(EXPANDED FROM 9/18/2020)
“Detroit Mind” is the label Brock Yates gave to the worldview of U.S. automakers from the 1950s into the 1980s. This was epitomized by a focus on cars that were “too large, too heavy, too clumsy and too inefficient to meet the needs of the modern driver” (1983, preface).
In his book, The Decline and Fall of the American Automobile Industry, Yates (1983) argued that even when Detroit started to offer smaller cars it still didn’t take them very seriously. As a case in point, General Motors CEO Thomas Murphy had the foresight to downsize the automaker’s lineup after the first oil crisis in 1973. However, he still believed that big cars “were sensible machines for right-thinking Americans, while little cars were at best stopgap oddities designed for the underbelly of the market,” according to Yates (1983, p. 105).
Yates, a long-time writer for Car and Driver magazine, suggested that Detroit Mind grew out of a management culture which emphasized conformity rather than innovation. This was most prevalent among Big Three managers. Yates called them “Grosse Pointe myopians” in a trenchant article published in 1968. Grosse Pointe is a ritzy Detroit-area suburb where many executives lived (Yates, 2018).
U.S. auto executives led strikingly insular lives
Becoming an auto executive was “like entering the priesthood,” an observer told Yates (1983, p. 80). “They get out of college and go into the system at the zone level. From then on the Corporation takes care of everything; it sells their houses when they move, invests their incomes, provides them with new cars every few thousand miles, gets them memberships in the right clubs. . . . The farther they advance, the more monastic they become. They simply have no concept of the real world.”
Also see ‘Bigger didn’t prove to be better for General Motors in late-70s and 80s’
One result was that management had little awareness of why people in other parts of the country were buying imported cars such as BMWs and Hondas instead of Buicks and Chryslers. The corporate structure and culture reinforced that lack of understanding. For example, staff were discouraged from comparing their products with those of competitors.
The system also emphasized being a “team player.” One former GM designer told Yates that “there was no reward for creativity or initiative. Everybody was slotted into a specific job description and spent most of their time keeping their desks clean” (1983, p. 89).
American staff were key to the success of imports
Yates concluded that this “provincial” culture “could not comprehend, let alone meet, the challenge” of imported cars (1983, p. 108). Yet the rise of foreign automakers was heavily assisted by Americans. A former Oldsmobile executive who switched to working for a foreign automaker told Yates:
“The fact is, dissidents from Detroit — guys like myself who couldn’t stand the stifling conformity and the discouragement of anything that smacked of nonconformity — we’re the ones who made the imports work. Sure, the Japanese and the Germans built the cars, but Americans set up the dealer networks, built the distribution systems, created the advertising and marketing campaigns, and put the merchandising in place. We could have done the same thing for Ford and GM if somebody had given us a little latitude and freedom of expression.” (1983, p. 93)
This suggests that a great deal of creative energy could have been unlocked if GM and perhaps Ford had been targeted with antitrust action. A new generation of leaders with ability to compete against the imports could have eclipsed more “old-school” executives such as Lee Iacocca and John Z. DeLorean.
Inability to compete was not caused by regulations
U.S. executives sometimes blamed their inability to compete against the imports on federal regulations. Yates dismissed that as an excuse, noting that foreign automakers were able to meet safety, emission and fuel-economy rules without complaint. He also noted:
“All of the government interference could have been avoided if the industry had demonstrated some social responsibility during the 1960s. . . . Bad automobiles came before bad laws. To be sure, federal bureaucrats have since swung the regulation pendulum too far, but that too was an inevitable response to Detroit’s witless excesses” (1983, p. 254).
Decline and Fall is one of the most important books of the last half century because it is a rare example of accountability journalism in the automotive media. Go here for a review.
NOTES:
This story that was first posted Nov. 1, 2018 and updated on Sept. 18, 2020.
RE:SOURCES
- Yates, Brock; 1983. The Decline and Fall of the American Automobile Industry. Empire Books, New York, NY.
- ——; 2018. “The Grosse Pointe Myopians.” Car and Driver. Posted May 2.
You know, I like this website a lot, but it seems to push this idea quite a bit. There is some merit to it, but how does one reconcile this with all the “trucks” and “SUV’s” being sold today. It looks EXACTLY what American consumers want is big, powerful, heavy and glitzy. I’d kill for a “personal Luxury Coupe” today over all that crap.
