10 Cars that sank Detroit.

Thanks for the explanation people.
I found the car on google but didn't know about the race track.

 

It is part of American culture. Because of free enterprise, American buyers are accustomed to options - lots and lots of options. A typical big box store in the U.S. will have 30 feet or more of shelves displaying deodorants and antiperspirants stacked higher than a person is tall. It is completely crazy and out of control.

My editorial comments aside, we are accustomed to having a lot of options. As bigger companies bought the small companies, the bigger companies maintained the illusion of options by offering many variations under different brand names, even though they were owned by the same big company. It is common in almost every industry: cars, soaps, personal products, food, ... the list goes on and on.

It's the American way: If more is good, then too much is perfect.

Tom

 

Detroit has made mistakes, but they have also produced some good cars that didn't sell. I tend to think Detroit is similar to our gov't, it reflects the american people to significant degree.

Foreign imports were anchored off our coast by the boatload until the oil/gas shortage. THEN they suddenly became desirable. I owned one American made car that didn't make 200,000 miles & it is still being driven by my neighbor.

I drive down I-35 from Oklahoma City to Wichita, KS & two of ten personal vehicles are NOT a pickup or suv. I've counted numerous times & it is changing, but that isn't detroit's fault. Consumerism is alive & well in American.

Given that, I looked at a lot of vehicles & still very satisfied with my Prius purchase.

 

You do have to admit that the corridor that you are driving is not the US average vehicle. A San Fransico driver would have a much different result (and this is not the US average either).

One thing I would like to point out is while every permutation of SUV, Big Truck, and Large Car is made by the US manufacturers. These same US manufacturers refuse to even consider (till overwhelmed) a high mpg hybrid, a high quality small car, and any possible electric vehicle. Yet the market has embraced these vehicles with a vengence (like you and me). In this regard, Detroit does not reflect the entire American public. The sensible, modest, and trifty American is not served by Detroit....in fact calling this segment Eco-names seems to be the response.

 

I don't think SUVs were really popular in the 70s were they?
I thought the SUV arose in the greed is good 80s didn't they?
Prior to that I don't even think the term SUV had been coined. I know I hadn't heard it here. Sports Utility Vehicle is a marketing trick when you think about it. When I think sport vehicle I think MG-B, Mazda MX5 (Miata) and maybe even Corvette, I don't think of a truck with a station wagon body. How "utility" is a car with leather seats, plush carpet and cloth head lining? But if you want to be considered a man you will need a Sports Utility Vehicle. Great marketing!
Prior to the marketing gurus getting into renaming overweight station wagons, a station wagon was mums car and dad drove a 2 door or 4 door sedan (refer early Brady Bunch episodes), yeah it was massive but it was a sedan. Those marketing dudes have really got to you lot too, I can't count how often I have read on these pages something to the effect "I need an SUV because I have 2 grown kids and we go camping/skiing, and once a year I pick up a sheet of plywood from home depot (although they have a delivery service)." How did they do it before SUVs were invented? I don't know about you, but my parents had a much bigger family than me and they got us around in a station wagon or a sedan.

Marketing people have made Americans believe they need an SUV or truck, need has nothing to do with it!

 

Both Ford and GM make smaller, more fuel efficent cars for the European market.

This is not because the auto maker's "leadership" is better in Europe, or because European consumers are more enlightented than American consumers. It's because gas is 2 to 3 times more expensive in Europe!

If we paid the true costs of gas in the US we would all be driving PHEV!!!

 

I don't know about nowadays, but in the Dot Com years in the 90s, I'd drive from my home in the East Bay to my job in Silicon Valley, and many a time I was the only non-SUV on the road.

 

The popularity of trucks and SUV's is due to the way US CAFE regulations are structured. In the 70's congress split passenger cars from trucks and SUV's and demanded that car companies make cars that get better fuel economy. They did this by making smaller cars with smaller and less powerful engines.

Congress did nothing to make consumers want to buy these smaller and more fuel efficient cars. After the shock of high gas prices in the 70's gasoline in America has steadily decreased in price (adjusted for inflation) so the purchase of gasoline became a smaller and smaller percentage of the family budget.



So the automakers had a problem. Americans still wanted large cars with big V8's and rear wheel drive. CAFE regulation prevented automakers from making these cars that people wanted. It didn't take long for someone to figure out that if they made trucks with nicer interiors and more creature comforts people would buy them. Take that truck and put on a station wagon body and you have the SUV. So congress effectively created the SUV by excluding them from CAFE regulation.

We also haven't learned from our mistake. The new CAFE law still maintains different requirements for cars and light-trucks. In addition we have made it worse by breaking light trucks into separate categories. Under the old CAFE law all light trucks had to meet an average. Now each of these categories of trucks has to meet new targets but all the categories no longer are averaged. That means that automakers can simple drop the small trucks from their line-up and make large trucks.

Take a look at the CAFE categories:

 

This is correct. Honda gained its foothold during the 70s as a direct result of the energy crisis. They made high quality fuel efficient vehicles, and many of us switched over to them.

I remember Time Magazine running a cover featuring a small foreign import with the caption "Economy at any price." People were paying ridiculous premiums to get these small efficient cars, much like what happened with the Prius.

