The Stingray Returns

So how healthy is the auto industry in the U.S.? 

This year’s Detroit auto show (officially the North American International Auto Show) tells the tale of an industry that has recovered from a near-death experience and has come back stronger than ever.

The star of the show makes the case for this assertion. Need to get from 0 to 60 in less than four seconds? The 2014 Corvette Stingray is your car. The seventh generation Corvette offers 425 horsepower in a vehicle that is likely to offer mileage above 26 miles per gallon.

The Corvette has a local connection in that General Motors (GM) assembles the car in nearby Bowling Green, Ky. Recently, a reporter from the Nashville Ledger called to get my thoughts on this vehicle.

To me there are really two interesting parts of the Corvette story. First, the fact that GM has the money to launch a new sports car speaks volumes about the company's renewed health. In 2009 when GM faced death, nearly all product production (except the Volt) went on hold. Now GM has money to produce an expensive image car.

Second, GM is facing a real challenge in changing the Corvette’s image as “grandpa’s hot car." GM has a tough road ahead to interest youthful buyers in cars in general. They now see a generation that focuses on social media, car sharing and urban living where a couple’s second car is public transit. Perhaps the only hot spot with youth comes in connecting their electronics to the car via Ford’s Sync and GM’s MyLink.

What is even more interesting in watching the auto industry is the overall strength of the competitors. The Japanese and Korean makes (Toyota, Honda, Nissan, Hyundai, Kia and Subaru) have retained and strengthened their place in the market. Chrysler, once 60 days from liquidation, is now generating strong profits and is rescuing Fiat from a disastrous European market. Ford, Chrysler and GM are all making big money (reportedly $10,000 per unit) on pickups, a market in which they have a 93 percent combined market share. It is amazing what a bankruptcy can do to help a firm jettison costs and shake up the bureaucracy. I’ve never seen such a competitive market with so many competent players.

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Andy Borchers

Andy Borchers

Associate Professor

Borchers earned his bachelor of industrial administration at the General Motors Institute, his maste... [More]

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