Matt, we just got a bunch of new readers so I wanted to highlight a key analytical framework Indie Auto uses. Readers can, of course, take it or leave it.
I don’t think that the lessons of the 1950s through the 1970s always translate well to the 21st Century because we have somewhat different dynamics. Nevertheless, it’s a simple fact that the U.S. automakers lost considerable ground to the imports from the late-50s onward by building cars that were too big, clumsy and poorly constructed.
History can also teach us that the car-buying public tends to be rather faddish. In the mid-50s people couldn’t get enough V8-powered mansions of glory. By 1960 they were flocking to all sorts of weird little imports we have long since forgotten about. By 1965 consumers were back to piloting land yachts but by the early-70s began to permanently shift away from Detroit fare to imports of all sizes and prices.
And now? Let’s not forget that public policy has played a meaningful role in the current automotive marketplace. For years policymakers have kicked the can down the road regarding climate change. A lot of car buffs seem to be pretty happy with that state of affairs.
The invasion of Ukraine could plausibly lead to a meaningful and sustained increase in gas prices. If that happens I suspect that we’d see a goodly proportion of buyers pull back from big trucks and SUVs. Another wildcard is the average cost of buying a new vehicle; how high can it go? My guess is that at some point the marketplace will swing back to lower-priced and more economical vehicles.
I also suspect that someday those big, gas-powered SUVs will seem as archaic as a 1958 Buick. That assumes the current trend toward EVs holds, which I think it will — regardless of what happens in U.S. politics over the next few years.
Well, we’ve discussed that before, and the ideas could fill many books. One thing I would like to look at is the term “poorly constructed.” That seems to put the blame on the line workers. Let me suggest poorly engineered. We know the extreme profit margins domestic car manufacturers expected. People talk about body lines and gaps and “quality” of the cars. This is the result of lack of investment in tool and die and molding infrastructure. These machines wear out. The parts and processes no longer fit like they should. It’s not that GM didn’t know about these new technologies, its that they chose not to invest in them. Same as in the steel industry, these huge corporations took the profits of basic industry and used them to acquire other outfits, rather than re-investing. I know it’s a lot easier to blame union workers than our profit-driven economy, but what were these line workers to do? No ,after how powerful these unions got, the domestic manufacturers never budged from “only management must manage.”
My use of “poorly constructed” was not intended to be shorthand for let’s blame the workers. As you discuss, the problems were systematic. For example, my sense is that the quality of AMC cars went down after George Romney left. He clearly prioritized increasing manufacturing quality; his successors did not.
Unions don’t deserve all of the blame, but that doesn’t mean that the UAW is blameless. Refusing to budge on retiree health care benefits, which were among the most lavish in the world, and demanding the retention of the Jobs Bank (along with provisions that the manufacturers must hire so many workers for several who leave), helped accelerate the downfall. There comes a point where certain benefits just aren’t sustainable.
Management did manage, but when part of that management is overcoming a significant cost advantage enjoyed by Honda, Nissan and Toyota, because of lower overall labor costs, then it’s up to the union to help address the issue. That cost disadvantage influences everything from how much money a company can put into the interior materials to how often it replaces various machinery.
Union partisans seem to believe that it’s perpetually 1938, and management asking for a meaningful concession (such as more cost-effective health benefits) is the equivalent of Harry Bennett sicking his minions on union organizers in the Battle of the Overpass.
Gas prices go up and down, and consumers have the memory of a goldfish. Yes, car prices are higher. The old industry standard of 3 years of payments is now more like 6s or 7. However, that is fine. Back in the day, the typical car would barely make it 7 years and if it did it was a worn out maintenance intensive (even by the standards of the day) rustbucket. A 7 year old car today looks new, and not too out of date. This magazine is pretty much devoted to the what ifs of the 40s-70s with emphasis on the independents. As one person put it, this was an era of optimism, youth and glorious excess, which doesn’t exist now. Even by gearheads such as my son modern cars are looked upon as appliances.
Interesting point. Except that the vehicles that some of us need as appliances, such as pick-up trucks, are now viewed as daily drivers!
