything lining up: lower gas prices, better U.S. employment numbers, interest rates still low and the absence of any production bottlenecks.
Top performers were pickups, luxury vehicles and crossovers. Fiat Chrysler Automobiles’ U.S. brands sales also continued rising toward a probable 15 percent year-over-year gain.