For the past decade whenever anyone in Congress would talk about raising CAFE standards or requiring SUV's to meet the safety standards of passenger cars instead of trucks we would get the response from auto executives that they have to listen to the market. People won't pay for safety or fuel economy they would say. We are only building what people want.
Well listen to the market now - go die. No one wants the crap you are building and you were too short-sited to hedge your bet by making anything else. Why should we prop-up this aging dinosaur? There are plenty of profitable car manufactures making cars in the US people want - the Honda Accord for one.
One might think their business decisions had something to do with a world where gas was under $2/gallon less than 4 years ago, and not stupidity or other negative qualities often ascribed to them. Japanese and European car makers, in contrast, always needed to make tiny fuel-efficient cars for their domestic markets, and then happened to be in a great position in a suddenly fuel-scarce world.
We have a habit of ascribing causality to human virtue and vice too much when the world is actually much more random. Had the executives of Ford or GE known what fuel prices would do from 2005-2007, of course they would have made different decisions.
Let's see, state of the "stability" of oil in the world in 2005:
Russia is run by a former KGB head who extra-legally destroyed their private oil producers.
Venezuela, one of the world's largest producers, has a president who thinks america is evil.
Continuing war in Iraq.
Gas prices at the pump have been rising on average for years. I just rechecked this and indeed, since before 2003 even prices have been on a long average upward trend. Even after our current plunge, prices are much higher than the LOWEST price in 2006.
Outside the US (where even US automakers should have known the bulk of their growth was going to come from) small efficient cars continued to outsell SUVs.
And yet instead of fixing their money-losing operations, they went all-in on their highest risk area: expensive inefficient trucks.
The geopolitical situation of the oil producing nations has been problematic for a long time. You might be right about gas price trends, but I seem to remember gas staying below $2 until Hurricane Katrina (at least in the Southeast), and then the price undergoing a few discontinuous rapid increases. A long upward trend in prices doesn't disrupt their business plans, as long as the slope or the change in the slope remains roughly constant.
Do you really think foresight in the auto-industry is that easy? Do you really think the executives of the American companies were that stupid? Is every company failure due to the stupidity of its executives? Can every failure be avoided?
It often seems that way in hindsight. But personally I find it striking that the automakers in trouble were all catering to the American domestic market, and the ones doing well were all catering to small-car oriented foreign markets.
Another thing about american auto makers I could never understand is that they have always believed in selling 2nd grade crap to general public, splitting their products into two very distinct niches. Ford and GM can innovate, they have brilliant engines and great designers, but all that stuff is generally reserved for european models or for "luxury" divisions. Two examples:
1. GE has always had two different lines of V6 and V8 engines: low-tech, gas-guzzling one (for cheap Chevy/Pontiac models) and high-tech modern ones for Cadillac and European Opel and Saab.
2. Ford is even worse. They make cheapened-down version of Focus specifically for US, while selling a great little car in Europe. I just got back from vacation and I truly enjoyed one. Just compare these two photos from european and american versions of Focus, see all that cheap hard plastic painted fake aluminum in US version? Jeee....
This article didn't mention that a 25% tariff on importedntrucks, but not cars, was a major factor in getting US automakers to focus on trucks and SUVs, where they could have fatter margins. Paradoxically, the legislation that was meant to protect them may end up killing them instead.
GMs problem is that they put all their eggs in that basket. They became an SUV company first, then followed by sporty cars. They completely ignored the compact, midsize segments and let those deteriorate until they produced nothing but crap. Which is how the japanese cars took over.
I mean honestly for me, GM can come out with an Ferrari looking honda accord competitor, that is more reliable, has more features and costs 40% less...and I STILL will go and buy a accord.
Why? Because the last and only GM vehicle my family owned was a piece of crap that fell apart with only 70K miles on the clock and cost us 4K in repairs before we sold it.
While the 7 Hondas we owned combined only cost us a total of $600 in repairs. And that $600 was our own fault because we missed replacing the timing belt on time per maintenance schedule.
Their biggest screwup was pretty much in the 80s-90s. Nothing but ugly crap. Not until 2000 did they take their head out of their ass and actually started trying to compete. With maybe decent products. Now some of their products are actually leaps and bounds ahead of what they were in the 90s(quality wise), but I still refuse to buy one. Since they turned me off completely with their cost cutting they did in the 90s.
Some cost cutting is ok, but when you have the same exact interior in a 15 Chevy Cavalier, as you do in a 50K Corvette, you got a problem. At least in the C6 Vette they finally fixed that problem.
Would you put your company's logo on a third-party piece of junk? No. That they did doesn't really help any argument that they have their head's on straight.
"And with that, the era of the big S.U.V. was as good as dead, done in by soaring gasoline prices and consumers fleeing to smaller, more fuel-efficient cars."
Agreed. I have had three Honda and Toyota vehicles. My last one had 350,000 miles on it - all handled well, were gas misers, always looked good, never gave me any problems, and were easy to maintain myself.
GM/Ford make, frankly, excrement. I really cannot believe people buy their goods. They are uneconomical, break down constantly, reflect zero innovation....and the companies themselves have had to be dragged kicking and screaming into the 21st century.
And then there is the Jeep I once owned. I spent all my free time fixing every conceivable part on it - they all seemed to break as soon as it was out of the driveway. The body started rusting out immediately, the engine began consuming great quantities of oil at 25,000 miles....even the SPARE TIRE carrier on it was so flimsy it broke off, not offroad, but driving through my neighborhood streets.
The Toyota 4WD pickup I still have will probably outlast me and any grandchildren I ever have.
I've never had any trouble with my ford, and it was the cheapest car available when I bought it. I don't follow the auto industry, but it's my understanding that the statistics generally confirm that US and Japanese cars are of comparable quality (unlike in the 1980s).
GM deserves its coming bankruptcy. They made obscene money on light trucks and SUVs (trivially engineered vehicles--unlike cars, which are expected to handle properly). They could have come up with the next Mustang, or the next K platform, but...eh.
Well listen to the market now - go die. No one wants the crap you are building and you were too short-sited to hedge your bet by making anything else. Why should we prop-up this aging dinosaur? There are plenty of profitable car manufactures making cars in the US people want - the Honda Accord for one.