‘while little cars were at best stopgap oddities designed for the underbelly of the market’
It was ever thus, even in 1960. And the attitude prevailed in the ’70s to the point that my Father, after being treated like dirt at the Chevy and Ford dealers after inquiring about the Chevette and Fairmont went out and bought a brand new Subaru.
That attitude still prevails. You’ll have a truck or a 5 door hatchback and like it, period.
Wonderful book, worth rereading. The chapter on GM’s J Car is pure entertainment
That’s my point. The failure of the franchise retail system and marketing (especially to women) did more to damage trust in the big 3 than an overloaded Eldorado. Who, exactly, did your Father “punish?”
The best car I’ve ever owned was a 1973 International 1210. Sorry consumer reports. Individual experience does not always equal industrial trends.
Consumer Reports, then, as now, surveys subscribers who own said vehicles to rate their reliability. Whatever the problems with the survey’s methodology, the magazine is not relying on individual reports to determine reliability trends with vehicles. Saying that a particular vehicle was great, based on ownership experience, is a sample of one, and thus constitutes an individual experience.
One last thing. I still find it really funny that we quote Brock Yates in these articles. I can’t imagine a car he’d hate more than a modern Subaru Ascent or Toyota Highlander. If the argument is we should be zipping around in Italian sports cars.
I draw upon Yates because he was the most prominent automotive journalist from a buff magazine to articulate why Detroit lost ground to the imports. I don’t have to agree with everything he ever said, e.g., his later rantings about climate change.
Agreed, but to look at Yates and what he said about the Big 3 then, and use it to look at cars now, is really not what he was about. He would’ve hated the direction cars are going, I think.
I think we have to differentiate opinion from fact. For example, unless he was specifically quoted, we don’t know what CEO Thomas Murphy actually thought about small cars, only what Brock Yates thinks he thought.
Re: antitrust, I think it was an appropriate concern in the 1950s that appropriately led to no action being taken. It was on the Independents to not let themselves be so vulnerable to things like the Ford-Chevy sales war. At the end of the day, it is product strategy and planning that establishes line-of-sight on either a bulls-eye or the weeds, product execution and sales that shoots either a straight arrow or and errant one.
A lot has changed for the better since those earlier days. Unfortunately, product strategy and planning is not one of them. As they dive headlong into EVs – electrifying their current fleet not because it is the most appropriate to be electrified but because it is the only market they know – modern CEOs and their VPs are still very much like the ancient ones.
Paul, what do you see in GM’s behavior during the 1970s would lead you to believe that Yates was misinterpreting Murphy’s view of small versus large cars?
I have brought up antitrust policy with the recognition that it may be a decidedly unpopular topic among car buffs. I bring it up anyway because it has been addressed so rarely in the auto history literature. I think that’s a mistake. The U.S. auto industry was, by definition, an oligopoly in the postwar period.
In general, we know that such a high level of economic concentration in a given industry makes it much harder, if not downright impossible, for smaller companies to be competitive no matter how brilliant their management.
Not sure where you’re going with your last paragraph. My sense is that most automakers are shifting to EVs to comply with the global regulatory environment. And those regulations, in turn, are a response to climate change.
I get that bringing up climate change in an auto history website is fraught with peril, but it’s also the intellectually honest thing to do (here is an example of why).
Steve, let me first say that I agree with you that climate change is absolutely relevant to auto historians, as is trade policy, the economic and societal impact of manufacturing and assembly plant investments and closings, dealership laws, and anything else that the industry touches.
GM’s Vega program was significant and began a half decade before OPEC. It was an entirely new car with a new engine with an aluminum block and OHCs, and built in a new plant (Lordstown) with a new level of automated assembly. They sold 2M vehicles between 1971-77 (Wiki). That they didn’t get it quite right is for me, beside the point. Their intent was serious and they followed it up with new top hats (Monza, et al) just four years later, which means they probably kept the core Vega team together.
GM also led the Big 3 in initiating a downsizing program for their cash cows – the full-sized cars. This was also a big deal, especially for Cadillac given that its entire showroom was affected, excluding Seville. I ding GM only in what appears to be choosing a mostly reused mid-sized car platform rather than going all-in on a new RWD unibody with allowance for IRS in the upmarket models.
