This post is in response to George Colony’s CounterIntuitive blog challenge, why can’t America build great cars?
George, in a way it’s not their fault. Like many things America has done so well over the last 100 years, we find ourselves with some pretty smart competition these days. It used to be said, “They make airplanes in Everett, Washington (Boeing’s primary assembly point), every one else only tries.” The same could have been said about automobiles and Detroit
First, a little personal background. Growing up I had two uncles who were mechanics and one who drove race cars on the super modified circuit. I went to watch these open-wheeled cars dash around a dirt, high-banked, quarter mile oval track every Sunday night. When a back injury forced my race driving uncle to retire, guess what he did, he sold cars. First Chevrolet where he would say that Ford meant “found on road dead.” Then he got a better offer from the Ford dealership and suddenly it stood for “first on race day.” Cars are most definitely part of my heritage. As soon as the new car models were in the showroom, my dad would drive us from dealership to dealership looking under the hood, in the trunk, inspecting the interiors. It was kind of like a sacred pilgrimage.
GM was the only way to go in our family. Once my dad bought an MG Roadster for fun and it literally fell apart before our eyes. Needless to say I was influenced by him and was a charter member of the GM fan club when it came time for me to choose a car.
I gravitated to Chevrolet with a Nova followed by two Monte Carlos, then a Buick Century. But over time there were a lot of annoying problems. Some place along the way GM changed the trunk mechanism from mechanical to hydraulic which would fail a year into ownership. Why make that change? The old design worked well and never needed attention no matter how long you kept the car. I was young and didn’t have the money to repair all these things, so I just bumped my head every time I put something in the trunk. There were many other problems with seals, transmissions, air conditioning, starting in cold or wet weather, flooding, starters and overheating.
Now, back on point. I believe you can boil down American’s car problems to the following; arrogance, inertia, lack of understanding customer need states, and a personal favorite, the ivory tower syndrome.
Arrogance is the easiest to understand, ”We believe America makes the best cars in the world.” End of conversation. If you don’t recognize there is a problem, you will have trouble solving one.
Inertia is a bit more subtle. The assembly line to showroom chain was a finely honed process for American car makers. One of my uncles lived in Lansing, Michigan where there was an Oldsmobile assembly line. As a child he took me on a plant tour and I marveled at how all the parts came together like a well choreographed production number. They got them off the line and onto the dealer lots efficiently.
Even though cars were a significant expense for the average family, they were still relatively affordable. My father didn’t make a lot of money as an electrical engineer, but he paid cash for every car he ever bought, trading up to a new GM model every couple of years. Here’s the bill of sale from his purchase of a 1961 Pontiac Tempest Safari station wagon (last generation’s version of the SUV). Total price $3,249.35
The boomers were coming of driving age. The Eisenhower Interstate Highway system was in place connecting this vast country. The family car was how you saw America, it was the vacation transportation. Women began to enter the workforce and so a second family car was needed. The price of gas was under .50 per gallon. Ride the wave American car barons. All these factors that led to meteoric growth also conspired against them as they pushed the supply chain thinking to the max. This has made it very difficult to rethink or re-imagine a complicated business.
America definitely made cars safer and more comfortable, but it’s hard to see how they thought beyond the next model. It’s as if some guy said, “Let’s try this.” And everyone did it at the same time. It was a look alike game. Styling, colors, options, even the names. Oh yeah, there was one stand out on the name front, Gremlin. Oddly enough, American Motors didn’t survive. There was a brief attempt by Preston Tucker of Ypsilanti, Michigan in the late 1940’s to create “The Car of Tomorrow.” It was successfully stopped.
That brings us to lack of understanding customer needs. Remember the trunk story? When Japanese automakers found a part or design that worked well, they kept it. As a result the quality of their products improved over the years, allowing them to focus more on who would be driving their cars. Honda and Toyota pulled off an amazing marketing feat. They used their management and production methods to raise quality, and their vision and research to gain a yet to be relinquished foothold in the U.S. They gave boomers the Honda Civic and Toyota Corolla as they entered their 20’s. Reliable, efficient, low maintenance and long lasting cars. Once the boomers became established in careers and began to accumulate disposable income, they gave us Lexus, Acura and Infiniti, just as we were looking for more luxury and prestige. Brilliant.
Meanwhile America was trying to manage brand strategy and find the quality recipe. The boomer’s parents (at least the dads) pretty much stuck to one brand, but everyone ended up in the repair shop just as frequently with all those annoying problems. Oh by the way, they cost more and didn’t last as long. American car companies were on an internal corporate life-cycle and it was out of synch with consumer need states (customers anyone?). When you give consumers choice they will expand their thinking. It didn’t hurt to see all those Japanese cars on the road. It took a while for Toyota, Honda and others to get noticed, but once they did it was all over.
