C7 – Near Misses

In this chapter we extend our analysis to other auto companies that have faced crises in recent years but which, unlike Rover and Saab in chapters 5 and 6 managed to survive. We briefly review 13 major auto company crisis, including those that proved  fatal to Rover and Saab, and examine the circumstances under which firms survived.

Many auto firms have experienced crisis – our list includes companies such as Toyota, BMW, Hyundai-Kia, Volkswagen and GM.  This underscores one of our basic arguments – that the fundamental ability to design, make and sell cars is not a good predictor of which auto firms will experience crisis, or of those that will manage to survive it.

The 13 crises are shown here: Table 7.2 Examples of crises

The chapter includes case studies on Chrysler, a car company that has repeatedly dipped in and out of crisis and on Nissan, rescued from near-bankruptcy in 1999 by an alliance with Renault.

Selected Quotes

“Chrysler is a fascinating case of crisis and resilience, not least because the company has been in and out of crisis so often. Chrysler provides a powerful illustration of the various factors that can both support and undermine resilience… In 1997 Chrysler won the Forbes ‘Company of the Year’ award and was praised for ‘a superb management team that has made smart, disciplined decisions’. (p240)

“Operationally, Nissan performed reasonably well on measures of manufacturing efficiency and product quality in the decades leading up to the crisis… Nissan does not appear to represent a case in which a fundamental inability to design and build cars to competitive standards was responsible for the company’s near-failure [… ] Constraints on change and adaption led Nissan to slide slowly, almost imperceptibly towards a financial crisis, aggravated in the 1990s by the stagnation of the Japanese economy. In this respect, the very strength of certain stakeholder relations – particularly with suppliers, and to some extent labour, may have discouraged earlier adjustments, and therefore meant that adjustment, when it came, had to be all the more brutal”. (p251)