This year, 2008, will go down in history as the year even the likes of BMW, Daimler, Honda and Toyota felt the effects of a global financial crisis that has brought Detroit's auto makers to their knees, begging for government assistance.
I won't get into the gloomy details here. Instead, as the industry works to rebuild itself, let's get right to a few New Year's resolutions for car company executives around the world:
Resolution No. 1: I will never, never allow my car company to become overly dependent on any one vehicle segment or type.
Case in point: Detroit's overdependence on trucks and sport-utility vehicles.
For a decade trucks were the consistently profitable part of Detroit's business, yet the moment fuel prices spiked earlier this year, big rig sales tanked – dramatically. Japanese brands sell far fewer trucks, though not for lack of trying.
Yes, I am pointing a finger at you Toyota, and you, Nissan. Consider yourself lucky that the likes of the Titan and Tundra have been sales disappointments.
Resolution No. 2: I will always, always push for maximum fuel efficiency.
Case in Point: The only Detroit auto maker with a model in the subcompact category is General Motors and its Chevrolet Aveo/Pontiac Wave is built in South Korea by GM Daewoo.
Yes, yes, Ford is bringing its new Fiesta to North America, but not for another year. Look, if Detroit is to have a future, it will be based on good cars – fuel efficient ones – not trucks.
And this is not just about small cars that sip gas. Today's “halo” car is as likely to be a slick, technology-laden hybrid as a high-horsepower sports car. The public's perception of “performance” now includes fuel economy and more.
Resolution No. 3: Once this current mess has been cleaned up, I will only turn to discounting only as a very last resort, rather than the first line of defence.
Case in point: The blogosphere is littered with posts that say, in effect, only suckers pay retail. That's no way to run a business.
I'm old enough to remember when, in 1975, Joe Garagiola shouted, "Buy a car, get a check!" for Chrysler. That sold cars then and it still does.
But discounting has created a vicious deflationary cycle that even amateur economists warn against: shoppers wait for a discount, inventories pile up, auto makers cave in and cut prices or pile on incentives and around and around it goes until the car company or companies doing this start begging for government bailouts.
Resolution No. 4: I will stick to my knitting.
Case in point: Former Ford CEO Jac Nasser once said Ford was not a car company, but a service company. What utter nonsense. Nasser's reign as CEO lasted about two years (1999-2001) but it was long enough to send Ford into a tailspin.
Ford is not a finance company; Ford is not an oil change company; Ford is not an Internet-based services company. Ford is a car company.
At least the current CEO, Alan Mulally, has had the good sense to sell off nearly everything that isn't at the heart of the Blue Oval – Jaguar, Land Rover, Aston Martin and so on. Volvo is next.
Resolution No. 5: I will always focus on quality; it is critical for survival.
Case in point: Detroit's auto makers ignored quality for years and years and conditioned buyers to expect problems. That in turn devalued Detroit's products and accelerated the downward spiral we're witnessing today. Quality should never, ever be ignored, neglected or overlooked.
Resolution No. 6: I will not be tempted into making unwise alliances and mergers. In other words, culture matters and two organizations with two entirely different cultures can never, ever merge successfully.
Case in point: DaimlerChrylser. The so-called “merger of equals” proved to one of the great disasters in auto industry history. There was no hope, ever, that Germany's Daimler-Benz, a luxury car maker with a heavy duty truck division, could merge successfully with a mass-marketer like Chrysler.
And then we have GM's tie-ups with Fiat, Subaru, Suzuki, Isuzu and so on. Fiat was a particularly embarrassing waste of money for GM.
That's six. Auto makers that manage to stay true to these six resolutions have a decent chance of prospering.
