Final Inspection

Charting the Comeback


Maybe it’s time to recalibrate.

Most of this year was spent repeating the same monthly vigil, as we waited anxiously to see whether industry sales volumes would top the 1 million-unit mark and how far the seasonally adjusted annual rate would creep toward 12 million vehicles.

We sweated over whether the fleet market was carrying too big a sales load and wondered aloud just what – and how long – it would take to get overall demand back up to more reasonable levels.

But it may be time to transition to a new way of thinking, where the industry’s health is judged much less by how many cars and trucks were sold in the previous month and much more on a set of metrics that better reflect the market realities of the post-2009 meltdown.

The recession the industry is weathering represents more than a traditional economic slump, it has forced a complete correction in the way auto makers think and operate, and the future will be less about volume and market share and more about how well the players stick to the game plan dictated by the new paradigm that has put a lid on easy credit and forged a more cautious consumer.

Getting back to 16 million-unit annual sales or more would be nice, but only if that’s the true level of demand and the industry can avoid the pitfalls that made the overcapacity-fueled record sales years of 17 million-plus vehicles famous as the period of “profitless prosperity.”

That means making sure capacity, production, inventory and sales levels remain in a healthy balance that allows auto makers to dodge costly incentives that erode profits and tarnish brand equity.

More important barometers than sales volumes and market shares are days’ supply of inventory, plant capacity utilization, average transaction and resale values, cash flow and, yes, profits and losses.

Are auto makers once again paying more attention to what Wall Street thinks than to core product, brand and customer issues? Are they maintaining a broad product portfolio that allows them to react quickly to market demands or one so skewed in one direction that it is too vulnerable to fuel-price and buyer-mood swings?

A ton of money stands to be made in even a modest 15 million-unit market. Detroit already is beginning to post some pretty healthy financials at much smaller volumes.

But auto makers and suppliers will need to maintain some discipline if they want it to remain that way.

In the meantime, maybe we should all stop waiting for that big market rebound as the one sure sign the industry is on its way to a full recovery. Things have changed, and monthly sales reports won’t tell the whole story.

As recent history indicates, sometimes record volumes are nothing more than a lot of smoke and mirrors any way.

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What's Final Inspection?

WardsAuto editors share insights and observations on the global auto industry.


David E. Zoia

As Editorial Director, I oversee much of what goes into, enjoying a ringside seat that lets me observe up close just about every facet of the industry worldwide. I have covered the...

James M. Amend

James Amend is an associate editor at, covering day-to-day business and product news at General Motors. He also leads coverage of regulatory and environmental issues, as well as the...
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