By on May 21, 2012

Throughout the history of the automobile in America, one city has been synonymous with the industry and culture of cars. Booming with America’s great period of industrialization, Detroit became the Motor City, the hometown of an industry that created a blue-collar middle class and a culture based on personal mobility. But as America has entered the post-industrial age, as the focus of our economy has shifted from production to consumption, Detroit has been left behind. Long used to defining consumer tastes, Detroit was caught unawares by the changes wrought by globalization and the rise of information technology. And as America’s traditional auto industry struggles to redefine itself in the new economy, another Motor City is rising to meet the challenges of a new age.

Though not often recognized as such, Los Angeles has long been America’s “other” car capital. Developing during the rise of the automobile, Los Angeles has become a place where automobile ownership is not just a necessity, but a fundamental aspect of the culture. And as a result of its headlong embrace of the automobile, Southern California has contributed some of the most important elements of automotive culture. From the drive-through fast food joints that now dot America’s landscape to Harley Earl’s design revolution, from hot rod culture to smog control, it is impossible to imagine modern American life without L.A.’s unique automotive achievements.

Industrial-age Detroit was surely grateful for Southern California’s innovative attempts to reshape society around the cars it produced. But as long as the automakers dominated the wealth produced by America’s love affair with the automobile, Los Angeles was seen as little more than Detroit’s best customer. Though an important ally in promoting automotive culture, Los Angeles’s value to the industry was little more than offshoot of its major industry: entertainment. But as global competitors entered the US market, Southern California’s car-crazed culture became one of the first to embrace the imports. And as Detroit’s near-monopoly began to erode, the balance of power shifted: from this point on, consumers would drive automotive tastes with increasing independence.

With this shift, Los Angeles began its ascent in the automotive world. While Detroit lay mired in the industrial age, Southern California developed a taste for the new global menu of automotive options, and simultaneously embraced the new revolution in information technology. Its status as a taste-maker grew, and its focus on consumer opinion, fashion and communication put it in close touch with the values that were reshaping America’s economy. Now, with the information and consumer-economy revolutions largely realized, Southern California is becoming the new center of gravity for America’s auto business.

In fitting with the values of this new world, L.A.’s automotive juggernauts neither produce nor themselves sell automobiles. Instead of factories and dealerships, they have invested in server farms and data models. Rather than controlling information to maximize profits in support of an industrial supply chain, they create and share information in service of the consumer and market efficiency. And through this revolution, the two titans of Southern California’s “automotive industry,” Edmunds and Truecar, have become some of the biggest players in the business of buying and selling cars.

Edmunds.com got its start just as Los Angeles was coming into its own as the capitol of American automotive consumption, and well before the information revolution began to take hold. In 1966, it began publishing booklets which consolidated automotive specifications as a tool to help buyers make informed decisions. Over the years, it has evolved this service from print to CD-ROM, to web page and mobile app. And with new technology, it has dramatically expanded its services, offering everything from news, reviews, and specifications to industry analysis and forecasting, from a live consumer-advice hotline to dealer reviews and its “True Market Value” pricing tool. Never losing focus on its original insight, that consumers need help navigating the crowded new car market, Edmunds has embraced every new technology to expand on its mission and become the most established gatekeeper to the burgeoning world of online auto research and sales.

Entering Edmunds’ brightly-colored offices in Santa Monica, it becomes instantly clear that the company looks to Silicon Valley rather than Detroit. With its whiteboard walls, open cubicles, espresso machines and video game room, the ambience is clearly inspired by Google rather than GM. And like Google and Facebook, Edmunds is finding that its consumer service is just the beginning of its opportunities. So massive is the traffic that Edmunds’ car buying website generates, it has developed its own value as a model for the larger market. As the patterns of research at Edmunds.com shift, the company can track changes in interest in specific cars and brands with an ingenious in-house application, giving it insights into the market that no automaker  can ignore. By serving consumers with the latest technology, Edmunds can not only generate huge revenue from advertising and sales leads, but create valuable intelligence for the industry as well.

Though Edmunds’ business model may now embrace the industry as well as consumers, it hasn’t lost sight of its original mission. Indeed, as it has assumed leadership in the burgeoning auto consumer services industry, it has embraced its role as an advocate for automotive consumers in every venue. Leading this charge is former CEO and current Vice Chairman, Jeremy Anwyl, an intense, often-iconoclastic dynamo who has become the closest thing the automotive business has to a public intellectual. Rising to prominence through his regular commentary and industry analysis, Anwyl has become a regular figure at Washington D.C. hearings on everything from fuel economy regulations to distracted driving. Over a brief lunch, he jumped with ease from topics as diverse as EV tax credits and NHTSA incident reporting to sales forecasting and media criticism, fusing a generalist’s fascination with every aspect of the automotive business and culture with an unshakeable focus on serving consumers. While Detroit’s executives often seem inward-looking and overly focused on their traditional industry patterns, Anwyl demonstrates the importance of an automotive culture that engages every arena in which automobiles play a role. His ability to serve as the auto consumer’s advocate-in-chief, not only serves Edmunds’ mission and image well, it helps cement the consumer power that launched his company to prominence.

