The North American Automotive Industry Is Not a Dot.com Bubble; There is a Growth Strategy

Implications: Autmotive OEM's have saturated the US market, and now must ride out the economic downturn. The astute OEM's are right-sizing for the US market,and the wisest among them are using US capacity to support the explosive growth of sales in China, Russia, India, and Brasil. What should emerge are more OEM US manufacturing operations that are supporting world car platforms. US factories could become significant exporters of certain models.

Analysis: What is happening in the US market is not neccesarily a bad thing for both domestic and transplant automakers. Just as bitter medicine might improve the morning after hangover and lead to better health, the slow down in US sales should force the OEM's to right size themselves for the domestic market and to develop more flexible manufacturing capacity to supply a worldwide market.
It is no secret that the United States vehicle sales growth per 1000 people is not a double digit sales growth market. The US already has more than 800 vehicles per 1000 people, a mature Used car market, and a proliferation of brands and models. The US, whether there is an economic downturn or not, is a flat market at best for vehicle sales for years to come. The only shame may be that the OEM's, particularly the domestics, did not see this coming sooner. But then, the domestic OEM"S have been through several resurrections and rebirths in the past. Not too many years ago, in 1979, Chrysler would have been given up for dead if not for Lee Iacocca's approach to the US Congress. And Ford and GM have had their share of boom and bust as well. So what the automakers are experiencing doesn't exactly fit the bill of a dot.com type bust. It is more of a deja'vu.
The domestic OEM's will shed capacity. This will mean the reduction of brands - it is conceviable that Pontiac, Saturn, Plymouth, Mercury and Hummer could disappear. Certain SUV and light trucks models will also become history.  Also, manufacturing capacity will either be shuttered or reallocated.
The real bet is that both domestic OEM's and transplants will  more seriously look at their North American manufacturing capacity to provide vehicles for the world market. North American automotive factories will become exporters of automobiles to the BRIC markets. GM and Ford are already receiving a substantial portion of their volume sales from these emerging markets. And Toyota, Honda, Mercedes, BMW, and Volkswagen are all aggressively building sales and distribution networks for these markets. And the potential is there. With China, Russia, and India each having less than 200 vehicles per 1000 people, the volume grow potential is enormous. China is experiencing a 10% growth in sales per year, and this is predicted to continue for decades. Russia is experiencing a 13% growth is automotive sales and is accelerating. And India experienced a 102% jump in Premium / Luxury cars sales and had a 25% growth is sales volume, overall, in 2007. So these markets are ripe for sales, for brand recognition an brand development, and to receive import volume from US factories. And the demand will not simply be met by vehicle manufacturing in those countries.
BMW already ships X5, Z4, and X6 to 140 worldwide markets from the South Carolina facility. Mercedes produces a ML and GL class of vehicles for the world market in Alabama. Honda and Toyota are now beginning to utilize US factory capacity to supply the Russian market in particular. And to highlight the potential for the domestics, just use the Buick brand as an example. While Buick may be fading in the US, if you travel in China there is a very good possiblity that your limousine is a Buick. The brand has a presence and cache' in that market. Why not export US built Buicks to China? 
So now the potential is definitely there for the domestics to do the same. What it does mean is that the domestics need to configure their factories to support multiple models and multiple markets. The days of a factory being dedicated to a single model are probably numbered. In stead, we should see more flexible manufacturing capacity, delivering a world product. And with the dollar a deflated currency when compared to the Euro and the Yen, the profitability of export of US dollar sourced and built cars makes even better sense.
My perspective in that the domestic OEM's, and the utilization of both domestic and transplant manufacturing capacity are undergoing a very healthy process. If they can emerge leaner, with fewer brands, better utilized capacity, and a world car presence, we will surely see Ford and GM continue to produce and sell cars for years to come. And it also might be nice to see Toyota emerge as the largest exporter of cars, out of their US factories, to the world market in the next decade or so.