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Foreign OEMs: New Auto Industry Opportunities

Charles Krome
by Charles Krome
June 18, 2009

With the dismantling of General Motors and the Fiat takeover of Chrysler, the face of the U.S. auto market is going to soon look a lot different in the near future. And if you happen to believe that more competition is a good thing in the industry, you're going to like the way it looks.

At this stage, it seems that GM has actually found new owners for all of its bad divisions: Saturn is going to the Penske Motor Group; HUMMER still looks like it will end up with China's Tengzhong Heavy Industrial Machinery; and now it appears that Saab will be owned by Swedish supercar maker Koenigsegg. (Okay, Pontiac's new home will be the automotive graveyard, but you can't win 'em all.)

Fiat also will be selling vehicles here, and not just its own. The latest rumor is that the next Alfa Romeo 167 '” Alfa is owned by Fiat '” will be built off the Chrysler 300 platform, in Canada. There's even talk that because Fiat and Indian OEM Tata '” which, for those of you keeping score at home, now owns Jaguar '” have a number of joint ventures going, the Tata Nano could end up in the U.S.

And speaking of Indian OEMs, Mahindra & Mahindra is set to start selling its trucks and SUVs (pictured) in the American market this fall. In fact, M&M is already signing up dealers, including a chunk of those formerly selling for GM and Chrysler.

At first glance, Mahindra's product mix seems a little out of alignment with the whole fuel efficiency thing, but the vehicles are supposed to be clean-burning diesels, all of which get 30+ mpg. With the price of diesel now back under that of gasoline, and the fact that U.S. customers still prefer trucks over cars, I'm thinking that that mpg number alone is going to attract some buyers.

The vehicles themselves, although perhaps not yet up to the quality levels of most current players in the U.S. market, are already being sold in European markets. To me, this is further evidence that Western buyers will accept them. Also, Mahindra is the third-largest tractor maker in the world, with a growing U.S. presence in the farm vehicle market. In other words, there's already some amount of name recognition out there.

Put all this together and it means some real opportunities '” and not just for consumers. In the same way Penske and M&M are already picking up former 'Detroit' dealers, the further opening of the U.S. market to more foreign OEMs could help make up for at least some of the auto jobs lost during the meltdown.

These companies will need dealers, suppliers and other support. Perhaps they'll even need help on the manufacturing side if they start building plants here.

Now, I do realize that there are some important differences between working for a 'U.S.' company like GM or Chrysler or Ford and working for a foreign auto company, and some of the difference is going to have to do with the quality of the job itself. But I also know there's an even bigger difference between working for an international OEM and not working at all.

And if that's the choice people are faced with, I say bring on the foreign OEMs.


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