Guest Posting by Chris Reed
NYC Google Automotive Summit 2009
Google has been holding a series of briefings for OEMs and agencies across the country. The NY program has some great speakers from inside and outside the industry. As you might expect, a primary topic was “when will this pain end?”.
John Casesa, the auto analyst and an advisor to the Auto Task Force, had some great historic analysis identifying that a lot of the intensity of the current slump is the result of several years of “unnaturally” high demand that was propped up by easy money and incentives. In terms of what got the domestics into their current fix, Casesa took the long view and said the root cause dates from the 1930’s when the National Labor Relations Act and State Franchise Laws were passed in reaction to predatory OEM practices. Unfortunately, these laws shifted the power dynamic in the opposite direction and created a structural rigidity that, over time, lead to bloated labor costs, inflexible rules and excess capacity in the franchise network as market shares declined. This, in turn, led to less product innovation and excess debt as import competition squeezed margins and volume.