The “Buy American” anthem was hatched to try and hold off the outsiders. Buying American is great but it would have been much better if it was “Buy American because it’s better,” and actually true.
Now the oldie, but goodie, the ivory tower syndrome. American car execs drove their own car brands and models to work each day and never had any problems with them. “What are all these people complaining about? These cars are fantastic.” Well first of all they always drive new cars. American cars will get you down the road pretty pain free for the first year (12 month or 12,000 mile warranty). Second, when they parked in the headquarters garage a team of mechanics would swarm their vehicles and make sure all was in perfect working order. Hmmm, maybe that had something to do with why the cars seemed in tip top shape. The execs should have given themselves 3-5 year old models to drive and forced to maintain them the way everyone else had to, by making an appointment with a dealer and finding an alternate means of getting to work.
I swore off American cars and bought a new 1994 Toyota Camry. I had it seven years, drove it 118,000 miles and never once opened the hood myself to check the oil or troubleshoot a problem. It was never in the shop for anything except normal maintenance. It never, ever failed to start, even in the harsh Chicago winters. I was converted. I now drive a 2003 Acura TL and love it.
The 1970’s oil embargo and energy crisis helped downsize cars and improve mileage. But America quickly forgot about that, wanting bigger and faster, so on came the SUV, the rebirth of the V8 engine and the era of monster cars and trucks. When looking at the profit margins on those vehicles vs. the other models, it made great business sense to the U.S. car makers. Wall Street liked it too. The quality has come up nicely, the reviews are better and reported incidents of problems has improved.
This success simply sharpened the short sightedness. They completely missed the fact that someday the price of oil would rise as the rest of the world grew and drove, and we would need alternatives to fossil fuel. American car makers have been looking at battery and hydrogen cell technology, but that is a long, expensive cycle, not a strength of the big three.
Now the big American cars and trucks sit idle while consumers are waiting in line to pay full price for the Toyota Prius. The car companies have approached Congress to ask for help in retooling their factories for the next generation of cars. Excuse me, isn’t that what a visionary business plan is for? And by the way, you’re ten years too late. Try competing with your competition before they have won.
Americans over the years haven’t tried very hard to conserve energy, in fact quite the opposite. Fortunately that is changing and has some urgency behind it. You can’t blame the U.S. car makers for giving people what they wanted to buy, but you can hold them to task for not developing a parallel strategy to protect their business for the long haul.
Like so many massive and long-standing communities, airlines and government being two others, it takes outside thinking to change the inside direction. When great things are created, and they are, it’s too late to get the credit.
So George, it’s not that America doesn’t build great cars, it’s just that people feel stupid buying them.
6 thoughts on “Asleep at the Wheel – Why Consumers Forgot About American Cars”
Great post. Quite simply, American automotive is no longer fulfilling your needs and desires in a car. I value your insight!
The American too relied on the vehicle
I can not imagine owning anything other than a Honda. Up till recently, I heard people rave about Hondas, but I wanted to be “patriotic” and buy American – my two Dodge caravans were the biggest money pits ever, and I’ve been told by mechanics that the car they frequently have to fix (major stuff like heating coils and transmissions) are the Dodges.
No thanks. I would rather spend a little more for a used Honda and not have to worry about it needing thousands of dollars of repairs.
I would certainly buy American if Americans could make something as reliable as the Honda.
Really interesting write up!
I had a 1987 Honda Civic that was carbureted and drove that straight into the ground, ~182,000 miles when it died, only thing I did was regular maintenance, and replaced the neck of the gas tank because it started to rust out. I also drove an Acura CL for a long time and now own another Honda Civic. The only American car I had was a Chrysler LeBaron, had constant problems with it. Growing up we had several American car brands all of them were nothing but trouble and my father was a mechanic, he is Japanese so he was really trying to buy American and do the American thing but he finally gave up and drives a Toyota now. He still has a bright red Corvette though, but just for fun, raw power is one thing we did good.
Honestly I can’t ever see myself buying an American car in the future, I’ve lost my faith and trust in both the industry and it’s intentions, it’d take a lot of convincing to earn that trust back, and I think that alone is a reason that American car companies will be hard pressed to get die hard rice burning fans back to buying from the homeland.
This is perhaps the most balanced article I’ve read so far on the issue. In fact you stole the words right out of my mouth. However, your point on the Ivory Tower could definately be delved into more. case in point, Why do the American Big 3 have so much dead wood at the top, compared that of the Japanese?
Masa, Thanks for advancing the conversation. Hadn’t given the senior manager aspect that much thought. Steve