As the year 2008 comes to an end, you could be forgiven for cheering the year out and wishing for a brand new one, filled with hope and promise and the expectation of change. For 2008 was by all means one of the bleakest years on record, not just for the sheer number of tragedies, wars, deaths and the like that we have seen around the world, but more particularly for it hosting the largest meltdown of the automotive industry.
In any discussion of the economic scene, you will get umpteen references to the Great Depression of the early twentieth century and of how the current crisis is only overshadowed by that one. But think for a minute and one fact becomes clear – the auto industry was not as significant a part of the economy in those days and what little clout it had was confined to the US and Europe. Today, the car industry is a cornerstone of most modern economies, serving as the hothouse of industrial growth, competitiveness and excellence and employing millions of skilled personnel. While we hear of the US big three auto makers trying to get congress to give them a lifeline, we shouldn’t forget that car sales are down drastically even in the high growth areas of China and India, affecting global giants and regional players equally.
At times like these, governments across the world need to realise that the bottom-line should be sacrosanct. Any company, car manufacturer or otherwise can survive in the long-term only if it operates profitably. Governments should also use the same yardstick and measure the profitability of their support of industry in the long-term, but should not see monetary return as the only measure. Employment, technical development and the cascading social and economic impact of supporting industry should be given their due importance and in the process if industry needs to offer small sacrifices like limiting executive salaries, so be it. On the other hand, they need to also understand the impact of letting mega-corporations sink, with the resultant global chaos. Perhaps that style of free market economics is on its way out, just because in real life no one wants to shoulder the pain of the dark side of free markets.
The journey the auto world is on through 2009 is a lot more difficult than the car czar’s alternative car trip to Washington DC – but it will be a lot more than a symbolic gesture in nature. In our opinion, we haven’t seen the bottom yet, but even as we hit nadir we should remember that the evolution of new energy economies and a greener conscience will bring about future growth that will make the spurt that we had in the last decade pale into insignificance. And car manufacturers who use the current depression to invest in new technologies and leaner ways of functioning will be the ones that our children and grandchildren know as household names.