Detroit: The Long Road Back

Martin Albright
by Martin Albright
detroit the long road back
“Back to the Future” is Hollywood fluff, but the movie has its moments. When Marty McFly takes his 1985 vintage nuclear-powered Delorean to Dr. Emmett Brown’s 1955 alter ego for repairs, “Doc” looks at the car’s complicated electronics and snorts “No wonder it broke down. It was made in Japan.” “What are you talking about?” McFly corrects. “That’s where all the best stuff comes from.” The throwaway line perfectly illustrates the sea change that's swept the American automobile industry during those crucial 30 years.

From 1955 to 1985, Japanese manufacturers completely reinvented themselves. They went from being producers of cheap, copycat products famous for near-instant obsolescence, to makers of high-tech, value-driven products built to last. There was an equal, opposite and horrifying corollary to this astounding transformation: American manufacturers more or less switched places with their Japanese counterparts. Despite domestic carmakers’ gains in product quality over the last two decades or so, the perception that domestic cars are inherently inferior to their foreign competition has become deeply ingrained in the American psyche.

But all is not lost. Not to coin a phrase, there is a way forward. To reverse the reversal, here’s what America’s struggling automakers need to do…

Can the discounts I remember watching GM’s “employee discount for everyone” commercials and thinking how they reeked of desperation. I figured the next step would be to have a line of UAW workers gnashing their teeth and rending their clothes as they begged me to please, please buy an American car. This summer’s discounts may be less prominent, but Detroit's still using price as the primary way to sell cars and trucks. The emphasis on cash gives consumers the impression (rightly or wrongly) that price is all the automakers have to offer. They might as well run an ad campaign that says “Chevy: When you can’t afford anything better.”

There’s only one way around these discounts: realistic sticker prices and no haggle pricing. This two-pronged approach would send a message to the American heartland that GM, Ford and DCX are serious about value– and their customers' confort level. If the vehicles aren’t selling, reduce the price.

Make inexpensive cars that people want to buy We’re not talking about “cheap” cars. The domestics need to make beautiful-looking, sensibly-priced automobiles that don’t feel like automotive purgatory. The mini-whips should have dramatic interiors made from quality materials. They need convenient touches that make people think they’re getting superb value for money. Theses entry-level vehicles also need sophisticated powerplants and superior dynamics. And they need to be updated every two to three years.

Toyota and Honda clawed their way to the top following this strategy; it worked once, it’ll work again. Yes, the Big Three’s labor and legacy costs make it nearly impossible for them to make money on small cars, but they’ve got to reclaim this territory at any cost. The traditional domestic buyer is getting older, and competition for the middle and upper market is equally fierce. If Detroit wants a future, they need a secure a toe-hold at the bottom of the mountain, and claw their way back.

Innovate! Detroit is so busy cranking out “Me too” vehicles that it’s hard to believe that the American car industry was once the pinnacle of fresh automotive thinking. Where are the striking designs, or new directions? What about diesels? Detroit could build small, clean-burning turbo diesels that get near-hybrid levels of fuel economy (especially on the highway, where hybrid mileage sucks). Right now, VW has the diesel car market pretty much to itself, but GM, Ford and DCX could one-up the competition by offering small, efficient diesels in their entry level cars. The company’s could also offer the TDi diesels in small trucks, creating a unique product for the North American market.

Attack reliability If, in fact, Detroit is building cars that are as reliable as their “foreign” competition, they should offer a 10-year/100,000 mile warranty. (If, in fact, they aren’t, they have even more reason to provide the coverage.) A long warranty would go a long way towards convincing consumers that Detroit’s vehicles are the mechanical equal of Toyota or Honda. Of course, it could cost the “domestics” a fortune, but there’s simply no cheap and easy way to win back consumer confidence. The Big Three need to make existing and potential customers believe that they care about more than just collecting monthly payments.

Clearly, Detroit is stuck in a time machine. Retro designs like the Mustang and HHR might get people into the showrooms, but they won’t save Ford and GM from Chapter 11. (DCX is doing better, but they face the same reckoning.) If the Big Three can’t make customers confident about Detroit’s future, their image will remain stuck in 1985. And if that happens, they’ll soon be history.

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  • Nutbags Nutbags on Jul 28, 2006

    If there is to be a change at GM or Ford it has to start at the top! The attitude of the workers is directly influences by the actions and attitudes of their managers. The main problem I see in other areas of manufacturing as well is that the companies are run by accountants or MBAs who only have one thought on their minds - stock price! They need to relegate these managers back to their department - the accounting department. They need to put an Engineer in charge who understands that the product, if designed, built and priced well, will sell. You can argue engine type all you want but it is ultimately the well engineered product that sells. But this will never happen at GM (Ford has a chance - the family name is at stake) as Rick 'Ride the Wagontrain as long as I can' Wagoner and his board of cronies will not let it.

  • Jody Jody on Jul 28, 2006

    how long until people stop calling chrysler american? it's getting old. they haven't been a domestic company in years. did anybody see the news a week ago that "domestics" are now below 50% of the american market? ironically they went into detail about how, since it's hard to tell what makes an "american" car anymore, they calculated market share by where the company was headquartered. doesn't that mean that the domestics went under 50% of market the day mercedes bought chrysler or thereabouts?

  • Sayahh Is it 1974 or 1794? The article is inconsistent.
  • Laura I just buy a Hyndai Elantra SEL, and My car started to have issues with the AC dont work the air sometimes is really hot and later cold and also I heard a noice in the engine so I went to the dealer for the first service and explain what was hapenning to the AC they told me that the car was getting hot because the vent is not working I didnt know that the car was getting hot because it doesnt show nothing no sign no beep nothing I was surprise and also I notice that it needed engine oil, I think that something is wrong with this car because is a model 23 and I just got it on April only 5 months use. is this normal ? Also my daughter bought the same model and she went for a trip and the car also got hot and it didnt show up in the system she called them and they said to take the car to the dealer for a check up I think that if the cars are new they shouldnt be having this problems.
  • JamesGarfield What charging network does the Polestar use?
  • JamesGarfield Re: Getting away from union plantsAbout a dozen years or so ago, Caterpillar built a huge new engine plant, just down the road here in Seguin TX. Story has it, Caterpillar came to Seguin City council in advance, and told them their plans. Then they asked for no advanced publicity from Seguin, until announcement day. This new plant was gonna be a non-union replacement for a couple of union plants in IL and SC, and Cat didn't want to stir up union problems until the plan was set. They told Seguin, If you about blab this in advance, we'll walk. Well, Seguin kept quiet as instructed, and the plan went through, with all the usual expected tax abatements given.Plant construction began, but the Caterpillar name was conspicuously absent from anywhere on the site. Instead, the plant was described as being a collective of various contractors and suppliers for Caterpillar. Which in fact, it was. Then comes the day, with the big new plant fully operationa!, that Caterpillar comes in and announces, Hey, Yeah it's our plant, and the Caterpillar name boldly goes up on the front. All you contractor folks, welcome aboard, you're now Caterpillar employees. Then, Cat turns and announces they are closing those two union plants immediately, and will be transporting all the heavy manufacturing equipment to Seguin. None of the union workers, just the equipment. And today, the Caterpillar plant sits out there, humming away happily, making engines for the industry and good paying jobs for us. I'd call that a winner.
  • Stuki Moi What Subaru taketh away in costs, dealers will no doubt add right back in adjustments.... Fat chance Subaru will offer a sufficient supply of them.