But Edmunds’ rise, from booklet printer to market-making, policy-influencing juggernaut, has not gone unnoticed. Numerous companies have tried to match its success and compete for its influence, but few have given it any real trouble. The simple fact is that Edmunds has been working at its mission so long, and has been so in tune with cultural and technological shifts, that any rival would have to make enormous investments in order to match its suite of services and aura of leadership. And yet, in just a few short years, one company has managed to break through Edmunds’ near-monopoly, and join it as the second Southern Californian juggernaut of automotive consumer services. That company is TrueCar.

The short roots of TrueCar’s stunning rise to prominence lead back to Edmunds. Formed by a core of Edmunds employees, TrueCar grew out of just one element of Edmunds’ sweeping empire: the “True Market Value” pricing tool. While the larger site spread its resources across an entire ecosystem of consumer information and advocacy, TrueCar’s mission was laser-focused on creating the best real-time pricing tool on the web. By investing in every possible source of data on new car sales, and by developing a slick, intuitive interface focused solely on delivering localized market price transparency, TrueCar has been able to claw out a niche in one of the most lucrative automotive consumer services. And though Edmunds downplays comparisons with TrueCar, it’s clear that the upstart firm has established itself as a major player.

TrueCar’s more focused culture is evident in its almost zen-like offices high atop Santa Monica’s historic clock tower. In sharp contrast to Edmunds’ primary colors, copious espresso machines and young employees blowing off steam at the company pinball machine, TrueCar’s headquarters are smaller, less self-conscious, and a more obviously-focused workplace. Not that TrueCar couldn’t have a vast Google-like complex if it wanted: just last year, in the depths of of the economic downturn, the company brought in a $200 million round of investment. But, as CEO Scott Painter explains, TrueCar’s spends its millions largely on acquiring and analyzing pricing data. Where Edmunds seeks to offer a complete research and shopping experience, Painter refuses to break focus on pricing until total market transparency is achieved.

But where Edmunds’ broader focus has allowed it to assume the mantle of consumer advocate in a generally non-confrontational manner, TrueCar’s narrower but deeper approach to serving consumers has ruffled feathers among dealers and manufacturers. For an industry long used to consumers overwhelmed by the vast variety of brands, models and trim levels, and for dealers who have long relied on asymmetrical information to pad their profits, TrueCar’s crusade for pricing transparency has tipped the balance of power so far towards consumers as to be seen as a threat.

Towards the end of 2011, TrueCar, falling victim to its own success, came into conflict with dealer groups, manufacturer “dealer marketing allowance” schemes, and state regulators tasked with protecting local franchise laws. In the wake of that confrontation, TrueCar has had to make some specific changes in how it operates its business, but the industry’s reaction showed that TrueCar’s mission to deliver real pricing transparency was changing the way automotive retail works. And as Detroit has proved over the last 40 years, businesses who cling to a comfortable past in the face of inexorable historic forces get left behind.

Though Edmunds and TrueCar eye each other warily, and though there is certainly some overlap in their business models, they aren’t really competitors. Together, they form the vanguard of a movement to use information to empower consumers, and I would argue that a consumer that wants to make the most of this new movement would use Edmunds to help decide what kind of automobile might suit them best, and use TrueCar to help price and negotiate for it once that decision has been made.

Competition between the two will make both better, which in turn will arm consumers with ever-greater power in the marketplace. In this way, the two behemoths of online car buying services will continue to strip power from the automakers, force them to pay closer attention to consumers, and drive the innovations that will allow producers to more efficiently serve an increasingly-informed market. And as this dynamic plays out, the producers and marketers of Detroit and elsewhere will have no choice but to recognize the rise of America’s new Motor City in sunny Southern California.

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75 Comments on “Blind Spot: America’s New Motor City...”


  • avatar
    vikast

    Great article about the New Motor City. Being a long time Angeleno, I always felt that Southern California was much more integral to the car industry than recognized by much of the nation. Not only is Southern California home to Edmunds and True Car, but the LA region is also home to several of the US HQs for the Japanese and Korean car companies; design studios for several major manufacturers including BMW, Nissan and VW; the prestigious Cal Arts school of automotive design; Fisker a niche manufacturer looking to provide extended range hybrids; and JD Powers, a leading consumer survey firm serving the automotive industry. Southern California also supports some of the new-age automotive companies, namely Tesla and Project Better Place.

    • 0 avatar
      jimmyy

      Agree. In fact, I think the US HQs for the Japanese and Korean companies were strategically placed in LA. A drive from the South Bay to Costa Mesa on the 405 should make this clear. Unfortunately, GM and Chrysler still does not recognize the strategic importance of LA as the car capital.

      Many years ago, I remember meeting a few Ford employees at a happy hour in Irvine who were complaining about high home prices … they had just relocated from Michigan. Ford understands this. Where is that Ford operation in Orange County at?

