New Models for Success May Emerge From Auto Chaos

The American automotive industry is entering a transition period unlike any experience before. From the vehicle manufacturers down to parts suppliers, dealerships and even training of mechanics nothing will ever be the same. While these changes have already cost jobs and will cost even more as the industry rights itself, new opportunities arise in the research and development of new ways to power vehicles and the manufacturing and marketing of those vehicles to the public. It is a scenario that is a throwback to the early days of the gas-powered car, when small companies were abundant before being gobbled up or run out of business by the companies that emerged as the Big Three: General Motors, Ford Motor Co. and Chrysler Corp. “When you have this amount of chaos in the retail auto industry you are going to see many different models emerging,” said industry consultant Mark Rikess. “It won’t be a one size fits all people will test out. These people are entrepreneurs and will come up with a better way to serve their customers.” Smack dab in the middle of the car-centric culture, the San Fernando Valley and surrounding areas have their share of auto-related business, particularly in the number of dealerships. While the General Motors plant in Van Nuys is history, the company still has a significant presence with a regional headquarters in Thousand Oaks, a vehicle design center in North Hollywood and a training facility in Burbank. (GM spokesperson Diedra Wylie refused to make available a representative from the regional office; spokesperson Julie Huston-Rough refused to make available a representative from the design center.) GM, however, maintains a low-key presence with the regional office that oversees sales and marketing programs in the western U.S. Thousand Oaks officials are more apt to have contact with GM dealerships than regional executives. The automaker’s filing for bankruptcy this month has not been a cause of concern for the city as GM executives have indicated the company will reorganize fairly quickly. When consumers see that the company is still viable it may be encouragement to purchase vehicles. “That is good for the local community and the local economy,” said Gary Wartik, manager of economic development for Thousand Oaks. “We are interested in the jobs they provide and the sales tax generated.” The fallout of the GM bankruptcy is also of importance to Superior Industries International Inc., the sole major parts supplier to the auto industry located in the Valley. The Van Nuys-based company will know the immediate impact to its cash flow and receivables but still a mystery is what orders will be made for Superior’s aluminum wheels. Through communications with its Big Three customers and information supplied by analysts, Superior had seen the writing on the wall of a shrinking auto industry with lower production output. Steps to cut expenses were not always the most popular. A plant closure in Kansas in December and elimination of wheel manufacturing in Van Nuys cost hundreds of jobs in an economy already reeling from layoffs in other industry sectors. “We are taking the opportunity to streamline the business to be more profitable in an industry that will be smaller,” said CFO Erika Turner. From Turner’s perspective the best way Superior can be ready for that smaller industry is diversifying its portfolio and be less reliant on Big Three business. The company is making progress in that area although Turner could not yet give details. Diversification of its products line was a reason behind rapid prototyping manufacturer Solid Concepts Inc. acquiring last year Troy, Mich.-based Composite Tooling Technologies Inc. Under its previous ownership, Composite Tooling had primarily supplied the auto industry. It may once again provide parts to carmakers but for now Solid Concepts in Valencia finds other applications for the fiber-reinforced plastic products Composite Tooling makes. “We are investing in it and believe it will come back around,” said Scott McGowan, the marketing director for Solid Concepts. Having the auto industry come back around is just as important to dealerships although it is generally accepted there will be fewer around. The Chrysler bankruptcy resulted in dealerships closing in Van Nuys, Glendale and the City of San Fernando. The poor economy also felled Courtesy Chevrolet in Thousand Oaks, which had provided vehicles in the Conejo Valley for more than 40 years. The Silver Star Auto Group, owners of other dealers in the city’s auto mall, will take over that dealership. Industry professionals see this contraction as necessary as a result of a glut of vehicles left as consumers stopped buying. When buyers return to the showrooms, the relationship with sales staff may have irrevocably changed. With the Internet providing greater transparency on vehicle pricing and other vital information, techniques and tricks salesmen have long employed to boost commissions may no longer work. Dealers may also have to change their sales model, increase salaries and provide better working hours to attract salespeople who can create a better buying experience, Rikess said.