GM’s mid-sized cars were downsized next, probably using the Nova platform. Chrysler did the same segment/platform adjustment for its large and medium cars. Ford’s Panther platform appears to have been the ’72 Torino platform with a few geometric changes. Look at the steering wheel… it’s canted outward. Why? Because they widened the seats and moved the occupants outward, but didn’t change the underhood attachment point of the steering assembly. Somebody correct me if I am wrong.
At GM around 1975, the seeds began being sown for all-new FWD cars (Curbside Classic), the biggest of which would finally arrive in 1985. This was a major shift in the company’s vehicle architecture and assembly processes, and fuel economy was a primary reason.
Steve, I really like the website that you have created, and see your efforts as a valuable and needed contribution to the industry. As for Yates, I view his work as part valuable, part entertainment. I thought about going into auto journalism long ago and decided that I didn’t want to shout from the sidelines (until later in life). Instead, I wanted to suit up and play on the field. That led to Ford and then GM, and the experiences were eye-opening. It is much easier to make a great vehicle than to make a profitable great vehicle, and there was rarely a meeting that I attended where the subject of cost was not brought up. For the industry it’s not a dirty word, it’s a reality that can lead to good things done on behalf of the consumer and the producer, if the producer is smart enough to use it as motivator to innovate and make careful trade-offs.
I agree with you about the horseplay that the climate change deniers have been engaged in since the Eighties, casting doubt in a sustained and carefully crafted way. And the industry has too often dragged their feet. On the other hand, when well-meaning folks in government start mandating the types of cars that the industry should make, without anywhere near the knowledge base that the industry has, then we just perpetuate the same binary thinking that we’ve been floundering in for far too long, in almost everything that we as a society do.
How in the world are we helping our planet by adding 1,000 pounds of expensive weight to a 4,000 lb vehicle? How is the industry supposed to turn a profit if the customer is only willing to pay a few thousand dollars extra for that weight? Long term, solid state batteries may even the score. But until then, expect to see an increasingly binary showroom filled with stand-alone unprofitable EVs sitting next to hugely profitable I/C pickups and large BoF SUVs, with little else. The more that one sells, the more of the other that will need to be sold, with the entire showroom joined at the GHG hip.
Through it all, even after solid state batteries arrive, too many folks will continue to drive too much vehicle, too often. That the real EV opportunity. The third alternative, the sensible way forward.
Paul, you make some good points. For example, I give GM credit for leading the parade on downsizing in the late-70s and early-80s. That said, they also dragged their feet until CAFE standards kicked it.
I don’t give GM points for coming out with the Vega. Even if you ignore the problems with the car’s engineering, it still represented a parenthetical effort. Note, for example, that GM never offered four-door body styles on this platform.
Regarding EV mandates, what I find lacking in those who criticize them is a plausible alternative scenario that involves the auto industry showing a steadfast commitment to doing the right thing on climate change. Those mandates came about because civilization has run out of time. The auto industry quite literally had decades and decades to gradually shift to a lower-carbon product line and what did they do? Only what was required by law.
Regarding the lack of the four-door body style on the Vega platform – when GM developed the Vega, it targeted VW, which was then, by far, the best-selling import. The Beetle was only available as a two-door coupe and convertible, and the Squareback and Fastback only had two doors. Even the Honda Accord was only available as a three-door hatchback until the sedan version debuted in 1979.
The VW Rabbit, which debuted in 1975 in the U.S., was available as a five-door hatchback, and was a real game-changer in the small car market. But it debuted four years after the Vega.
From GM’s perspective, there wasn’t necessarily a need for a four-door version of the Vega, given that people were still buying as many VWs as the parent company could ship to this country when the car was being developed.
There were a variety of four-door subcompacts on the market in the late-60s and early-70s. Also note that whereas the Beetle’s design was relatively tall, both the Vega and the Pinto were relatively low and sporty. GM and Ford clearly thought American car buyers were more interested in snazzy styling than practicality.
Fiat and Renault offered four-door subcompacts, but they were seen as outliers, given their suspect reliability reputations and spotty dealer coverage. The Japanese threat was ignored – but that was because GM management didn’t take Japan seriously, not because it didn’t necessarily take the small-car market seriously. Neither did many Americans at that time. “Made in Japan” was still a punchline in the 1960s.