      • 0 avatar
        carbiz

        Yeah, yeah – we get it: California is the center of the Known Universe, and Los Angeles is the capital.
        So, let me get this straight: what you are celebrating is the handing over of American industrial might and supremacy (Detroit) to the new epicenters (Tokyo, Seoul, Beijing), which happen to have located a few branch offices in California.
        Wow – that is progress. Bricks and mortar. Factories and supply depots. None of these count for much. Sneering derisively at the ‘rust belt,’ Angelinos can beat their chest for they are the new captains of industry. Except that industry is across 5,000 miles of ocean.
        And as two of California’s proud sons, TrueCar and Edmunds, dissect Detroit, one brick at a time, they can be proud that the tens of thousands of jobs that have vanished are replaced by – how many people work in those colorful offices? One hundred? Two hundred?
        Kudos, California. Here’s hoping the Mexico takes you back in the next decade or two – and they likely will.

      • 0 avatar
        jkross22

        Mexico?? Hey, I’m not sure we can cover the light bill this month. I hope the utilities take IOU’s.

      • 0 avatar
        Toad

        Carbiz, Ed is not advocating tearing down the domestic auto industry, he is trying to wake it up. Like it or not LA sets the trends the rest of the country usually ends up following to one degree or another. If Detroit based automakers ignore how their business is being changed by new industries based in LA they do so at their own peril.

        The newspaper industry tried to ignore how the internet could impact their business and look how that worked out for them. Ed is warning the automakers that they could face the same fate if they fight against technology rather than adapt their business to the changes that are happening.

        These changes are driven by consumers; nobody is forcing you to use TrueCar or Edmunds. Consumers want these services and will demand even more in the future. Fighting your customers is not a strategy that will make any automaker successful in the long run.

  • avatar
    DC Bruce

    I don’t see this as important as you do. Yes, these companies have the ability to provide real-time market data and the ability to bring better price discovery on the buy side of the marketplace.

    But the automobile of the future is not being built in Southern California; it’s being built further north, in Mountain View. Google’s self-driving car technology is what will transform the automobile in the 21st century. And, significantly, unlike the top-down idea of “intelligent highways” (effectively replicating the function of today’s air traffic control system, which is in the process of being scrapped), Google’s effort is self-contained within the car. The benefit of this that I see is more densely-packed traffic, operating at higher speeds with no loss of safety.

    And before people complain too much about turning driving “over to a computer,” realize that just about every car today has only a computer connection between the engine’s output and the driver. And also that all of today’s high performance military aircraft are “flown” by computers which translate the pilot’s commands into control surface adjustments that affect the attitude, direction and speed of the aircraft. Needless to say, the pilots’ lives depend on these systems working correctly.

    That’s the future of the car, not some system whose entire existence depends on a unique U.S. law which prohibits manufacturers from enforcing retail prices of their products sold through dealers.

    • 0 avatar
      mike978

      It isn`t just the US that prevents manufacturers from enforcing MSRP. Dealers in the UK haggle too.

      Does anyone know what Edmunds web traffic is like and how it compares to other sites?

  • avatar
    onyxtape

    I came upon TrueCar by accident a few months ago when I was shopping. I was surprised that they had listed the dealer cost, etc. One could figure all this out by doing a little math with some online info, but this was laid out in clear cut graphics and everything. It gave me the confidence knowing that my numbers were not off by one bit.

    I was not surprised when they stopped showing all this info a month later.

  • avatar
    Joss

    The automotive blue-collar middle class is largely gone – dispersed by robots. Here’s the new IT middle class birth genesis in LA. What’s the next age after this dispersion?

    • 0 avatar
      carbiz

      Half of them are already in Bangalore. India bangs out (literally) more engineering grads in a year than the U.S. could ever imagine.
      Pass the popcorn, folks – we’ve got front row seats to the decline of America and Californians set the match.

      • 0 avatar
        jkross22

        It’s unfortunate you view it as happy news. Just because it’s happening doesn’t mean you should cheer it on.

      • 0 avatar
        bikegoesbaa

        “India bangs out (literally) more engineering grads in a year than the U.S. could ever imagine.”

        India also has roughly 4x the population of the US. Why do you regard it as a problem that a nation with a much larger population also graduates larger numbers of people in any particular degree field?

        News flash: California produces more doctors than Alaska, too!

        I’m sure people looked at the first mechanical farm equipment displacing hordes of hand laborers and wistfully reflected about how “there ain’t going to be no jobs no more”.

      • 0 avatar
        docrock

        I’m sure people looked at the first mechanical farm equipment displacing hordes of hand laborers and wistfully reflected about how “there ain’t going to be no jobs no more”.

        Ask the hiring managers at John Deere, ConAgra, Monsanto and ADM that there “ain’t” going to be jobs any more.

        The jobs will go to those with intellectual capitol to offer those in the Agricultural Industrial Complex . . . cheap food, expensive equipment and seed, government subsidies that the average taxpayer does not yet have a handle on.

        The jobs will be there for those with something to offer to their employeers.

  • avatar
    ajla

    No matter what city becomes Constantinople, I think Detroit will always be Rome.

  • avatar
    OldandSlow

    Information, Marketing or Media Capital – definitely.

    Import gateway from overseas and Detroit – pretty much.

    A Motor City in the traditional sense – no way, California’s regulatory and tax environment has driven away manufacturing.

    I’d wager that more vehicles are built in Kansas City, Mo than in all of Southern California. Southern California on the other blows Kansas City away with regards the number of people employed in the marketing, sales and service end of the pipeline.

