Keith Crain is the closest thing the American auto industry has to a minister of groupthink, so it is worth noting when the editor-in-chief of Automotive News furrows his brow. In a late-December column he criticized the industry for failing to learn from the hard lessons of the last economic downturn.
“It’s as if the recession never happened,” Crain (2014) wrote. “Maybe that’s the way this business operates. But those of us with a vivid memory of the trauma of the recession and recovery are surprised, even amazed, that the industry is back to business as usual.” That includes building too many vehicles and then spending lots of money on incentives to maintain market share.
This is a valuable antidote to industry groupthink — yet a month later an unsigned Automotive News editorial (2015) took a much softer tone. Although the editorial warned that the industry was “nearing the part of the business cycle when confidence can slip into overconfidence” it concluded, “So far there’s scant evidence of excessive exuberance. Manufacturers and retailers are maintaining discipline, but they need to be increasingly rigorous about their spending plans.”
If that strikes you as a little schizoid, consider Peter DeLorenzo’s (2014) state-of-the-industry summary:
“Don’t let those supercharged sales numbers go to your heads, because in typical Detroit fashion what goes up like a rocket comes down with a resounding thud. It always has and it always will. And just as the executives at the car companies here in the Motor City begin to believe their press clippings and start to think that maybe, just maybe this blissful state of soaring sales is going to stay hot forever, well, things are bound to get weird.”
Why? Because the American auto industry has always had more executives like James Nance than Charles Nash (go here for further discussion).
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RE:SOURCES
- Automotive News; 2015. “Editorial: Be hold, spend big — and don’t go overboard.” Subscription required. Posted Jan. 26; accessed Jan. 29.
- Crain, Keith; 2014. “It’s as if the recession didn’t happen.” Automotive News. Subscription required. Posted Dec. 22; accessed Jan. 29.
- De Lorenzo, Peter; 2014. “Presenting a delightful holiday assortment of crackpots, recalcitrant twerps, spineless weasels, the obligatory egomaniacal dictators and, of course, the true believers. No, you can’t really control it; you can only hope to contain it. That’s right, it’s the AutoExtremist Year in Review!” Auto Extremist. Posted Dec. 15; accessed Dec. 15.
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