Since the 2008 Lehman Brothers collapse, you can look at the strengths and weaknesses of the Detroit Three in various ways. The big three are posting modest profits from the relative strength of the North American auto market, they are namely Ford Motor Company, General Motors and Chrysler Group; however, in spite of good profits European operations caused the auto markets to drag. The car buying and selling aspect of the auto industry shifts prices due to the economic impact on regional levels.
The already down earnings of GM North America from $2.2 billion in the second quarter of 2011 has been offset by Opel/Vauxhall European operations with a whopping $.4-billion loss; this despite of the $2.0 billion earnings before income tax (EBIT) of General Motors. The automaker blamed the revenue decline on the strength of the U.S. dollar versus the euro since GM’s global net revenues fell 41 percent against a 4.6-percent drop in net revenues as car buying and selling has also declined in Europe.
Ford made $2 billion EBIT in North America while lost $0.4 billion in Europe in the second quarter, following a trend of loses. The offset growing losses at majority owner Fiat was also caused by the 2012 Peugeot 208 Gti Concept Front Three Quarter Driving Chrysler’s $436 million net income in the second quarter. Perhaps the automaker hardest hit by the European Union’s economic crisis was GM’s partner Peugeot-Citroen PSA. car buying and selling has gone down all over the world despite it being an important commodity of daily life for people the world over.
Initially the economic bubble burst in America and then Europe and the rest of the world and if it wasn’t because cars are a basic necessity also, the auto industry would have shut down under the immense pressure of starting over.
Surviving the EU crisis while making money in North America and Asia is the luck struck Volkswagen Group, the biggest automaker in Europe. Volkswagen is among the most cherished name in car buying and selling and both fans and enthusiasts alike purchase their latest car models for their efficiency in design. Compared to the second quarter of 2011, its net revenues rose 18 percent in Q2 in 2012. Let’s compare the 2012 Volkswagen Passat TDI SE Front End by throwing in one more variable. GM, VW, Ford, and Chrysler spend billions each year on product development and manufacturing. You would have to spend stacks of cash to design and build new models if you want to make better profits each year.
Apple farms out most of its production to factories in China, it spends billions each year on product development and it is the world’s most valuable corporation. What a clever strategy wouldn’t you think so? This means that they’ll survive half a dozen recessions before their company will fall. Perhaps the Detroit Big Three should consider moving their factories to China instead of Europe or at least divide the production in two so that Americans can sustain a relatively decent jobs. Production cost, research and development, taxes and shipping cost has a tremendous effect on the car buying and selling industry. The law of supply and demand still applies.
