All car sales are down though. Inflation doesn't bite necessarily, but a rapid change in the rate of inflation does - and gas fits that profile. Fords big seller, the F-150, got outsold by Japanese passenger cars for the first time i na long while.

There is also news that GM is considering closing four truck plants in North America. The problem for the automotive industry is that it cannot respond to fast market fluctuations. The lead time for any platform of factory is often ten years. Even integrating a new part into a car can take three years.

Rapid changes in consumer buying patterns can leave car manufacturers with a lot of wasted capital expense which is no longer making money or bringing in revenue. The situation car manufacturers are in now are the perils of a capital intensive and heavily regulated industry.

John McElroy writes that GM's business model of regionalism worked well when the automotive business was larger protected prior to the internationalization of trade in 1980s. This ceased to be efficient when globalisation and the economies of scale stemming from it came into effect. McElroy writes:

But the strategy fell apart, at least for GM, when automotive trade became really big on a global basis.Until then, GM's portfolio of brands gave it the greatest economies of scale of any automaker.

But when companies like Toyota and Honda were able to expand their sales to many markets in the world, they were able to offset GM's advantage. They could make Corollas and Civics in huge numbers and sell them everywhere.

That isn't really a brand issue though, it is more that GM was fraying its capital investments into too many platforms. The much touted Zeta platform, for instance, which Holden developed for GM appears to only have an application in the Chevrolet Camaro outside of the Holden Commodore range and its international variants.

McElroy argues that too many brands mean that there is too much fighting for both development, engineering and marketing, despite the badge swapping that goes on amongst the GM makes;

Toyota can pour all of its development and marketing money into two brands (I'm ignoring Scion for the moment since it only exists in the U.S. market). Every year the company comes out with about four new or significantly refreshed Toyotas and about three new Lexus models. How can a Chevrolet or a Cadillac compete when they each come out with maybe one new model a year?

McElroy's argument is that GM should rationalize its operations down to Chevrolet and Cadillac with the two sharing platforms much in the way Toyota and Lexus do. Ford faces similar difficulties, and ironically McElroy suggests this poses problems for European manufacturers too;

That's why GM will likely kill off HUMMER, and why Pontiac and Buick could end up on the endangered species list. It's why Ford will kill Mercury and sell Volvo. And it makes me wonder how long VW will be able to maintain such a large portfolio

Volkswagon includes Audi, Seat, Skoda, Lamborghini, Bentley and Bugatti. Not long after this article came the rumor that GM was considering killing off a brand, though it was speculation with GMC and Pontiac being the two main suspects. Which was amusing as it is the equivalent of linkbait on the automotive boards as poster after poster and comment after comment laid out each person"s view of the ultimate 'brand' lineup from GM. The irony being that automotive forum boards are less about cars and more about marketing with everyone being an expert on brand marketing.

It appears that Holden may have lost the engineering for the RWD Alpha platform. This was to be a smaller sized car than the Commodore, probably 3-Series BMW sized, which now seems to be going to GM North America as Cadillac has more control over it.

This is a blow for Holden, in my opinion, as they transitioned to an engineering company with the Zeta platform and provided a high quality and extensible platform which is used in the Commodore, Camaro and the stretched platforms such as the Buick in China.

GM has been making decisions all over the place recently; cutting this, cutting that, project so-and-so is on, project so-and-so is off, project so-and-so is on again, etc, etc. Not confidence building for an industry with high capitalization requirements and long lead in times.

Currently the moving of the Alpha engineering to North America is rumored, so maybe Holden will be able to get that business back;

In another rumored move, Global Product Board has taken development of Alpha from GM Holden and has given it to the GM North America and GM Europe operations. This was done to placate Cadillac, who does not want to compromise on Alpha's development for their planned BLS-replacement. What Cadillac hopes to achieve is to get a flexible enough platform to support 4, 6, or 8 cylinder engines, as was deemed necessary by the Wreath & Crest brand.

Holden is in a tough spot. The manufacturing numbers are too low to be sustainable for any long term - though government has been happy to throw money at Holden in Australia - and permanence will most likely be based on niche engineering ability, much like Lotus survives. Losing the Alpha platform's engineering would be a nasty loss.

This is a very good comment on the difficulties a commoditized market faces:

It's not the bureaucrats fault that the media market fundamentally changed. The big three stopped making a product Americans wanted to buy. The American media has never had more readers. People want what we make. They just consume it differently now. Creativity isn't the problem; finding a new way to make money off it is.

Publishing platforms now approach a cost of zero. The barriers to competition that the old media had were largely ones of capitalization. To compete with a newspaper, tv station or radio required a lot of capital, and hence a large market, and consequent economies of scale to be economically viable.

Today, a computer and an account on blogger is all that is needed to publish in a similar format and on the same distribution channel as the New York Times, the Sydney Morning Herald, NBC and 2MMM.

Historically when a market has commoditized then labor costs have been reduced in some manner or form; usually through importing or out-sourcing. Today the media market is so effectively de-capitalized that people all over the world are giving their time away for free - or for the return of google ad-sense; say a couple of hundred dollars a year.

It makes you wonder what the car market might be like if it under-went such a radical form of decapitalization and commoditization. Kids love cars, constantly draw them, render them, read about them; adults are not much different. If it was as cheap to make a car as it is a publishing platform then we might see great variation, creativity and expression on the roads.

More likely however, most people will not change the default 'theme' and the standard car will be sky blue and white with sans-serif fonts - al-la wordpress.