Sideways

As a result of the work of these self-proclaimed "geniuses" and "whiz kids," the domestic automobile market has lost at least two full generations (and maybe more) of potential buyers. There are people who are now near the prime of their earning and spending years who will never consider purchasing an American-branded car. Trucks, fortunately, are another matter.

What happened? As the attorneys and MBAs moved into the boardroom, they wrested control of the companies out of the hands of the engineers and entrepreneurs. That was the start of the fall. I recall learning that automotive engineers used to "over engineer" American cars by a factor of 300 to 600 percent. With bean counters gaining too much control, they started taking the "over engineering" out of the cars in an effort to "save money." Brake rotors got smaller and plastic parts were actually used in automatic transmissions. Engineers who wanted to continue to design and build cars correctly were viewed as evil "money spenders" and bean counters who saved nickels in production (but cost millions in warranty claims) were considered as saviors by the boardroom bandits.

BUY AMERICAN?

As the quality and engineering of American cars suffered, so did the sales. Americans will support car companies that take chances with styling and performance, but they will not support unreliable vehicles. The cost-cutting bean counters had made American cars unreliable, so buyers turned to the two "mother-in-law" cars and made them the best-selling cars in America. They are the Toyota Camry and the Honda Accord. Why are they called "mother-in-law" cars? Because when your mother-in-law asks your opinion on a new car, those are the vehicles you recommend. Why? Because they are dependable. Even if the old woman never changes the oil, you will not get a 9 p.m. call (the middle of the night to her) saying, "The car you told me to buy broke down. Now come to the church bingo parlor and pick me up."

For the most part, those two brands have lived up to their image of reliability. However, in the past few years, even Toyota and Honda seemed to catch the American disease. Where they built their reputations for building only high-quality, fully equipped cars, they have now started building to a price (even once stately Mercedes-Benz is doing this) and going with the lowest bidder. As a result, both Toyota and Honda have been forced to recall vehicles. Ten years ago, this would not have happened. And if it did, the chief engineer would have committed suicide. Today, even the Japanese car executives play the "blame" game and will try to blame someone else (usually a supplier) for the problem.

It is interesting to note that the Asian way of dealing with a problem is to have a secret meeting somewhere and hide until the problem resolves itself. That may work in Asia, but here in the U.S., consumers want to know what the problem is and what the company plans to do to fix it. It goes against their Asian business training, but if it's done correctly, it works.

Here are two examples. Honda and Pontiac suffered cylinder-head gasket troubles at about the same time in the 1980s. Honda apologized for the problem, picked up the customer's vehicle, made provisions for loaner vehicles, repaired it, cleaned it, and even filled the fuel tank. As a result, Honda buyers gained even more respect for the company and the cars it built. Honda executives didn't want to do it this way, but they listened and then acted on the suggestions made by their public relations consultants.

Pontiac, on the other hand, handled the problem on the cheap and allowed customers to see that. They repaired the cylinder-head gasket for free, but they did not apologize; instead, they made customers bring the vehicles to the dealers, made no provision for loaner cars, and returned the vehicles dirty and empty. As a result, Pontiac owners had less respect for the company and the cars it built. Pontiac executives didn't want to fix the problem either, but they acted arrogant and didn't do the things their public relations consultants recommended.

For two generations, American cars have been dull, unreliable, and poorly built. And American consumers have responded by buying them in fewer and fewer numbers. So, for two generations, buyers have turned to import brands for their daily transportation.

It took a while for import brands to establish themselves in the U.S. The first imports from Europe were simply not suited to the vast expanses of the U.S. The engines were thrifty on gasoline, but they were too small and lacked the horsepower and torque necessary to handle American highways. Even the early German cars, such as BMW, Mercedes-Benz, and Audi, were not all that good. It took many years for BMW to evolve from the tiny Messerschmitt cockpit car to the BMW 1600 and 2002 sport sedans. In the early years, Mercedes-Benz was not a premium brand—it was known for producing underpowered taxicabs from Europe. Fortunately for the Germans, their cars continued to improve to the point where they are now considered premium brands in the U.S.

Japanese cars at one time were pure junk. They were bad copies of poorly designed English cars. Remember the Toyopet and the Datsun 1600 sedan? How about the Nissan Cedric?

The poor-quality English and French cars were driven from the U.S. market, but the Japanese auto companies listened to the American public, built cars to meet consumer needs, and finally got it right. The turnaround started with the Toyota Corona and the Datsun PL-510 in the late 1960s. Today, Japanese cars are considered to be so good, they command premium prices.

American companies have gotten their acts together as best they can and are now building good automobiles. The problem for the domestic carmakers is nobody believes them when they say they have changed. Consumers have heard it for so long they no longer believe it. Even as the high-quality car magazines and broadcast shows talk about how American car quality and performance have improved, customers are still staying away. It took a long time to lose the customer's confidence and it will take a long time to build it back up.

And the results? How long can General Motors, Ford, and Chrysler continue to build good cars that are not selling? Will they be forced to sell or shut down unprofitable divisions while they try to hang on? How long will stockholders allow the now-retired executives who ruined the business to collect huge pensions and exercise those lucrative stock options? It's time for the ax to fall. The fuddy-duddies in the boardroom can no longer make decisions regarding automobile engineering.

GIVING CUSTOMERS WHAT THEY WANT

Mike AnsonEditor-in-Chief [email protected]