    • 0 avatar
      tresmonos

      Whenever I leave KC, I can’t help but think that it is what Detroit would have been like had it bee more diversified. Kansas City has also been the benefactor to big manufacturing losses in St. Louis, so all is not what it seems.

      I can’t help but think SoCal will experience what Detroit has in terms of outsourcing. Something has to give in California, and when it does, it will be the Detroit degree of ugly.

      Detroit was a boom town. It was the perfect storm in terms of Northern migration, automation, vertical disintegration, market loss and free trade.

      • 0 avatar
        George B

        I used to live in Kansas City. The Kansas City metro area benefits from straddling two states, one solidly in the “Red State” column. It’s relatively easy to move your business across State Line Road if the business climate becomes unfriendly so competition between Kansas and Missouri plus competition among numerous suburbs keeps government power somewhat in check. The fast growing suburbs with the good schools plus Sprint and Garmin are in Johnson County Kansas. The good bars, Sunday alcohol sales, and unbelievably horrible schools are on the Missouri side of the line. General Motors builds cars on the Kansas side and Ford builds trucks in Missouri.

      • 0 avatar
        alfabert

        New cars aren’t assembled in Kansas City, MO. GM Fairfax is in Kansas City, Kansas; and Ford in Gladstone, MO. Those are awfully distinct from KC, MO, if you’re the KC, MO taxman. The Leeds plant in KC, MO closed decades ago, never mind the Ford plant….

        “Kansas City has also been the benefactor to big manufacturing losses in St. Louis…” What manufacturing moved to the KC metro area from St. Louis?

        “I used to live in Kansas City. The Kansas City metro area benefits from straddling two states, one solidly in the “Red State” column. It’s relatively easy to move your business across State Line Road if the business climate becomes unfriendly so competition between Kansas and Missouri plus competition among numerous suburbs keeps government power somewhat in check. The fast growing suburbs with the good schools plus Sprint and Garmin are in Johnson County Kansas. The good bars, Sunday alcohol sales, and unbelievably horrible schools are on the Missouri side of the line. General Motors builds cars on the Kansas side and Ford builds trucks in Missouri.”

        Depends on your business – if it’s 3000 sq. ft. of office space, maybe.

        Some saloons/gambling parlors used to straddle the state line between KC,KS and KC,MO back in the Pendergast days (1920-1940). Given 10 minutes notice (always given somehow with the right palms greased), everything moved to the other side/state just in time.

        Solidly Red State? U.S. Rep. Dennis Moore (D)-KS 1999-2011 might have to question that. Google “Mission” “Driveway tax” and “unconstitutional” to see how competition among governments doesn’t quite keep stupidity in check among local governments. Sunday liquor sales became a local option in Kansas a while back – for once, government “competition” visibly DID work…

        “But while we are at it- how many car design studios are there in Kansas City vs Southern California?” I dunno – how many elementary schools ARE there around Kansas City? :) Or do you mean
        http://www.thetruthaboutcars.com/2012/05/whats-wrong-with-this-picture-ontogeny-recapitulates-phylogeny-edition/ ?

        Provincialism knows no geography.

    • 0 avatar
      icemilkcoffee

      No need to wager. The last mass production car factory in California – NUMMI in northern California- closed its doors around 3 years ago.

      But while we are at it- how many car design studios are there in Kansas City vs Southern California?

  • avatar
    bumpy ii

    “Detroit became the Motor City, the hometown of an industry that created a blue-collar middle class”

    No, but they like to pretend they did.

    • 0 avatar
      tresmonos

      100% agree. There’s a blue collar middle class elsewhere (but not as concentrated as manual labor once was in the rust belt). It’s great propaganda,though.

  • avatar
    "scarey"

    The blue-collar middle class spread from Detroit outward to the rest of the country. Where else did it start ? It spread with the proliferation of the auto factories, which begat supplier factories which begat other factories. It was a matter of timing and good fortune, and resulted in the mechanization of the world.

    • 0 avatar
      tresmonos

      You can say that it existed at the dawn of American Industrialization. There’s also an ‘argument’ that is was ‘won’ by collective bargaining (starting in Detroit). A more reasonable answer is that it came into existence when the standard of living reached ’1st world’ status in the United States. Manufacturing was just concentrated in the rust belt, mostly spurred by the belief OEM’s held that model changes would be easier if the complexity was spread between numerous firms (circa 1930′s).

      Manufacturing has declined elsewhere, it just was more concentrated in the midwest. Saying it was ‘invented’ there shorts the steel, textile and food processing industries.

      • 0 avatar
        redmondjp

        Yes, some of the oldest manufacturing done in our country was in the Northeastern states (hand tools and clocks come to mind quickly).

        Back to the Detroit vs. LA topic: to me it is clear that the domestic automakers really didn’t understand the colossal shift in their business that came about during the late 70s – early 80s with the upswing in foreign makes. One huge reason for this I think is that the domestic leaders didn’t really know that it was happening! How can I say this?

        Having lived in two major auto manufacturing cities (Flint, MI and Kokomo, IN) back in the 1980s in which a vast majority of people drove what they built (employee discounts didn’t hurt either), it was an insular domestic car culture which in no way reflected most other major US cities, especially those on either coast.