With the Vega, GM took the same styling approach that it did with both generations of the Corvair. The first-generation Corvair was a reduced scale version of the “flying buttress” four-door hardtops introduced for 1959. It was very low and sleek, and tremendously influential, with car companies in Germany, Great Britain, Italy, Japan and the Soviet Union (!) launching vehicles with styling influenced by the Corvair.
The second-generation Corvair displayed the latest version of Bill Mitchell’s styling philosophy, and was widely praised for its styling. Both the 1960 and 1965 Corvair were much lower than contemporary VWs.
The Vega was essentially a 3/5s version of the 1970 Camaro. Not the most practical car, but then styling considerations were over-ruling practicality on even GM’s B- and C-bodies of this era. The “styling over practicality” philosophy would reach its peak with the 1973 Colonnade intermediates. GM’s design philosophy was “styling first” during this era. (Compare a 1971 GM B-body to a 1961 GM B-body to get an idea of how styling considerations had whittled away interior space, trunk space and overall usability.)
It was most apparent on the Vega because there was less interior space to lose in the first place.
My point being that GM and Ford’s U.S. operations did not consider subcompacts to be “family cars,” but rather entry-level sporty coupes. That was a decidedly different approach than in their European arms, where the styling was more upright and four-door sedans widely offered.
You also fail to mention that the Datsun 510 and Toyota Corona offered four-door sedan. In 1971 even Opel began offering a four-door sedan version of the Kadett and 1900, according to the Standard Catalog of Imported Cars.
The Toyota Corona and Datsun 510 were not on GM’s radar during the Vega’s development, primarily because Japan was not taken seriously as a competitive threat in large parts of the country. Again, in the 1960s, “Made in Japan” was still a punchline, which reflected the common perception among large swaths of the country that Japanese goods were cheap but shoddy. That view would change by 1975 when it came to cars, but it was still the prevalent view when GM was developing the Vega. And not just on the 14th Floor of GM headquarters.
In Europe, cars the size of the Vega and Pinto were often bought as family cars. That is why the Escort and Cortina, as well as comparable Opels and Vauxhalls, featured four-door versions and much more upright styling. Here in the U.S. such cars were still seen primarily as either second cars, or cars for young singles (or couples). That view wasn’t necessarily limited to the corporate offices of GM and Ford.
This view was quite common in our suburban neighborhood. The subcompact was a second car – generally for dad to take to work, or a car for the teenager who drove. Room was less important that low purchase cost and higher fuel economy. Mom had the “real” car, which was generally a domestic intermediate or full-size car used to ferry children and take long trips (fewer people flew in the days before airline deregulation).
You’re actually making my point for me.
Yates’s original claim – I have his book – was that the Vega was an intentionally half-hearted effort designed to convince people that small cars were second-rate products. I’m assuming that this is your view, as well.
(For the record, this view is offered in Yates’s book as an anonymous quote from someone who was not involved in the Vega project, was not a member of GM management, and was offering his opinion soon after the car’s introduction.)
That is not synonymous with saying that GM and Americans still viewed small cars as second cars, and thus developed the Vega primarily as a second car for the growing number of two-car households. Developing vehicles based on how people actually used them was how the Japanese got their start here.
An examination of the car’s development, and final product, tends to prove the opposite. The shortcomings of the Vega are rooted in both Mitchell and Cole taking a very active interest in the program.
Mitchell wanted the car to look good – if he hadn’t cared, he would have greenlighted a facelifted Kadett and called it a day. But he didn’t. The Vega, whatever its faults, is a very good-looking car. It’s still praised for its styling. It’s not practical, but that is because Bill Mitchell actually cared about how it looked, and demanded that the car fit in with the prevailing GM design philosophy. Note that “not practical” is not synonymous with “second rate.”
Ed Cole demanded that the car to use his engine, which required new – and expensive – technology to both design and manufacture it. Again, if he didn’t care, he would have signed off on the more conventional engine that DeLorean claims Chevrolet had already developed. But he wanted his engine to be used. This drove up costs, and resulted in other cost-cutting measures (particularly with interior trim). But that is because Cole wanted the Vega to be “high tech,” not because he wanted it to be cheap.
Again, the Vega’s faults aren’t because anti-small car advocates made it deliberately cheap, or sabotaged the program. They exist because very powerful people within the corporation – Mitchell and Cole – got their way on key aspects of the car. One part of that – the styling – is rooted in people used their cars at that time. But it is not the same thing as saying they deliberately made it a second-rate effort – let alone really didn’t care – which was Yates’s original claim.
