It is certainly sad to see the domestic auto industry struggling. The U.S. auto industry played a valuable role in making the United States an economic powerhouse in the 20th century. There is plenty of blame to go around, but the key reasons are as follows:
1. The U.S. auto industry, in the 1970s and 1980s, chose to build cars that lacked the quality and often the features that consumers wanted. This led to a mass defection of customers to Asian brands.
2. In the 1990s, the industry found salvation with the S.U.V. craze. But this only hid the fundamental problems created above. They should have plowed their profits from S.U.V.s into a broader product range, including smaller, more fuel-efficient vehicles.
It is true that domestic automobiles are of very high quality today. But GM, Ford, and Chrysler have lost a generation or two of consumers who would rather buy Toyotas and Hondas.
What ever happened to the large, rear-wheel drive American sedan? Or the intermediate-type Chevelle/Fairlane-type car?
Domestic producers have been criticized for their indulgence in SUVs. But truly, they were only giving customers what they wanted. Cars are a fashion statement, and people wanted to present the image to their neighbors of being rugged and tough. Of course, few of these SUVs ever went off-road, and I would guess that only a small percentage of SUV buyers ever towed anything. Yes, a little bit of innovation into products that were not SUVs would have been very helpful...i.e., DON'T follow the market. When you follow fashion, you are doomed to fickle consumer wants that can change overnight, and that is what is happening now. And it could change tomorrow, as fuel prices crash. Wouldn't that be something, after GM has cancelled its next generation of big SUVs?
Now, high fuel prices have attacked Detroit when it desperately needed breathing room to revise its product mix. The recent credit squeeze has furthered impacted Detroit's ability to provide financing to customers.
Oddly, now is a great time to buy a large SUV or truck. The money saved would more than compensate for poor fuel mileage. And some of the other vehicles produced are simply terrific, like the Cadillac CTS and Ford Flex. The Cadillac CTS is truly a world-class car, better than anything the Asian carmakers can produce. And some great products are in the pipeline, like the Chevy Camaro and Volt.
A merger between Chrysler and GM would not be in the best interests of either company, also. Let's hope things change quickly and such drastic events don't happen. A merger of two weak companies only creates one very large weak company (think Studebaker and Packard in the mid-1950s).
If you visit car shows today, you almost never see Asian "classic cars." That would seem to be an oxymoron. In my opinion, the Asian cars that have been sold for the past 30 years are equivalent to refrigerators....very competent but terrible boring. Go on E-bay, for example, and see how many mid-80s Toyotas and Hondas are for sale. There is a reason for this. Who wants to brag that they own a "classic" 1980 Toyota Corolla? Only domestic cars have provided the style, power, and driving experience that Americans have traditionally wanted in a car. A world with only little Toyotas, Hondas, and Hyundis would be a sad world indeed.
Sunday, October 26, 2008
Monday, October 13, 2008
World Wide Financial Panic - Following the Crowd
If there was any doubt that most humans are followers, the recent events of the stock market sure do show it. At the first sign of fear, people will inevitably bail out. This, of course, is the "fire in a crowded theatre" syndrome. It is the same mentality that causes people to buy the latest fashion, pile on to the hottest sports team, and the like. (Sigh.)
Wednesday, October 8, 2008
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