Posted on 12/24/2008 7:19:49 AM PST by XR7
The collapse of the U.S. auto industry would be easier to take if the cars were junk.
That’s how it was the last time one of the Big Three (Chrysler) went belly up back in 1979. If you’re old enough to remember the Cordoba, you know what I’m talking about. It was easy to comprehend the failure of late ’70s-era Chrysler because Chrysler’s cars of that period were junk. People tend not to buy junk — end of story. Simple relationship. Cause and effect.
But today?
Never have the products of the Big Three — especially GM and Ford — been as good as they are right now. The incidence of problems, recalls, etc. is actually lower for some American-brand cars than for Toyota and Honda. By any objective measure, parity, at the very least, has been achieved. The cars are damn good. But they’re not selling.
How do you fix a problem like that?
The cruel answer is, it’s not up to GM or Ford anymore. They have done almost everything they can, on the product side. What’s coming home to roost is a deadly trifecta of lingering buyer suspicion of American-brand cars combined with soaring gas prices and an economy in free fall.
You can fault the American car companies for the first item — the unpleasant legacy of Pintos past, so to speak — but the other two are completely beyond their control.
Some fault GM, Ford and Chrysler for building too many big trucks and SUVs. But that is what the market wanted — until quite recently. The car industry does not turn on a dime. It is not like making a candy bar or a plastic bucket. Millions of dollars and several years (24-36 months is typical) are needed to design a brand-new, wheels-up new car model and bring it from design sketch to production. The surge in gas prices came upon us — and the auto industry — suddenly.
Those who fault GM, Ford and Chrysler for not anticipating the uptick forget that every single major Japanese automaker was feverishly working on gigantosaurs of their own circa 2000-2004 — from the aptly named Nissan Titan to the monstrous Toyota Tundra. But they got to the party late — and their exposure was minimal as the feces began to hit the fan. It was relatively painless to throttle back (Nissan and Toyota may actually cancel their big trucks) and re-focus on what they have historically always done best — passenger cars.
But the backdrop issue is the collapse of the consumerist economy. What’s forgotten amid all the hair-pulling and gnashing of teeth is the simple fact that people, in the main, were only able to “buy” cars — irrespective of who made them, whether Americans or Japanese or Germans — by signing up for a big fat loan on the easy monthly payment plan.
Often, few, if any, questions were asked.
Credit and loans made it possible for even average middle income people to drive home in $45,000 vehicles (SUVs and cars). Now that credit has dried up, the party’s over. No one’s buying anything — because no one can afford to buy a damn thing. Gas mileage is a bogey. The truth is most of today’s middle-large sedans don’t deliver much better fuel economy than trucks and SUVs. About 5-8 mpgs or so better. Big whoop. If the car in question has a V-8, there is virtually no difference. Minivans are obnoxious pigs — with typical city mileage in the mid-high teens, as bad or worse than a new Escalade.
No, the problem is we’re tapped out. We can’t afford gas because we can’t afford anything. That includes cars.
Which is why the cars aren’t selling. Which is why the $25 billion bailout won’t do much except temporarily preserve the jobs of those unlucky souls working directly or indirectly for the industry.
Until the broad masses are once again in a position to buy expensive consumer goods such as automobiles, no amount of bailout boodle is going to solve the problem. Trillions in hopelessly unrecoverable debt is going to have to pass through the economy’s colon first. Then, incomes — and income stability — will have to rise, so that people not only have disposable income once more but feel reasonably secure in their jobs so that they’re willing to sign up for a big hunk of debt.
Do any of you see this happening in the near-term future? Me either.
So, we’re left with the cruel irony of an industry that has never built better products that is on life support — and not likely to recover.
Because for it to recover, we’ve got to recover first.
And no one’s offering us a bailout.
“I think it would have been in their best interest to have a broader product line.”
I don’t think it would have helped. There were plenty of high (32+MPG) cars on the dealers lots. The problem was that no one wanted to buy the gashog trade-in.
BTW, about the only thing that GM was making a profit on was the ‘gashogs’, those 40K+ cars. They were at best breaking even on the high mileage cars.
So you were faced with tightening credit, reduced trade-in value, and an inability of the dealers to lower prices on their high mileage/low profit margin vehicles.
A different mix of models on the show room would not have affected any of that.
The Pinto wagon with a stick was actually a great little car.
