Detroit: The Long Road Back

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.