An Analysis of the US Car Industry
This looks at the big three automakers and discusses how their collective problems have evolved. It also considers problems in the visions of the companies.
United States automakers have created themselves a deep rut that may become a grave for one or more of them. While the strong United Autoworkers union can shoulder some of the blame, the real problem lies with the management that has consistently pursued the easy dollar instead of making the hard choices.
During the 1970’s, automakers should have realized that as long as American transportation depends on internal combustion engines fueled by petroleum products, problems were looming on the horizon. Unfortunately, this lesson was not learned over three decades ago. It seems that it may very well be missed again with car companies receiving billions in government monies to continue operations.
Obviously, the economic problems of the automakers is not just the result of building the wrong type of cars. The economy’s version of the perfect storm has hit industries of every type. The bursting of the housing bubble, high gasoline prices, tight credit, and a global recession have conspired to make the problem look even larger than it is.
During the 80’s, 90’s, and the last decade, car companies have contented themselves by throwing carrots to the American people as solutions to the oil problem. They built their cars to run on unleaded gasoline to satisfy ecologist. With the lower compression engines, they could look like they were interested in getting the alternative fuels a chance with engines that could burn ethanol. It was not much of a change going from 100% to 90% gasoline mixtures.
In recent years, a few vehicles have been produced to run on E85, a mixture of 15% gasoline and 85% alcohol (www.e85fuel.com). If you quickly tell 5 places to purchase E85 fuel, it is a miracle unless you are a gasoline jobber. These stations are few and far between. This means that E85 vehicles also must be designed to run on regular unleaded gasoline, too. The car companies could blame big oil, but they would be wrong.
When Washington mandated unleaded gasoline cars be built, it was an almost overnight transformation as big oil began filling their storage tanks with unleaded fuel. The reason that E85 is not readily available is because Detroit has elected to stay the course with their bread and butter. The only time the Big 3 have made significant changes was when federal law gave them no choice.
The automakers have had the technology to build hybrid cars for a long time. So far, they have only built small ugly cars with limited availability and high price tags. This is improving, but these cars are still only driven by die hards who want to do their part for the environment. The gas savings is too small to justify the price tag.
In fairness to Detroit, automakers around the world have failed to deliver a car that makes a genuine effort to be powered by any revolutionary type of engine. Perhaps it cannot be done. Necessity is still the mother of invention. This change is necessary if the auto companies and the automobile are to survive deep into this century.
Sources:
http://www.csmonitor.com/2003/1015/p25s01-bogn.html
Primary source was author’s recollection of having lived through these periods and various news reports of the time.
