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Have Automakers Cut Nearly Enough?

New study warns the US market will remain overcrowded, despite Detroit's radical cutbacks.

by on May.14, 2009

Despite deep cuts in both production capacity and the number of models offered by makers, such as Chrysler -- workers shown here building the Town & Country minivan -- a new study warns that the U.S. market remains dangerously over-crowded.

Despite deep cuts in both production capacity and the number of models offered by makers, such as Chrysler -- workers shown here building the Town & Country minivan -- a new study warns that the U.S. market remains dangerously over-crowded.

With the U.S. automaker off by nearly half since it hit its stride, earlier in the decade, manufacturers have been slashing their production and sharply reducing production.  The hardest makers, Detroit’s Big Three, have or will close more than a score of plants and trimmed their overall workforces by roughly half.  But even the most successful makers, like Toyota and Honda, are making unanticipated cutbacks.  Yet this may not be enough in the face of the weakening market.

The U.S. car market remains overcrowded, with too many manufacturers and too many nameplates, warns a new study by the consulting firm, A.T. Kearney.  Daniel Cheng, director of the firm’s automotive practice, said the situation could still get worse over the next few years as Chinese manufacturers begin to edge into the U.S. market.

“Six companies now aspire to be full line generalists,” like Ford Motor Co., Toyota Motor Co., and General Motors, Cheng noted, during a Thursday presentation to TheDetroitBureau.com and other members of the automotive media.

Subscribe to TheDetroitBureau.com“The U.S. market is incredibly crowded,” Cheng added, contending that none of the major manufacturers, even those in bankruptcy, appear prepared to step back from the competitive fight.  But, as a result, the full-line manufacturers, including Honda and Nissan, now offer too many nameplates in the U.S. market for them to earn a profit and be sustainable. (more…)