Viewpoints : Blame Consumers for Gas-Guzzling Cars
Consumer advocate Ralph Nader recently called American auto makers on the carpet for fueling the energy crisis. Light-weight cars that get 50 miles to the gallon are achievable, Nader scolded, and Congress should be reading Detroit the riot act.
A 1,500-pound car with a three-cylinder engine probably could get impressive mileage. But try getting the family to Yellowstone Park and back. Nader’s tin can could seat two people and a dog, uncomfortably.
Nader’s protests aside, the auto industry has had a good scare from the Mideast crisis--and from consumers, who put the brakes on car purchasing plans. Right now in the boardrooms of the Big Three, auto makers are radically reassessing their product lines.
Are they worried? Yes. Will they act decisively? Don’t hold your breath.
Before Saddam Hussein, auto industry priorities went like this: global competition, recession, labor negotiations, product design, environmental requirements and cash, in that order. Energy trailed all of those; safety was dead last.
Recent international events rearranged that list. Gasoline jumped higher, to roughly the No. 2 position.
Pricier gasoline is also distressing consumers. But car buyers looking for a quick-fix super-fuel-efficient vehicle or any new leadership from American auto makers will be disappointed.
Top industry executives won’t be going back to the drawing board any time soon. It takes $1 billion these days to put a new car on the road. Misreading the market and taking decisive action is a mistake that only a few very robust companies--General Motors, Ford and Toyota--can afford to make. Any other company making such a capital intensive error will make it only once, and then rebound as a shrunken company with diminished resources.
Even if a company committed the dollars and manpower this week to developing a hot new super-efficient car, it wouldn’t tool up anyone’s driveway anytime soon. Design and production for a new car, from the first rough sketch to its introduction in the dealer’s showroom, takes a bare minimum of three years. Auto makers have pushed hard to shorten that lead time, but it still takes a long time to make a baby car.
Coming up with a radically new design to save fuel will require new inventions, and auto makers have, like others, failed miserably when they tried to schedule breakthrough ideas. The automobile engine today is essentially the same cast iron beast with pistons pumping up and down that Henry Ford was building around the turn of the century. Auto makers have searched fruitlessly for a better engine for 80 years.
Any discussion of cars powered by electricity, sunshine or liquid natural gases is fanciful thinking at this point. A few prototypes of each do exist, but they have serious failings because they cost too much to attract enough buyers, or their range and power are so limited. For example, try plugging in your electric car every hundred miles between Los Angeles and Dallas.
Environmentalists and consumer advocates talk about such cars because it draws attention, auto companies bring them up because it reduces the heat, and Congress bandies such issues about because it helps at election time.
But engineers don’t talk about them. They know they can’t deliver them any time soon. Sure, anyone shopping around at GM will see drawings of these cars, but they won’t see serious production designs. Such advanced engineering operates on small budgets, receives little management attention and has no hope of surfacing for lack of practicality.
If and when gasoline price projections head toward the $4-a-gallon mark, alternative engineering will come charging out of Disneyland and into reality. Until then, however, auto makers will tinker with such designs and build some flashy prototypes, but nearly all Buck Rogers-type engineering will stay deep inside the company.
For all these reasons, the large--and until recently prosperous--auto industry lumbers forward with alarming momentum, no matter what rolls into its path. It can’t turn quickly even if it wants to. Getting GM to change course is like trying to get the QE 2 into New York Harbor--the captain has to start the turn somewhere up near Newfoundland.
There are some limited low-risk steps that the big auto makers can take. They will consider ways to make existing fuel-efficient cars more attractive and comfortable. They will also look for ways to improve the fuel efficiency of gas guzzlers with better engines. They can also adjust production schedules so that more fuel-efficient models are given production priority. But consumers seeking gas-saving cars in the months ahead won’t find anything radically different out there.
Last month, GM, Ford and Chrysler captured only 57% of the American market. Moreover, if gasoline prices shoot up and stay up, or if regulators set stricter fuel-efficiency standards in the near future, U.S. auto makers will lose an even larger share of the market.
While they hustle to catch up, foreign competitors will fill in the gap as they did in the 1970s when gasoline became expensive. Asian and some European makers already produce cars for consumption at home that get 40 miles to the gallon.
This does not mean, however, that foreign producers are either seers or sages. They, too, have been building longer, lower, heavier and less fuel-efficient cars for U.S. consumption in the last several years. The Honda Accord, for example, gained hundreds of pounds and sacrificed significant fuel economy because Honda tried to make it look and drive more like the mid-sized Ford Taurus.
Why? Honda, like U.S. auto makers, has been observing American buying habits closely and has concluded that people crave comfort, size and power. Nissan, Toyota and Mazda are also beginning to court the American public with the same overweight luxury vehicles that U.S. makers know Americans love to drive. Witness the Nissan Infiniti, Honda Acura and Toyota Lexus.
Do auto makers really listen to buyers, anyway? Consider that some three dozen companies are selling cars in the United States, they all have excess capacity and they are all cutting prices. This is the roaringest buyer’s market in history, and when it’s a buyer’s market, producers--even automobile companies--listen hard.
But this is what they hear: People still want quality, comfort and responsiveness when they drive, whether they’re off to the corner store or visiting a national park. And they are willing to sacrifice a lot to get it, including some fuel efficiency. Large cars continue to be very big sellers. Sales of the heavy, luxury-laden Lincoln Town Car have been wonderful for Ford.
In high contrast, the new Ford Escort (and in all probability, GM’s new darling, the Saturn) is a stellar example of the newest in American economy cars. It may be the best that the Big Three can do, but nobody’s interested.
If auto makers learned anything from the last energy crisis, they learned that the demand for gasoline is highly elastic. Consumers turn away from gas gulpers in droves when prices go up significantly, and when prices drop again, they go back to their old driving and buying habits. Auto companies are not in the business of depriving consumers of what they want--they try like hell to foresee the future, and this is the lesson they learned last time around.
Consumers and industry critics can blame the auto industry for concentrating on gas guzzlers, but auto makers aren’t the only ones who need to make a radical assessment.
There are actually plenty of American-built, fuel-efficient cars offered today, including the offshore name plates, and all a person has to do is walk in with a buck in hand and plunk it down. Those votes will be counted early and if they are sustaining, auto makers (American and foreign) will move as fast as they are able, first to supply those cars, then to design even better ones. But until these cars move consistently off dealer lots, auto companies will not be believers.
Ralph Nader has a point in a twisted way. People probably are getting the wrong cars for an energy conscious future. But it isn’t the auto company that creates the demand, it’s the consumer, who is as yet unconvinced that anything has changed.
