Dave Illingworth, majority owner of Warsaw's new Toyota dealership, spoke to the Warsaw Breakfast Optimist Club about the current state of the auto industry this morning.
"There is plenty of blame to go around for everyone," said Illingworth.
Illingworth said that when he was in Warsaw 15 months ago to announce the plans to open the new Toyota dealership, the marketplace was totally different."If you would have told me that GM and Chrysler would be bankrupt and Toyota would be losing money for the first time in 50 years, I wouldn't have believed it," Ilingworth said.
The auto industry sold about 16 million cars per year in 2007 and was projected to sell 15.8 million in 2008.
Then the market began to crumble.
Illingworth tied new car sales declining to the implosion of the housing market.
"Last year when fuel was up to $4 a gallon it killed the truck and SUV market," said Illingworth.
That was a problem for General Motors, which invested heavily into that market and also had the Hummer division.
Illingworth said the money for car companies was in trucks and SUVs. He said investors and Wall Street were to blame because, looking only at a return on their investment, they pushed the manufacture of vehicles that weren't fuel efficient.
Unions also played a role in the demise of the auto industry according to Illingworth. He pointed to a strike by GM workers in Flint in 1998. At the time, GM worked five-hour days and received overtime for any hours beyond that.
GM tried to deal with the unions but there was a strike company wide.
"After the union won, they were celebrating in the streets of Flint," said Illingworth. "You go there now and it's a ghost town.
Congress, said Illingworth, also played a role what's going on today. He pointed to standards set forth by Congress in the 1970s that pushed auto makers to build more trucks and SUVs that didn't have to follow government restrictions.
Illingworth said he didn't agree with the decisions by Chrysler and GM to close dealerships because they were sources of revenue for the company.
"The question is 'Where do we go from here'"," said Illingworth. "I don't think anyone has a good answer for that."
He said he doesn't believe it will get back to the days of 16 million cars being sold in the U.S. every year.
He told optimist members that last week was a tough week for the dealership and at one point he headed over to Steak and Shake and talked to a manager there.
"They said business was tough for them too," he said.
Illingworth called what is going on now a "general malaise".
"We think it will level off at 12 million a year," said Illingworth whose last title with Toyota was Senior Vice President, Chief Planning Officer at Toyota Motor Sales USA before he came to Warsaw to open his dealership.
Illingworth was familiar with the Warsaw area because he has been visiting Winona Lake for many years.
Illingworth had some advice for the Optimists before he took questions from the audience.
"Go out and buy a Toyota," said Illingworth. "If you don't buy a Toyota go to Rice Ford and buy a Ford.
Illingworth is a partner with Dan and John Rice.
"Go buy a car," Illingworth continued. "And go get a milk shake at Steak and Shake."