        When any US auto exective looked out his(/her) window, be it at headquarters or at any manufacturing complex, they saw a massive parking lot full of late-model domestic cars and thought “all is well.”

        And anybody else remember Pontiac’s advertising from the 1990s? The greasy-dark-haired dudes in their ads touting sporty Pontiacs – that just had to be a Detroit thing! I always laughed when I saw those ads.

  • avatar
    Pleiades

    Los Angeles was indeed a major manufacturing/assembly hub for the domestic car industry. I will list only some of the major assembly plants below. There were many more suppliers in the area that not only supported the car industry, but Los Angeles’ huge aerospace industry as well.

    Chrysler Los Angeles Plant – City of Commerce, 1932-1971

    Ford Pico Rivera Plant – Pico Rivera, 1959-1980

    General Motors Van Nuys Plant – Van Nuys, closed in 1992

    • 0 avatar
      tresmonos

      Ford Long Beach Assembly, Ford Richmond Plant, Ford San Jose Assembly.

      • 0 avatar

        I don’t want to downplay the role of manufacturing and development in LA’s contributions to the car business… obviously it has been the site of significant manufacturing historically, and it’s still a major center of automotive design. In fact, the design presence is yet more proof that the area is a mecca for the truly consumer-responsive elements of the business. But my goal with this piece was to present LA’s role in the car business in the larger context of the globalized, increasingly post-industrial American economy. Edmunds and TrueCar seem especially emblematic of this and, well, the piece was long enough enough as it was.

      • 0 avatar
        jimmyy

        Edward, so true.

      • 0 avatar
        tresmonos

        I wasn’t refuting your piece more so just piling onto the list. The only part of your piece that I question is the power of Edmunds and TrueCar. Your article reminds me of the documentary, Beer Wars. Businesses like the ones noted in your piece have mountains of legislation and politicians against them. I don’t think they’ll ever be a ‘force to be reckoned with,’ with respect to OEM’s. They will (hopefully) leave their mark, though.

  • avatar
    jz78817

    I never cease to be amazed at southern California’s seemingly endless supply of smug self-importance.

    • 0 avatar
      redmondjp

      Well, if any GM exectives had taken a closer look at what people were driving out in LA back in the 1980s, maybe things would have turned out a bit differently for them. Even today when you do Google street view virtual tours of places like Detroit, it’s hard to find very many foreign cars.

    • 0 avatar
      Pig_Iron

      It stank when I was there in the 70s, but the people seemed to believe there own propaganda. Katy Perry seems to be the latest Comical Ali for California. Still… it’s better than (whoops, I better stop right now).

      Actually, the latest tourism commercials smack of servile begging, it came across as very contrived to me.

    • 0 avatar
      jimmyy

      SoCal is one of the most important destinations in the world. Smug self-importance has been earned.

  • avatar

    >>>In sharp contrast to Edmunds’ primary colors, copious espresso machines and young employees blowing off steam at the company pinball machine,

    Edmunds has a pinball machine???! Is there a Studebaker parked out front?

  • avatar
    icemilkcoffee

    California’s real contribution is that it’s the birthplace of almost every automotive subculture. Hotrods started out in LA. Lowriders started out in San Jose. Import tuning started out in both northern and southern California. Calbugs, dune buggies, choppers, outlaw motorycle gangs, rat rod, kustom kulture- you name it , it probably started out in California.

    • 0 avatar
      OldandSlow

      *** A spot-on the money comment. – Very true. ***

    • 0 avatar
      Pch101

      “California’s real contribution is that it’s the birthplace of almost every automotive subculture.”

      Pretty much. The most significant byproduct of all was that California served as the beachhead for the emergence of the Japanese automotive industry onto the world stage.

      • 0 avatar
        jimmyy

        Agree. The Asian car culture took over California many years ago.

        However, on the east coast, the take over was more recent. Just 10 years ago, Detroit vehicles still dominated the east coast scene. Now, the east coast resembles the west coast.

      • 0 avatar
        carbiz

        … the follow up to Pearl Harbor delayed by 40 years. Plenty of time to strategize.

      • 0 avatar
        Pch101

        “the follow up to Pearl Harbor delayed by 40 years. Plenty of time to strategize.”

        At some point, you’ll need to figure out that jingoism isn’t a great way to sell cars. You’re behind the times — two-bit racism is out of style these days.

      • 0 avatar
        carbiz

        Playing the racist card every time someone says something you don’t agree with is also getting old.
        I literally had a Chinese kid at a Future Shop flatly declare that ‘they’ buy Japanese cars when he saw my Chevy logo on my golf shirt.
        Don’t you dare lecture me about racism.
        If an executive in Detroit farts, some journalist is going to print it in our culture of ‘gotcha’ journalism. We have no idea what the policy makers and industry shakers in Japan or China are saying behind our backs. No idea whatsoever.
        As a former Italian co-worker whose wife was Chinese once said to me as 4 Chinese clients got up from his desk and left: “They have no idea I speak their language. They just said the most nasty things about this dealership and about me. I wanted to punch the guy in the face.” And he walked away.

      • 0 avatar
        Pch101

        “Don’t you dare lecture me about racism.”

