09 October 2001
The first week in October brought a pair of developments in the U.S. automobile industry.
It is not often that a decline in sales is viewed as a positive development. But that was the case in September 2001. Domestic auto sales fell, but not nearly as far as some had predicted after the September 11 terror attacks.
Analysts had expected a decline of from 12 to 15 percent. In reality, sales were down 9.1 percent from the same period a year ago.
Individually, General Motors was off by three percent, while Ford slipped by just less than 10 percent. The Chrysler group was off 28 percent, but that is in comparison with last September when the company was heavily discounting minivans and other vehicles to clear out inventories.
GM and Ford were quick to offer no-interest financing on many of their vehicles last month. Those deals kept buyers active, but they also eroded the companies' profits. Chrysler, after vowing to eliminate incentives, followed suit with their own zero percent financing program.
Sales for most foreign automakers were either flat or slightly higher. Toyota is also offerring zero-percent financing to bring in customers. Given its current sales rate, Toyota could overtake Chrysler as the number three-selling brand in the United States by the end of the year.
Despite reports of the sagging economy, September's auto sales still worked out to 15.9 million units on an annualized basis. Because sales were so good early in the year, 2001 may still turn out to be the third-best U.S. sales year ever.
On Wednesday, October 3, workers at the Nissan assembly plant in Smyrna, Tennessee, voted against union representation by the United Auto Workers (UAW). The vote was not close. Nearly three out of four plant workers rejected the union.
The auto industry was watching the Nissan vote closely. No production facility in the United States that is wholly-owned by a foreign automaker is unionized. But workers at several jointly-owned plants such as the General Motors-Toyota assembly plant in Fremont, California are represented by the UAW.
Factories producing familiar brands like Toyota, Honda, Nissan, BMW, and Mercedes-Benz are all non-union and most are in the southeastern United States, historically not friendly turf for organized labor.
The UAW had hoped that, with a win at Smyrna, the union could have launched successful attempts at the other foreign-owned plants in the United States. This was the fourth defeat the union has suffered in 12 years at the Tennessee facility - and a stinging blow for a union whose membership is in decline.