Jeep was the first to introduce an SUV. Jeep had experimented in this area before with the Jeepster Commando, but with only limited success. In the early 1970s, Jeep took the iconic Jeep C-J5, put a fancy paint job on it, called it a "Renegade", and started selling Jeeps to a whole new market. They realized that a lot more buyers were interested in the concept of a Jeep than the number of buyers who actually needed a Jeep, so why not sell it to the masses like a sports car. The concept worked. Jeeps in those days were placarded as "Sports Utility Vehicles" so that they didn't have to meet the current safety and mileage requirements. In this respect the SUV really started in the early 1970s.

SUVs as a soccer mom phenomenon was more of an '80s thing. First we had the minivan craze, which was a natural extension of baby boomers having children of their own. Jeep had introduced the Wagonner and the Cherokee, which were smaller versions of the now familiar SUV. Ford responded by introducing the Explorer. The Explorer was phenomenally successful. Minivan drivers started moving away from the minivan to the sexier SUVs. To my way of thinking, the Explorer was the true beginning of the current SUV craze.

This says it all. SUVs became popular because they were effectively subsidized by the federal government by not holding SUVs to the same standards as normal passenger cars. The thinking was that light trucks are used for business, so they are a small part of the fleet, and it would be okay to cut them some slack on mileage and safety standards. The problem is that the car companies effectively cheated by making cars that were technically light trucks. SUVs were then and continue to be nothing more than rule beaters. If this loophole had been closed, SUVs would never have become so popular.

Tom

 

Remember when Apple nearly folded because they just had too many models and no focus?

 

So what can we conclude from all this? That American vehicle manufacturers sold (and then invented vehicles and/or found lopholes to sell) what the American buying public would purchase. Capitalism at work? Well, duh!

 

I definately give the American car industry credit in the past for creating a lot of market segments right when Americans wanted them. They created the minivan, they created the SUV, they created the assembly line, it was because of Ford mass market cars became a part of the American landscape. We owe a LOT to American carmakers, but they've been so poorly lead over the last few years they ar just now wising up to what consumers want today.

Look at what Chrysler is unveling at the NY Auto Show...the new Grand Cherokee. Now I understand the Grand Cherokee is very popular, its a great vehicle, and its important for Chrysler but the mere fact that its ALL Chrysler has to unveil underlines the point...they don't get it.

Americans don't want Grand Cherokees anymore. They want the Prius, they want hybrid powertrains, they want crossover SUVs not older truck based SUVs that get poor mileage. They want affordable high quality family sedans again.

If Chrysler thinks the Grand Cherokee is going to solve their problems they deserve to go out of business.

 

Which is why the biggest problem in Detroit right now is what to do with all those huge piles of money they don't have room for.

 

The new Grand Cherokee is part of the solution to Cerebus's problem. Cerebus is looking for a company to buy Chrysler or a partner to run it. They have no intention of running the automotive manufacturing side of Chrysler, they bought it for the financing company. Considering that Cerebus is willing to give Fiat 35% of Chrysler's stock for no money, just the promise to use some of their factories makes it evident how desperate Cerebus is to off-load Chrysler. Daimler still owns 20% of Chrysler but wrote down that equity share to $0 last year.

Right now Chrysler has a handful of models that would interest someone. The Jeep brand is their strongest brand and the only one with worldwide recognition. In addition to Jeep they have the Caravan and Ram. That is it.

The potential partnership with Fiat is important and the only hope for Chrysler to avoid liquidation. In that plan Chrysler will make all the trucks, minivans, and SUV's while Fiat will supply all the cars. Chrysler's extra auto plants get tooled to make Fiat cars to be sold through Chrysler's dealership network.

 

uhmm my last truck and my Prius are in the list...

 

Did you actually read the article? If so, what is your point about the Prius being on the list?

I'm sure this is the thought process behind this, but it shows an overall lack of R&D on Chrysler's part for a number of years leading up to now. This isn't a company that is being run to thrive into the future, its a company thats being run in such a way as to be offloadable and thats not something thats worth the US Taxpayer pouring money into.

 

Lack of R&D effort at Chrysler is not the fault of the current ownership or Chrysler employees. Until two years ago Chrysler was owned by Daimler and the Daimler management took the best of Chrysler long before Cerebus came around. Anything designed under Cerebus won't be to market until next year so we don't really know what they have been up to besides closing factories and axing models.

I agree with you that Chrysler isn't worth saving as a stand alone company. It does make sense to give them enough to transition to new ownership. It would cost the US taxpayer much more to pay Chrysler employees unemployment and 75% of their Cobra then to keep Chrysler running until a buyer is found. Cerebus shouldn't make a dime on it though.

 

This is a very good post and very thought provoking. Thanks. There are some other factors at play here in addition to what is mentioned. One of them is that 'disposable' income (or given the present economic hindsight, perceived 'disposable' income) increased mightly since the '70s. This pretty much ensured that much more expensive vehicles were going to be bought. The SUV craze had the fuel as well as the spark.

The stranger factor is how the SUV replaced that "Attention getting" sports car (e.g. Corvette) or status car (e.g. BMW) as the widespread status vehicle. Who could have predicted that an Escalade or Hummer would cause more drooling than a high end Mecedes for so many?

 

How about "wildly out of control credit so easy to get that even a meth mouth hillbilly in a tarpaper shack could suddenly "afford" a $367,000 home?"

I'm really hoping the "cure" to our easy credit isn't more credit ....