        Truth hurts, I guess. The shtick is too cliched to miss.

      • 0 avatar
        ZekeToronto

        Carbiz, if your Italian former coworker spoke their language, why on earth wasn’t he serving those Chinese clients in their language?

      • 0 avatar

        “truth hurts, I guess. The shtick is too cliched to miss.”

        Few things are more cliched in 2012 than playing the racism card.

        RE: shtick. If I casually used urban black patois you’d probably accuse me of cultural expropriation.

      • 0 avatar
        Philosophil

        “I literally had a Chinese kid at a Future Shop flatly declare that ‘they’ buy Japanese cars when he saw my Chevy logo on my golf shirt.
        Don’t you dare lecture me about racism.”

        Historically, China and Japan have had their share of disputes, which complicates the associations being made here.

        It’s difficult to interpret responses such as these without a little more context. A couple of quick questions might help people flesh out the context a little more:

        1) Did he tell you why he buys Japanese? After all, there are many possible meanings behind a phrase like that. For all we know, for example, he could be like many Americans who also ‘buy Japanese” (i.e. Toyota or Honda) because of the perceived reliability of those vehicles (which is still a common perception nowadays).

        2) Was the kid actually a Chinese citizen? (i.e. a card-carrying citizen of China) More context would help here as well, for as far as we know the kid could have been an American of Asian descent (who is merely expressing a view that might be heard from any number of Americans, or Canadians, or Europeans, etc.).

    • 0 avatar
      Zackman

      “California’s real contribution is that it’s the birthplace of almost every automotive subculture.”

      Well, if you are referring to Jan & Dean, the Beach Boys, Ronnie & the Daytonas and a few other old pop groups, you’re correct!

      “Tach it up, tach it up, buddy gonna shut you down”!

  • avatar
    jimmyy

    Being a part year resident of coastal Orange County, I understand the attraction of Asian brands. Because of the sprawling nature of Southern California, many drive 40+ miles each way to work in heavy traffic. This occurs because high six and seven figure home prices surround many employment centers in West LA, South Bay. So, people commute from San Berdue and Riverside, where homes can be had for less than 500,000, to West LA, South Bay, and central OC. These people run hundreds of thousands of miles on vehicles, and reliability is everything. This created the opening for Toyota and Honda.

  • avatar
    Pch101

    Sorry, but I don’t quite understand TTAC’s love affair with TrueCar. It’s a car broker/ dealership bird dog agency ala Autobytel (which, incidentally, was founded in Southern California by a car dealer more than fifteen years ago), not the Second Coming. Why so much affection for one particular company?

    Similarly, Edmunds followed in the footsteps of Kelley Blue Book, which was founded decades earlier (also by a car dealer in Southern California). Long before there was an internet or Edmunds, one could go to the reference desk of the public library and get invoice prices, holdback formulae, etc. from print editions of KBB. None of this stuff is new, although the internet has made it easier and more convenient to obtain.

    • 0 avatar
      tresmonos

      I believe it’s Mr. Niedermeyer’s penchant for disrupting the ‘status quo,’ i.e. the dealer network. It’s the same drive that fuel’s the GM hatred on TTAC.

      Last year, he wrote a piece about the founder of TrueCar that compared TrueCar’s ability to raise more cash than Saab could at the time.

      Agreement on KBB. Great resource.

    • 0 avatar

      Neither TrueCar nor Edmunds invented the idea of providing information to car buyers, but they’ve adapted to changing technology better than anyone. And I’m not saying that either company has an uncertain destiny… history shows that anyone can screw up at any time in the car business. If I give the impression of being “in love” with either, it’s because I think both companies are moving with historical forces that the traditional auto industry has resisted (see comments in this thread from “carbiz” for a spot-on satire of the industry’s resistance to change). And remember: I don’t identify these historical forces because I like or dislike them, but because I think they are real.

      Had OEMs and dealers recognized the information age’s potential to revolutionize their business the way these two firms have, this piece could just as easily have been about a rebirth of the “traditional auto industry.” But whose fault is it that the piece came out the way it did? Mine because I would never write anything good about Detroit nor anything bad about California (remember, this is an Oregonian you’re dealing with), or the dealers and OEMs because they were too comfortable with their informational and taste-making advantages to imagine they’d ever go away?

      • 0 avatar
        Pch101

        “they’ve adapted to changing technology better than anyone”

        For now, that’s certainly true. The thing about technology, though, is that its propensity for change creates opportunity for new firms to destroy the former leaders. (Think Friendster or Myspace, to name just two.)

        “Had OEMs and dealers recognized the information age’s potential to revolutionize their business the way these two firms have, this piece could just as easily have been about a rebirth of the ‘traditional auto industry.’”

        Maybe the revolution isn’t being televised, or perhaps my television may be broken, but I’m not seeing much disruption here.

        If Edmunds teaches us anything, it’s that information doesn’t do much for good for people who don’t know how to use it effectively. TrueCar demonstrates what any auto broker or Costco could tell you, namely that there is a small segment of the car buying audience that will leave money on the table for what they perceive to be an OK deal wrapped up with a bit of convenience.

