Yesterday Knowledge@Wharton published an audio interview with Wharton professor John Paul MacDuffie, co-director of the International Vehicle Development Program, titled The U.S. Auto Industry: Dangerous Curves Ahead? The following are some brief notes from the interview.
Much of the initial discussion revolved around the negotiations between GM and the UAW, specifically with regards to the proposed union-managed health care trust. It’s not the first time such an arrangement has been created, but the scale of this trust is much larger. Both sides seem truly interested in doing something very different and creative.
The subprime slump and the potential it may translate into lower overall consumer spending is hitting the Detroit Three just when they are in the fight for their lives. This could really hurt.
Chrysler’s problems are more on the revenue side than on the cost side. Nardelli is known as a cost-cutter, but Press actually focused on growing revenue even though he came waste-obsessed Toyota. The big question is whether they will try to grow the top line through improved design and delivered value to the customer or will Nardelli revert back to dictatorial cost-cutting.
Tata Motors may be taking over Jaguar and Land Rover. This could be very interesting as it would, assuming the quality was maintained, propel Tata into the global ranks. Tata has admirable, but relatively unknown, cost and waste reduction skills.
Although India’s car market is smaller than China, it is growing faster from a percentage standpoint. Economic dynamics creating more disposable income in India are driving this growth.
Japanese and Korean automakers are investing heavily in India. The initial investment was to capitalize on domestic Indian markets, but future investment will create export capacity to leverage India as a low-cost production base. Toyota has actually experienced some miscues with regards to matching the size and cost of their vehicles with the market, but now they are considering launching a new "global" small car in India first. Honda usually enters a new market with motorcycles first, which gives them some market experience before jumping into the auto market.
We often roll our eyes at academics, especially when a university interviews its own faculty to create news, but this discussion was fairly interesting with some new perspectives. The website indicates that a transcript will be available in the near future.