As the story has gone for the past few decades, changing market conditions and shifting consumer demand have once again caught the Big Three flatfooted. Thanks to $4 a gallon gasoline, trucks and SUVs are out and compact cars and crossovers are in. With General Motors, Ford and Chrysler still heavily relying on the former rather than the latter, the Big Three are hoping to hang on until 2010 when things should begin to turnaround.
So what will change so drastically in the next two years that could potentially return the Detroit automakers to profitability?
Right about the start of 2010, the Big Three are expected to see their first savings from the recently inked national contract with the UAW. Thanks to the new two-tier wage system and lower health care costs, each of the Detroit automakers are expected to save billions per year. By 2010 GM could be saving $5 billion a year with Ford seeing a savings of $1.2 billion, according to the Detroit Free Press. Chrysler has yet to comment on how much it expects to save.
Another reason for optimism about 2010 is that a new crop of fuel-efficient vehicles should be hitting the market by then. GM is preparing an all-new small car for the 2010 model year — with several other compact crossovers planned — and Ford’s compact and efficient Fiesta will hit U.S. showrooms some time in 2010.
Chrysler — which is widely regarded as the worst off of the Detroit three — could even see a resurgence in 2010. Chrysler will begin selling a re-badged version of a Nissan small car in 2010 and could even have a Chrysler-badged Chery A1 compact car to market by then.
However, 2010 is not a guaranteed turning point for the automakers of the mitten state. 2010 is “a make-or-break year,” Sean McAlinden, chief economist at the Center for Automotive Research, told the Detroit Free Press. “Ford has some good stuff coming. GM should do well. … They have some wonderful stuff in the pipeline. 2010 is the big question mark.”
