Twelve months ago, almost no one would have guessed that at the end of 2010 Ford Motor Co. would be the second-most profitable car company in the world.
It’s been that kind of year – a year of surprise developments. The automotive world has also been through a year of bold predictions and stunning stumbles. And let’s not overlook several once-emerging auto makers who in 2010 became firmly established as serious, ferocious competitors.
General Motors came to the financial marketplace with an initial public offering that was over-subscribed and completely successful (surprise development). Volkswagen reaffirmed its goal of becoming the biggest car company in the world by 2018 (bold prediction). Toyota and Honda saw their sales plummet in Canada (stunning stumbles). And once-overlooked players such as Hyundai, Audi and Subaru enjoyed spectacular years in every way imaginable (serious, ferocious competitors).
Then there’s the loonie. Parity with the U.S. greenback is the new reality and that has had enormous implications for new-car pricing in Canada – positive implications for price-conscious consumers, in fact.
Yes, 2010 was quite the year. If 2010 taught us anything, it is that 2011 is bound to be unpredictable, too. Here’s what I’d judge to be the top 10 automotive stories of 2010:
Fireworks light up the Detroit skyline in this undated photo. A year ago the city was reeling from the near-collapse of the Big Three auto makers. Today, the outlook is much rosier.
1. DETROIT MAKES A COMEBACK
Detroit’s auto makers have a future. Who’da thunk?
Where once they thought the world revolved around them, in 2010 Motor City’s car makers made serious strides towards reinventing themselves with business and product plans for a global marketplace where they must enter and compete. Ford is clearly the furthest along and it shows on the bottom line where Ford is immensely profitable.
General Motors is making money too, and did a successful share offering in November. Chrysler, now managed by Italy’s Fiat, is profitable on an operating basis and is launching 16 new or refurbished models this year.
You and I may yet get back all of the $7.1-billion (U.S.) the Canadian Government provided in the U.S.-led GM bailout in June, 2009; Ontario provided $3.5-billion. Perhaps most shocking of all, Morgan Stanley analyst Stuart Pearson recently told investors, “Chrysler may prove to be one of 2011’s most surprising success stories.”
The solipsistic mindset that once dominated Detroit’s auto makers has, at least on the surface, been replaced by a outward-looking world view laced with both opportunities and challenges. Detroit’s revival was the automotive story of 2010.
A Canadian dollar, or loonie, sits on its American counterpart— The Canadian Press
2. THE LOONIE: PARITY IS THE NEW REALITY
As the Canadian loonie climbs to par and perhaps beyond with the American greenback, cars get cheaper and cheaper. At the end of 2010, after so many months of near-parity, the Canadian new-car marketplace is rich in sales sweeteners – cash-back deals and cheap financing offers.
It looks like we should get accustomed to a loonie of equal or better value versus the greenback. “Parity is the new reality,” Scotiabank’s currency strategist Camilla Sutton told the Globe earlier this year.
As 2011 dawns, expect car prices in Canada – at least on a real transaction basis – to remain stable or even go down as the loonie stays strong.
— Getty Images
3. ONCE-IMPERVIOUS JAPANESE CAR MAKERS TAKE BIG HITS
I would argue that Toyota had the worst year in its history. But Honda is having its problems, too. Both have suffered a significant drop in sales this year.
Toyota’s troubles had been building for years, with the tipping point actually coming in late 2009. The massive recall of millions and millions of vehicles, a record $48.8-million (U.S.) in fines to the U.S. government for a slow response to problems with sticking gas pedals, and the seemingly endless series of recalls since, have seriously damaged the Toyota brand. It will take years for Toyota to recover.