        The nature of car retailing is such that there isn’t much reason for the manufacturers or the retailers to change it. The current model works for them, given US market conditions. As it turns out, it also works well for some consumers, although it does come at the expense of some others.

        Just so long as there is a significant base of Americans who prioritize haggling over customization and service, there isn’t much reason for a sea change in that business. In order to get some customers a rock bottom price, there have to be others who will pay more. The purpose of the current model is to extract enough cash out of the price-insensitive customers to cover the other buyers who are more aggressive. If we all end up paying “invoice”, then invoice is just going to become a gimmick with enough margin built into it that it may as well be something close to what is now known as MSRP.

      • 0 avatar
        tresmonos

        carbiz’s satire is about as polarizing as your favoring of Edmunds and TrueCar.

        Both companies provide a great web based tool for consumers. Trulia and Zillow provide great webpages for individuals looking to buy real estate. But do any of the tools have direct access to the product? No.

        Pch101 is dead on with his assessment. Rather than prosing on about two of your favorite icons, maybe dig deeper and provide some financial evidence of their impact; the money trail that tells us they ‘steer’ the industry.

      • 0 avatar
        Pch101

        To be fair, TrueCar has attracted venture funding, experienced some considerable revenue growth during 2011, and is supposed involved in a large percentage of new car sales. It is worth paying attention to.

        It seems to me that most of their growth isn’t due to the technology, but is the result of operating car buying services on behalf of other companies such as USAA. In that sense, their growth hasn’t been about technology per se, but about their ability to deploy capital to secure contracts, which provide them with a large enough buyer pool to have dealers take them seriously.

        I question the long-term sustainability of their model because of the high fee of $300 per sale. A fee that high makes it tempting for their customers on both sides (buyers and dealers) to start haggling, and for a competitor to come in to undercut them.

        Then there are the legal aspects. To the extent that state regulators attack the birddog aspect of the model, TrueCar doesn’t provide much of a unique benefit if it serves instead as what is effectively another mailing list lead generator. That’s a pretty run-of-the-mill business with plenty of competition.

  • avatar
    carbiz

    I’ve been to the bad parts of Rochester, Buffalo, Erie, Gary, Columbus and many others. It is a sad sight to see the former glory of the United States, the birthplace of most modern inventions and ingenuity, just rotting away – literally.
    After last year’s deficit ceiling fiasco, which had co-workers who know nothing about world economics actually paying attention, it amazes me that people celebrate the demise of America Inc. Why are Americans such masochists? You really would rather buy a Subaru or a Kia because, what – Detroit deserved it?

    Here’s a parting thought: the Top 5 nations with current account surpluses are (2010 figures, in U.S. dollars – for now):

    China $280.6B
    Germany $149.3B
    Japan $122.8B (no tsunami worries there – YOU paid for it!)
    Russia $90.5 B (who won the Cold War?)
    South Korea $36. B (buy another Hyundai, please!)

    Are there any surprises?

    And the bottom 5?

    United States SIX HUNDRED BILLION DOLLARS IN RED INK
    Turkey at #2 – now there’s good company to keep.
    Italy, France and the U.K – all models of conservative capitalism

    Hollywood just couldn’t make this stuff up! There’s a Grisham plotline right in those figures…

    • 0 avatar
      bikegoesbaa

      I bought a Subaru because it was a better fit for my needs and wants than anything offered by the domestics, and offered me better value for my money.

      If you think I’m wrong, please tell me where I can find a Ford, GM, or Chrysler manual-transmission wagon/hatch with a longitudinal crankshaft for under $20K.

      I also bought a Miata. Please direct me to the domestic equivalent. No, the Skystice does not count, since it has no useable trunk and is much heavier. Also, no, a Mustang does not become a roadster just because you cut the roof off.

      Subaru also got bonus points from me because:
      -It’s likely to get me more money on resale than any comparable domestic.
      -It has far more credibility with people my own age than any comparable domestic. I know a gorgeous girl who wouldn’t date a guy because he drove a Cruze. She likes my Subie.
      -They never sold a rusts-when-new never-runs-right Granada to my mom, or a Park Avenue with a plastic bag partially blocking the intake to my grandmother. Sure, that was decades ago. When people pay a significant portion of their yearly income for a manufactured good that doesn’t work right they tend to have long memories.

      So, ultimately, I bought imports because they sell the cars I want to drive. I do harbor some suspicion of the domestics based on prior experience, but it could easily be overcome with product if the product were there. The problem is that it is not there, at least not for me.

      • 0 avatar
        CJinSD

        Detroit never gave two figs about their customers. Why are we supposed to care about them? I’ve actually enjoyed owning the cars I’ve had since I stopped settling for Big-3 products. I’m supposed to buy miserable, unreliable, over-priced, ugly, rapidly depreciating cars that don’t do what I want them to in order to feed an industry that wants me defenseless and uninformed in the finance office? Besides, foreign car companies are better for my bottom line than the UAW ones are, because I don’t have to pay for their mistakes.

  • avatar
    thatguy

    I’d rather buy a Subaru. Because its a better car, despite the fact that its made in Indiana, by american workers. Just like BMW, Toyota, Nissan, Hyundai, etc. Unlike GM, who makes cars in Canada and Mexico.

