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What's up for the auto business in the coming year?
If ever it was a straightforward question, it sure isn't now. Think about what surprised in 2010: We knew Ford (NYSE: F ) was primed for a good year, but that good? The deck was certainly stacked in General Motors' (NYSE: GM ) favor a year ago, but the company's disciplined execution -- and sudden Wall Street favor -- was an unexpected development.
And what of last spring's Toyota (NYSE: TM ) recall debacle? That was a remarkable series of epic-fail moments from a company whose execution had long been hard to fault, and the lingering effect on the company's sales was another big surprise.
Other trends, like the emergence of mass-market electric vehicles, were easier to predict. But this is a brutally competitive, fast-changing business that is going through several different historic evolutions all at once. Trying to predict the future is a fool's game.
But even though we might find this article pretty funny a year from now, this Fool is game for some crystal ball action.
Predictions? I've got 'em.
So what's in store for 2011? Here are a few of the themes I expect to be writing about in coming months:
- Less dramatic gains for Ford. I think the Blue Oval's profit and overall sales will continue to grow nicely, but I think the sales growth will come from emerging markets and a rising global economy. The days of month-after-month market share gains in the U.S. and other developed markets seem likely to come to an end as heavyweight competitors like GM, Nissan, and Hyundai continue to gather steam.
- More noise from Tesla. Silicon Valley's Tesla Motors (Nasdaq: TSLA ) isn't slated to launch its maybe-mass-market Model S sedan until 2012, but I expect the company to continue to make headlines with big-name technology partnerships and, perhaps, new deals to supply components to established automakers. Tesla already has deals in place with Daimler, Toyota, and Panasonic (NYSE: PC ) , and the company could do worse than to evolve into the world's electric-drivetrain supplier of choice.
- Remember Chrysler? You will. It isn't getting a lot of attention yet, but America's number three automaker is quietly thriving in its arranged marriage to Fiat. CEO Sergio Marchionne's plan for the merged firm drew lots of skepticism when it was announced in early 2010, but the early results are stronger than expected. The companies seem to have discovered exceptional synergies, and the first jointly developed products (such as the new Jeep Grand Cherokee) have impressed reviewers -- and brought buyers back to long-quiet Chrysler showrooms. I expect to see more surprisingly solid products, much more visible marketing, and possibly even an IPO (but expect Fiat to increase its stake in Chrysler to 51% first -- it owns 20% now). Put another way, I won't be surprised if Detroit has three great turnaround stories to brag about at this time next year (maybe even four, if the Lions can stay healthy.)
- Continued struggles at Toyota. CEO Akio Toyoda has acknowledged that the company needs to show that it has transcended the quality problems (and the lack of forthrightness) that led to the recall debacle. He has also acknowledged that the company and its products need to show more "passion for cars." For a long time, Toyota led quality rankings but its products were seen as dull. With its quality armor now dented, sales have suffered. Look for Toyota to make some strides on both fronts in 2011 -- but expect the company to struggle for a while longer, as these changes will be slow to appear.
- Green is (still) the new black. Expect a lot of talk (again) about hybrids and electric cars -- starting with the concepts and new models that will make their debuts at the North American International Auto Show next week. Look for green-themed surprises from Nissan, Honda (NYSE: HMC ) , Ford, and maybe others -- if not at the NAIAS, then later this spring as the auto-show season continues. They're here to stay, folks.
- China's industry continues to mature. The world is waiting for a Chinese automaker to stride onto the global stage, but the most widely known candidate, BYD, seems not to be the world-beater that some investors (including two guys named Buffett and Munger) had hoped. Instead, I'd look for one or more of the country's established heavy hitters to expand into other emerging markets, perhaps in partnership with an established global big name. SAIC, which has both official favor and (big) joint ventures with Volkswagen and GM, is a name to watch.
One last thought: Keep your eye on the major auto shows, starting with one of the biggest, Detroit's North American International Auto Show, next week. The auto shows come with plenty of hype and pie-in-the-sky concepts, but they're also the places where it's easiest to see how the automakers view themselves and their idealized visions of their own futures.
I'll be looking especially carefully at GM's vision for its Buick and Cadillac brands, any new green or "infotainment" technology from Ford, future production models from Honda, and anything Hyundai shows. But I'll also be open to surprises, and the one prediction I can confidently make for 2011 is that this crazy industry will surprise us in ways we haven't imagined.
What are your predictions for the auto biz in 2011? Scroll down to leave a comment and let me know.