Are we seeing the the death of the US auto industry as we know it?
I haven't bought a US vehicle in a long time, mostly due to reliability concerns (the last Cadillac I owned was a piece of junk that spend more time at the shop than on the road). Can the US auto industry rebound?
I'll go out on a limb and say no but my reasoning is rather convoluted. First off, I don't think any of the big three will survive long term. They hedged their bets for their near future on large, boxy vehicles and internal combustion engines. There really wasn't any long-term planning save the ill-fated promise of fuel-cell vehicles at some indeterminant future date. To be sure, the automakers don't have a monoploy on lack of long-term planning. Rather, it's the way we train CEOs these days-head a new corporation, make changes to encourage short-term profitability, leave for your next job before the negative results of your changes come to pass, let the next guy pick up the pieces. So many viable businesses have been run right into the ground this way.
Getting back to the lack of planning, anyone with half a brain could have foreseen a decade ago that fossil fuel production more or less was going to peak soon, and demand from industrializing countries was going to increase. Point of fact I wrote about stuff like this on other forums shortly after 9/11. My conclusions were a natural result of the facts I had read. Fuel wasn't going to suddenly run out, but the factors I mentioned meant it would rapidly increase in price. Now if I knew this six or seven years ago by just casually reading publicly available information, I'll bet my last dollar the automakers and oil companies knew about it 15, perhaps even 20 years ago.
So my question is why wasn't long range planning done? Instead of embracing the EV1 program GM was practically dragged kicking and screaming into it. Fact is all of the automakers should have been pursuing an electric vehicle program from the early 1990s irrespective of whether or not there were zero emissions laws, and whether or not cheap gasoline existed at the time. Even if the cars they made wouldn't have sold as well as their other ones, they would have hedged their bets for a future they knew was coming. The Japanese do this all the time. They do basic R&D to get things into production which may not be fully realized for a generation. Had they put forth the needed development, they could have starting phasing out internal combustion engine vehicle production when gas prices started upwards a few years ago. Better yet, a large part of the vehicles on the road today would have been electric. This in turn would have meant higher fuel prices would be having a much smaller impact. Even at the time of $1.50 per gallon gas electric vehicles were more economical to operate (and cheaper to build if mass-produced). They would have made sense for many even a decade ago. However, putting the needed resources into electric vehicle development would have resulted in reduced short-term profits (but greater long-term profits). Since CEOs seemingly can't think past the next quarter, it was business as usual. Ditto for the heavy ad campaigns to convince everyone that they had to have an SUV instead of a car. Since SUVs are exempt from mileage and most emissions standards they were more profitable. Their easier to manufacture boxy but aerodynamically inefficient shape further added to their profitability. It's a fitting irony that the automakers now have lots full of SUVs they can't sell.
Anyway, IMHO the factors I mentioned, along with the UAW, have put the big three into a hole they'll never get out of. They just can't produce the type of vehicles needed in the time frame needed. And to make things worse, they poured billions into a hopeless technology-namely fuel cells, gambling that batteries for battery-electric cars would never get better than the lead-acid of 20 years ago. Looks like they lost that bet big-time as well. Fuel cells are in essence just a very inefficient, very complex battery. They offer no advantage to the consumer over batteries at this point. The only advantage they offer is to the automaker's spare parts business, and they also allow continued branding of fuel, probably by the same companies now selling gasoline. Electric vehicles on the other hand aren't tied to one carefully controlled fuel source. That's their strength to the consumer but their weakness to big business.
OK, so who will we see producing automobiles in America in the future if not the big three? Probably small companies each focusing on a niche market such as Tesla Motors. These companies have no prior investment in gasoline-engine production facilities, and certainly no informal relationship with big oil. Their sole purpose is to make electric cars the consumer will want to buy. I think it's no coincidence that the majority of previous attempts at either electric vehicles or economy gas cars by many automakers (not just in the US) are basically just glorified golf carts. They really didn't want to make these vehicles at all but had to because of mileage/emissions requirements. By purposely making them unappealing they could say look, we tried, but it doesn't sell so we're going to make muscle cars and SUVs. The EV1 is probably the only exception to this in recent history.
So what will the future look like? Probably a lot like the past when there were many smaller automobile manufacturers instead of the big three, and probably mostly electric vehicles but with a small number of gas ones for niche uses. And in many ways the consumer will be the better for it. My observations are that past a certain size, companies lose both efficiency and the ability to respond rapidly to changing consumer demands. It's almost like a large corporation is a world unto itself, often far removed from the reality of the consumers who ultimately pay the bills.