    • 0 avatar

      I guess that GM’s Detroit-Hamtramck, Arlington and Orion plants must be building bicycles since GM apparently doesn’t build cars in the US. Honda builds cars in Canada. BMW is considering a Mexico plant. BTW, the profit on the GM cars built in Canada and Mexico flows to the headquarters in Detroit.

  • avatar
    beefmalone

    How about a “sponsored post” notice next time?

  • avatar
    Slare

    Nuts and bolts engineers aren’t appreciated enough to make a decent living in California. The day anywhere in California fully displaces Detroit, it’ll mean all of the lowly engineering jobs have been outsourced overseas instead of just a lot of them.

    Detroit is in trouble, even if the big 3 make a huge comeback the city is broken. Much as I’d like it to I doubt it will ever recover unless some sort of natural disaster wipes most of actual Detroit clean.

    But people shouldn’t be so quick to hope for its downfall because LA won’t actually “replace” it. Somewhere in China, Malaysia, or India will replace it, and they’ll be a few nice buildings in LA with a much smaller quantity of people doing real work.

    I swear some people in this country aren’t going to be happy until all the average American knows how to do is brew beer and start internet companies. I can’t help but think once the average 18 year old kid doesn’t know how to use a hammer or screwdriver (and they are already out there) we are in big, big trouble.

  • avatar
    chicagoland

    California is near bankrupt, losing jobs and stopped being the ‘Land of Oppurtunity’ ages ago. “New Motor City”? Who cares? Traffic moves at 10 mph and people drive 100 miles a day to “affordable” homes. Nissan moved out years ago, too.

    With internet, movie and TV industry will shrink and no more big paydays for wanna be ‘players’.

    Cali is ending up as very rich, few elitists and many very poor service workers.

    Don’t envy it there at all.

    • 0 avatar
      jkross22

      Yep, there is a reason that CA unemployment is 30% above the national average. If you owned a small or mid size business, the cost of doing business in CA just doesn’t compute.

      Look at where Facebook, eBay, Intel, Apple, Google and other big companies based in CA expand to. Hint: It ain’t anywhere in CA.

  • avatar
    Zackman

    I guess it’s already been said, as I’m late to the party on this – hey! I had flooring issues (I thought) at home last evening – so no time on the computer.

    If an information-disseminating entity counts as a car-center, fine, but that is an illusion. They don’t BUILD anything. SoCal is an island of make-believe. When times were good, times were good. Get a bit inland away from the beaches – 1,000 feet or so, and it’s plain to see how things have sunk out there.

    California, indeed, seemed (and was for many) the “promised land” at one time – 40 years ago – I left just before the beginning of the end when I left the air force in 1973.

    Oh well, I have nothing more to add, so that’s all…

  • avatar
    Dynamic88

    Wow, where to start.

    Detroit as the “motor city” is more of a tag than a reality. Kinda like Wisconsin being the dairy state – other states do dairy, in fact CA does quite a bit more dairy than WI.

    It was much the same with Detroit. It produced more cars than anyone else, and so got the tag, but there were other places, especially before the great depression.

    As for car culture, yes, So-Cal has made it’s contributions, and yet while there were hot rodders in CA, there were rodders in other places too. While there were customizers like Barris in CA, there were also the Alexander Bros. in Detroit. And lets not forget good ‘ol Darryl Starbird who got his start in KS. IMO Starbird did more for custom car culture than anyone in CA.

    Finally lets not forget that the man who taught Toyota how do manufacture quality – Dr. Demming- was an American, from Sioux City and later from Wyoming. And let’s not forget a lot of his early work was for the “gubmint”. Deming had a hell of a lot more to do with the success of the Japanese than anyone in So-cal, or any “cosmopolitan” world view that might be attributed to consumers in LA.

    American cultural geography, and how it translates into business, is a bit more nuanced than you’ve made it out to be.

  • avatar
    nikita

    Things change, industries move or become obsolete. People live based how things are and it is very disruptive to peoples lives when it happens. Blame China, Japan, California, the US Government, but you have to blame someone or some thing rather than accept the inevitable.

    Seattle was not the birthplace of commercial aviation, it just happens to be the center of it right now. It was Douglas and Lockheed in Southern California. Who do we blame? It was the management of those companies, not Boeing or the consortium of Anglo-French companies that became Airbus. Every one had government subsidies of one kind or another, so dont blame it on that.

    Detroit became complacent or made repeated bad bets, like Lockheed did with the Electra, followed by the TriStar. Lockheed ended up being bailed out because the Government couldnt let them fail (for key defense technologies, not union jobs).

  • avatar
    TOTitan

    For all of the CA bashers and haters……”California’s economy is the eighth largest economy in the world (2011),[9] if the states of the U.S. were compared with other countries.[10][11] As of 2010, the gross state product (GSP) is about $1.9 trillion, which is 13% of the United States gross domestic product” “CA Income per capita $51,914″ per Wikipedia @ http://en.wikipedia.org/wiki/Economy_of_California

    Enough said

  • avatar
    TOTitan

    BTW…..the weather is pretty nice here too. Today in Thousand Oaks (halfway between LA and Santa Barbara) its 80 degrees with 41% humidity


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