The Death of Detroit?

The Decline and Fall of the American Automobile Industry.
by Brock Yates.
Empire Books. 302 pp. $13.95.

When an economic institution so pervasive in our national life as the automobile industry suffers its worst slump in twenty-five years; and when foreign cars, mostly Japanese, come to comprise 30 percent of new-car sales, as they did in 1982, something is afoot that merits the attention of serious analysts. Unfortunately, serious analysts have been little attracted to the automobile industry.

True, John B. Rae (The Road and the Car in America, 1971) and James J. Flink (The Car Culture, 1975) have rescued the relevant history of the industry from the ghost writers and hagiographers who chronicled the prodigies of Henry Ford, Alfred P. Sloan, et al. But the collateral issues have largely remained the province of the nay-sayers and the disaffected who surface when the industry is in dire straits. Kenneth R. Schneider (Auto-kind vs. Mankind, 1971) and Emma Rothschild (Paradise Lost: The Decline of the Auto-Industrial Age, 1973) may be counted among the former; John Jerome (once on the editorial staff of Car and Driver), with his possibly premature The Death of the Automobile (1972), among the latter. All three of these books appeared at the height of the anti-automobile hysteria set off in 1965 by former Senator Abraham Ribicoff and Ralph Nader. Given the recent slump, the time has been auspicious for another attack, and it has been predictably supplied by Brock Yates in The Decline and Fall of the American Automobile Industry.

Yates, a contributor to several popular automobile magazines for over twenty years, is most closely associated with Car and Driver, and should have some insight into the problems of a behemoth industry mutating into a new age against mixed signals from the market and the government. Unfortunately, he contents himself with repeating the popular fallacy that Detroit cut its own throat by building gas-guzzling cars that nobody wanted, and he offers the simplistic prescription that the domestic industry copy the technical features of the more expensive European cars in order to prosper once again. Since the public demand for gas-guzzlers has never slackened, except briefly in 1974 and 1979, and since technically more sophisticated cars will cost more, Yates’s recommendations hardly provide useful guidance.



Yates begins by ascribing the mediocre road performance and desultory market success of the new General Motors J-cars (Chevrolet Cavalier, Oldsmobile Firenza, etc.) to the myopia of the industry that produced them. He portrays Detroit as an isolated village, populated by conceited solipsists whose attention is so fixed on the next rung of the corporate ladder that they cannot design a car the public will buy. Although this view overlooks the several million cars that people do buy every year, it leads Yates in a promising direction: his conclusion, that the industry needs a broader outlook, is certainly true (if not particularly original or profound).

But then everything goes downhill. Yates usefully reminds us of the irrationality of many government regulations, but virtually destroys his own point with the misguided assertion that Detroit could have avoided regulation simply by being more progressive. He thus ignores the public lack of interest in, if not distaste for, Detroit’s earlier safety features, such as the padded dashboard and sun visors on the 1952 Oldsmobile, the “deep-dish” steering wheel on the 1956 Ford, and the crash-worthy body of the mid-50’s Nash cars. He also ignores the manner in which Senator Ribicoff, apparently hoping to ride to a presidential nomination on Detroit’s scarred back, virtually created and vigorously abetted the anti-automotive hysteria of the 1960’s. Nothing short of divine intercession would have preserved the industry from the contumely of its critics during that contentious decade.

Other chapters in the book, including one on the ten “best” and “worst” cars, are pastiches of errors of fact, facts misconstrued, and repetitious expositions characterized by inconsistencies that would be maddening if they were taken seriously. To cite but a few examples, Yates praises the disc brakes on the 1949 Chrysler Imperial but does not add that they were seriously flawed and were soon dropped; when Chrysler returned to disc brakes in the 1970’s, it used a different system entirely. He reports that the ill-starred Chevrolet Corvair was “driven off the market” in 1965, which only misses by four years: the Corvair was discontinued in the summer of 1969, as Car and Driver reported at the time. Throughout the book, Yates accepts the conventional wisdom that Ralph Nader’s Unsafe at Any Speed (1965) killed the Corvair, but overlooks the more rational explanation that GM itself killed the Corvair to make a place for the equally ill-starred Vega (GM never gave an unequivocal reason for dropping the Corvair). The list could go on and on. Peculiarly, OPEC and the fuel crises get five peripheral mentions, but no chapter of their own.

Besides errors of omission and commission, the conclusions Yates draws from facts vary according to whatever point he happens to be making, without regard to contrary statements a few pages ahead or behind. He lavishly praises the independent rear-suspension system on the more expensive European cars, and more or less declares that the adoption of such systems would rejuvenate the domestic industry. Yet he bestows equally lavish praise on Japanese cars, and on the Ford Escort and Oldsmobile Cutlass Supreme (the two best-selling domestic cars in 1982), failing to acknowledge that these do not have independent rear suspensions. Nor does he note that to replicate the suspension system of, say, a Jaguar or BMW would necessarily raise the cost of domestic cars, which he calls “overpriced” in any case. Actually, even this needs some qualification: the base price of a Toyota Cressida is $13,000, that of an Olds Cutlass Supreme $9,000.