I won’t say the same for the other model.
I used to have a 68 ragtop with a straight six. Oh, how I miss that car, even with its flaws. The guy I bought it from thought he was Young Tom Edison and had rewired everything, NOT to factory spec, which made for some interesting troubleshooting. That might have been what led me into electronics and (after some long and scenic side roads) computers.
1. Toyota
2. Mercury
3. Honda
4. Ford
5. Chevrolet
6. Hyundai
7. Pontiac
8. Buick
9. Acura
10.Kia
5 of the top ten name plates are US branded plates, with a Ford product as #2 and GM having 3 of the top 10.
Here's the complete list with the luxury or high end cars included:
1. Porsche
2. Infiniti
3. Lexus
4. Toyota
5. Mercury
6. Honda
7. Ford
8. Jaguar
9. Audi
10. Cadillac
11. Chevrolet
12. Hyundai
13. Pontiac
14. Lincoln
15. Buick
16. Acura
17. Kia
18. Nissan
19. Volvo
20. BMW
21. GMC
22. Mazda
23. Volkswagen
24. HUMMER
25. Subaru
26. Scion
27. Dodge
28. Chrysler
29. Mitsubishi
30. SAAB
31. Suzuki
32. Saturn
33. Land Rover
34. MINI
35. Jeep
That Subaru WRX is an awesome machine.
The only new American car I like is the Corvette and since I am getting robbed to pay for it, I want to go pick one off the lot... the rest of them can rust, I'll never buy one again.
They were popular with real estate agents for some reason.
The 440s were hot, but pointless with the softer suspension.
I disagree.
While domestics have caught up when “quality” is used as a metric, they still lag when measured using more subjective criteria.
Design and “feel” drive the emotional part of the purchase decision and domestics are seriously outclassed.
“American cars are every bit as good as foreign cars. “
Indeed. I have an almost 2-year-old Dodge Caliber. I love it. Good mileage. Lots of room for hauling things. Handles nicely. A little slow on the acceleration.
But I’d buy another Caliber when I need a new car.
Items under A are required by every manufacturer who sells in the US. This is not a competitive advantage or disadvantage for the manufacturer whether domestic or foreign nameplate.
True.
A) makes ALL vehicles too expensive, but B) makes U.S. made stuff even more expensive.
In 1998,I bought a 1999 Alero, my first new car, after a strike, 0% interest. It was a great car, a tad underpowered, 200 would have been better. I got 32 mpg on the highway. But, you had to know there was one, it had a very annoying wind noise from the drivers door. Once, it was off the lot the dealer would do nothing to fix the problem. The other low point was I had to replace the battery three times. And, when the battery went there was nothing you could do. The dealer gave no help on the batteries either.
I now drive a Toyota RAV4.
I remember. It made made for quite a few jokes.
I thought that was Volare?
Agree or disagree?
Disagree. He says - "The truth is most of today’s middle-large sedans don’t deliver much better fuel economy than trucks and SUVs. About 5-8 mpgs or so better. Big whoop."
Well, that is a big whoop. From 15 MPG to 20 MPG is 33 percent better. From 20 MPG to 25 MPG is 25 percent better. It's at the higher MPGs that 5 to 8 MPG becomes insignificant.
What killed the Pinto was $.35 a gallon gas.
What killed the Pinto was that little problem they had when blowing up with rear impact crashes.
HMMM, I had a 74 Duster (318) that had 170k on it and a friend of mine had a mid 70’s Fury (225 Slant-Six) that had over 200K on it.
Was that back in the day that you could work on your own car?? I knew lots of guys who could keep their beasts running. Not today, though.
How did a dealer get away with refusing to fix problems with a brand new car? GM offered 36 month 36,000 miles in 1998, didn’t they?
FYI,
If you subscribe as I do to Consumer Reports you will receive an annual survey of automobiles, appliances etc. that you own to fill out and return. This is how they come up with their ratings of new and older vehicles and other consumer items.
I agree GM and Ford have improved their quality/reliability over the last 10 years. However, they alienated so many customers like me in the 80’s & 90’s that I now on my 2nd Toyota Tacoma and my wife has a Honda Odessey.
Honda and Toyota including Acura and Lexus are the best cars made IMHO. Subaru are better than average. However, I would not buy a Mercedes, Land Rover, Mitusbishi, Suzuki, Kia, Volvo or Saab.
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