The second decade of the 20th century saw Henry Ford ride the US wave of economic expansion (including his own $5 day initiative) to provide “Mobility for the Masses” via the Model T.
The second decade of the 21st century could well be the converse, if ongoing economic decline persists longer than anticipated.
investment-auto-motives believes that such a scenario should be critically considered by Ford, GM and Chrysler, and that they need to look beyond their strategic and operational norms to create possible new business models that serve themselves and those American's that may have lost sight of the American Dream.
That business model is the provision of singular solutions for “affordable mobility + habitat”.
Today, commentators such as Soros and Forstmann believe that “[market] correction has only just begun” eventually leading a resultant major economic systemic shock; possibly most prevalent in the USA. With the advent of the August 2007 credit crunch, we have and will continue to witness a partial breakdown of the private home ownership model – the very backbone of a modern market economy. Some believe that house price 'normalisation' will wipe a further 20%-25% off the value of property (it already having dropped 10-15%) pushing more and more people into negative equity and carrying on the trend for home-buyers to simply leave the keys and walk-away. Equally, such price instability means that first time buyers will be reticent for years to buy back into the home-ownership model, whilst they wait for stabilization and endeavour to accrue savings to help put them eventually back on the housing ladder.
Although Congress has been presented with The Housing Rescue Package, formulated by government and industry, purporting to assist and slow-down the avalanche of re-possessions, its effect won't be measurable for years, and in reality there is little consensus that the avalanche is containable, only market forces able to find the natural equilibrium; which could take up to a decade. In the meantime, (possibly) 'displaced' millions will find themselves requiring 'alternative' housing circumstances, whether that be through family, renting (at reduced but still relatively high prices) or finding new options.
investment-auto-motives forwards the proposition that it, along with the investment community and Detroit's Big 3, start to sketch-out and formulate potential new business models that offer 'mobility+habitat' solutions for singles and couples.
Something that places a POD orientated Mini-Van type vehicle at the heart of the offering, which has an affiliated 'docking station' plot within the grounds of a dedicated leisure-orientated community, itself part of an inter-connected regional infrastructure that exists within the temperate-warmer US Southern states spanning: Southern California, Arizona, New Mexico, Texas, Louisiana, Alabama, Georgia & Florida. Primarily aimed at the 20s- mid 30s, it would, in effect, be the re-invention and combination of the SoCal/Florida Condo Complex and Leisure/Trailer Park.
As Hedge Funds and Private Equity well appreciate as the credit crunch takes hold the public will seek-out low-cost regional vacations and so these said funds have invested monies into Leisure Parks and Recreational Vehicle & Caravan/ Mobile Home manufacturers.
Looking at the broader social and housing trends, Detroit could look to 'take charge' of the situation and create new vehicle-centric solutions for new this new era. That may mean looking at alliance, JV or M&A relationships with associated renowned leisure vehicle manufacturers such as AIRSTREAM and WINNEBAGO et al.
[Infact we believe that Ford's AIRSTEAM mini-van concept is a part exploration into this possibility along with links with other American travel Legends such as the Sante Fe 'Super Chief' train as re-born on the F-250 Super Chief concept].
Indeed Detroit would need to work with other recognised and renowned enterprises with the leisure, hospitality & leisure parks industries, such as Disney Corp or perhaps Las Vegas greats, so as to wholly re-invent the idiom and remove it from the less than respectable connotations it has had I the past.
As for the Wall Street 'catalytic agents' that could wish to pull such an venture together, Kirk Kerkorian & Tracinda obviously comes to mind with sizable stake in Ford and the MGM Grand providing plausible management capabilities for new business models from sector cross-pollination.
Much would obviously need to be worked out and calculated, but given Detroit's aim to maximise platform utilisation, to move upstream as Brand Enterprises, better inter-connect with the public and Wall Street's desire to sweat automakers assets, create new business models and take advantage of low-cost assets (such as today's/tomorrow's depressed land values), there is certainly be much mileage in the Mobility + Habitat opportunity, derived from merging Automotive, Leisure, Home & Finance/Mortgage sectors.
Get the formula right and the initial model serves as a stepping stone into latter day full-blown home-ownership. And as the land prices of the infrastructure parks rises so it can be transformed into apartments or housing, assisting America by providing that all important, local stepping-stone, and of course giving the commercial stake-holders a high value long term vested interest, that could develop a dual-value meshing of Autos and Home loan.
So just as Henry Ford gave the American worker to buy into mobility, so today there is the opportunity to re-create an enjoyable journey into the 21st century American Dream.