General Motors undeniably missed the market with the 1982 J-car (though the 1983 and successor models might reedem the situation). But no one, neither GM nor Yates, knows why it flopped. What would sales of the J-car have been without a recession? Do sales of the Honda Accord prove that it appeals to a white-collar group that is better insulated from recession than the blue-collar buyers who are GM’s primary market? Will the popular Accord soon become passé, as did the once-popular Volkswagen Rabbit? If the J-car debacle does reflect the “decline and fall” of an industry (a fall that may be overstated), questions like these deserve consideration.

Furthermore, in a good year such as 1979, GM produces about 5 million cars; by contrast, Toyota produces only about 1 million, and Mercedes-Benz only about 500,000. The sheer magnitude of the Detroit enterprise, not to mention the size of the supporting infrastructure, precludes any quick change in GM’s line-up (the J-car was cobbled together from existing components, as was the original Ford Mustang in 1964). By contrast, as small-car sales rose after 1979 (in direct correlation with fuel prices), GM was called upon to change its nature drastically and in a very short time, while the Japanese were not required to do anything differently; they prospered by doing what they had always done. This is not to make excuses, but simply to look more deeply for determining circumstances.

Yates’s simplistic view of how the industry failed—presumably by building tasteless gas-guzzlers—also overlooks the importance that he himself elsewhere ascribes to the “image” factor; nor does he pursue this issue into its subtler recesses. For example, do the members of the post-60’s “me-generation” buy Perrier water because it fills a practical need? Would the same people buy a Honda Accord if it were made in Detroit? A J-car if it came from overseas? Yates seems to agree with the theory that VW Rabbit sales have declined because the car lost cachet once it began to be built in Pennsylvania. If image means anything near what he claims it does, questions like these need attention. Yates does not even ask them.



Whether for reasons of image or for other reasons, the domestic industry certainly saw its sales fall from about 8 million cars in 1979 to about 5 million in 1982, while foreign-car sales climbed from about 20 percent to 30 percent of the domestic market in the same period of time. This may prove that the domestic industry cannot—at least, did not—build a Toyota; it does not prove that Detroit suffers because it built gas-guzzlers that nobody wanted. In fact the demand for gas-guzzlers has remained strong. While demand is strong, however, the supply of big cars is restricted by the federal edict known as “corporate average fuel economy,” or CAFE, which went into effect in 1978.

CAFE stipulates that all the makes and models sold by a given manufacturer must achieve a specified average fuel economy according to EPA estimates. The CAFE figure rises each year; in 1978, it was 18 mpg and by 1985 it will be 27.5 mpg. Thus, at the moment, a buyer who wants a 16-mpg Olds-mobile Toronado must wait until someone else buys a 40-mpg Chevrolet Chevette, in order to keep GM’s CAFE average near the current 26+ mpg. If the industry were free to satisfy the demand for gas guzzlers, overall sales would be much higher. Indeed, the United Automobile Workers might do better to attack CAFE and gratify big-car devotees than to seek import restrictions against the Japanese and anger small-car devotees.

The full economic consequences of CAFE need considerable unraveling, but what can be clearly seen is that the provision virtually mandated sales of Japanese cars. Also, that if Detroit suffered from building gas-guzzlers, it suffered not in the marketplace but in the halls of government. Yates, however, refers to CAFE hardly at all, and does not analyze its effects.

The subject of sales also brings up the issue of market saturation. Once a nation of 225 million people owns 150 million cars, the market is clearly reaching its limits. Furthermore, as this limit has been approached, cars have come to last longer (largely due to greater precision in manufacturing and improved lubricants). For the fifty years from 1930 to 1980, the average age of cars in the national fleet increased from slightly under to slightly over six years. In the past few years, it has climbed to above seven years. Given 150 million cars on the road, even a modest increase in average useful life will eliminate the need for a huge number of new cars as annual replacements. The increase in the average life of cars, in conjunction with a market reaching its limits, does signal major institutional changes in the automobile industry and in the society that uses its products. Yates offers no remarks on the subject.

The automobile industry and its market are a much more complex phenomenon than is commonly realized, and certainly much more complex than Yates has managed to discover. Just as his book was being published this spring, figures showed domestic car sales running up to 40 percent above those of the same period a year ago. Does this new strength in the industry mean that Yates’s Decline and Fall will be the J-car of automotive literature? It is, at any rate, a reminder that the automobile industry is too important to be left to journalists.

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