After almost half a century of fighting battles, America’s Big Three – the Moderately Large Three, if you prefer – have at long last lost the war. Yes, it’s official. From this day forward, fuel economy matters. From now on, judicious use of fossil fuels trumps road-hugging weight. Too bad Detroit carmakers weren’t prepared. They only had fifty years to get ready.
Of course, many said the same thing – mileage is the new, eternal bogey – during the energy crises of the 1950s and the 1970s, and they were wrong. They failed to recognize that, given enough encouragement, Americans would use too much fuel again. The captains of Detroit professed their blamelessness: Americans love big, thirsty machines. Gas is cheap. What could we do?
But now that gas isn’t cheap, this is the part that’s important to remember. Detroit didn’t have to encourage profligacy, it chose to. And some will argue that the power of advertising dollars could and should have been used to encourage efficiency. The American industry could have played the same patriotic card it deployed following 9/11 to advocate fuel conservation instead of throwing around billions of dollars to make sure there were large SUVs in every garage. It didn’t have to spend some four decades fighting safety, emissions, and fuel-efficiency standards.
By way of justification, the men from the Motor City have maintained that America’s large cars – virtually unique in the world for their heft – were safer. This didn’t explain the big spike in deaths in single-car rollover accidents that accompanied the shift to SUVs. Or why these same companies were selling all those unsafe small cars to Europeans and Third Worlders. (Don’t their lives count, too?) And it ignored the hazard large SUVs posed to occupants of normal cars, cyclists, and pedestrians. In a war between a Ford Excursion and a Focus, the Excursion wins. But only sometimes. The Focus can outmaneuver an Excursion, and it takes up less room, two keys to avoiding accidents in the first place. The truth is, if you’re going to get hit by an 80,000-pound Peterbilt running late and full up, it makes no difference whether you’re in a 7000-pound Excursion or a 2600-pound Focus. It’s kind of like asking whether you would rather die in a fire at 1000 degrees Fahrenheit or 2200. Myself, I think I’d go with the 2200-degree fire.
Unlike rough patches in the past, Detroit isn’t making any money now – and that’s after it’s closed plants, squeezed suppliers, slashed waste, jammed the union, and laid off workers. Excepting executive salaries, more generously supersized than ever, what’s left to cut? (Alongside a bold $38.7 billion loss in 2007, General Motors turned over a new leaf by approving a 64 percent increase in chairman and CEO Rick Wagoner’s annual compensation, to $15.7 million, among other raises it handed out to top execs. Imagine if the company actually turned a profit.)
It is chilling to remember that GM spent a fair part of the last century fighting to keep its market share below 50 percent for fear of triggering antitrust intervention. And it seems like only yesterday that GM executives wore “29” buttons on their expensive lapels. That represented the percentage of market share GM was going, as their bold exhortative prophecy indicated, to reclaim. Whoops. GM’s market share has just sunk below 20 percent, its lowest showing since the 1920s. Will we see “19” buttons this year? Or should we go straight to “16”? Recently, the company announced plans to close four factories, lopping a substantial 35 percent off its light-truck production capacity – about 700,000 units – in one fell swoop.
Just as grave, GM says it’s thinking of selling the Hummer division, on which it has surely lost billions and its dealers millions. Or perhaps the company will just shutter it. GM has a point. Who would be foolish enough to buy Hummer? Besides GM, that is. It probably shouldn’t bother. Unless what’s in the cards is a radical recasting of Hummer as a maker of low-volume, high-tech, alt-energy off-roaders. But GM is too broke to make Hummer relevant, much the way it’s too broke to aggressively market the desirable cars it does sell. May’s disappointing total of 1091 Saturn Astras sold is a picture worth 1091 words.
How violent is the sea change for Detroit? In May, Ford‘s F-150, which hadn’t been outsold by a car since October 1991, skydived to fifth spot behind a couple of Hondas (Civic and Accord) and two Toyotas (Corolla and Camry). The Civic is now the best-selling car in America, with 53,299 sold in May alone. By contrast, Chrysler sales are off 25 percent, and as I sit down to write, Dodge has just announced plans to darken its Ram facility in Saltillo, Mexico, for what it said would be only two weeks.
We’ll see about that.
Clearly this is not just a down year, it’s a total paradigm shift. Honestly, it’s hard to think about cars in the same way anymore. Cars that seemed like pretty good ideas – say, Pontiac‘s six-cylinder G8, headed in the right direction with 25-mpg EPA highway mileage – suddenly seem less inspired with only 17-mpg city. Cars that appeared bad ideas before now seem like the worst ideas ever. The Hummer brand, for instance, is on target to sell fewer than 35,000 units this year, or about twelve percent the number of Oldsmobiles GM was selling when it decided to shut that venerable brand to concentrate on . . . Hummer.
Mercifully for our domestic makers, they’re not the only ones whose affection for American gluttony is reflected in suddenly ridiculous products and plans. Audi has been talking about setting up a factory in the States. But instead of building the A3, the second-highest-mileage model in its lineup, Audi talked about building large SUVs, possibly to share with Volkswagen. It goes without saying that VW has been given a golden opportunity by the oil potentates – not to sell Americans more crap-mileage, me-too SUVs, but rather a production version of its tempting Up! show car, the one with the two-cylinder, rear-mounted engine that promises to be both highway-ready and incredibly green. It would be perfect for marketing to Americans at a semipremium price, with currency-exchange woes excised if the car is built in the United States. Porsche, reclaiming the old formula, should conjure something wondrous based on it.
The point is, the peace following the war that the carmakers have lost doesn’t have to be a bad thing. Let the new game begin.