I try to avoid assuming intent and instead focus on actions. Did GM “deliberately” make the Vega a second-rate effort? I don’t know, but that sounds like counter-productive behavior given the amount of money that went into the project. I do think that GM was biased toward big cars, so they put less effort into their smaller-car programs. Certainly they wanted to hold back rising import sales, but not to the degree that it would unduly hurt their larger-car sales.
As a case in point, look at how much more money GM invested during most of the 1970s in their mid-sized cars over their compacts. Not only were the Nova and its corporate siblings not restyled as frequently, but they had less inter-brand differentiation and fewer body styles.
Perhaps I’m not correctly gauging what you mean. When I read your claim that the Vega was a “parenthetical” effort, I take that to mean that top management was dismissive of it, and really didn’t care very much about it.
The problems with the Vega were rooted in very powerful, key people within the corporation – Mitchell and Cole – taking an active interest in the program. They did care…if the program had been hatched by some sort of internal, off-the-radar development group (perhaps a “skunk works” for small cars), the end result would have probably been better. But the Vega project was announced with a great deal of ballyhoo in 1968 by GM Chairman James Roche himself.
GM spent a boatload of money on the Vega, between the body itself (the Vega initially didn’t share tooling with anything else in the line-up), the engine and the factory. Up until that point, this was a much more ambitious effort than had been put into the B- and C-bodies, which were pretty much operating on cruise control as GM simply restyled the car and draped the body over the same old mechanicals.
The result with the Vega was a disaster, but that is because GM, as a whole, was increasingly unable to execute ambitious programs properly. This internal dysfunction grew, until it climaxed with the Roger Smith’s disastrous 1984 reorganization and the GM-10 program.
I agree with what you just said. A big part of the Vega’s problem was micro-management. I was originally responding to Paul’s questioning of the accuracy of Yates’ contention that Thomas Murphy was a big-car guy. Pretty much all of the Big Three executives were. Their dominant assumption was that smaller cars equaled smaller profits. That didn’t begin to change until the mid-70s, after the first oil embargo and introduction of more expensive smaller cars such as the Granada and Seville. Up until then the main goal of smaller cars was to bring customers into the dealers, where they could hopefully be moved into something bigger and more expensive.
That helps explain why the original Chevy II was a less refined car than the Rambler Classic. The Chevy II was GM’s bargain-basement offering whereas the Classic was the franchise for AMC. By the same token, in the 1970s the Vega was competing against imports that were not as bargain basement.
I grant you that some of that was the result of the cost disadvantages U.S. automakers faced vis a vis foreign automakers, but it also reflected a basic product-planning strategy: Don’t give your entry-level products so many features that too few buyers gravitate to higher-priced products in your lineup. And in the late-60s and early-70s, a key marker of a higher-priced American car was a larger size. Even after the first wave of downsizings in the late-70s and early-80s, Detroit still tended to price bigger cars higher than smaller cars.
https://www.indieauto.org/2022/04/27/detroit-mind-led-to-collapse-of-u-s-automakers/#:~:text=Regarding%20EV%20mandates,required%20by%20law.
Steve – I hit “Copy Link to Highlight” and am curious to see if it does what your responses always do: quote a previous comment and put a yellow vertical bar next to it. If it doesn’t, the following remarks are in response to your comment “Regarding EV mandates…plausible alternative scenario…”
But first, on Vega’s lack of a 4-door model… Geeber pointed out the 2-door Beetle and other important factors. It may have been that other Vega body styles had been discussed early in the program, and perhaps a breakdown of the subcompact market by body style was presented. As others have said, Mitchell likely would have lobbied for the sporty 2-door solution. Steve, I think you are advocating a tall-package 4-door sedan and possibly 5-door hatchback, around 55 inches in height versus Vega’s 51 inches, and with a more richly contented interior in the highest trim. That would have been a worthy alternative to consider. I have no idea what GM was thinking in that regard, nor how successful the tall car(s) would have been. Maverick 4-door was sort of a scaled-up version of what a Vega 4-door might have looked like. VW Rabbit arrived in the U.S. in ’75 with an OAH of 54.9 inches. Opel-based Chevette 5-door arrived in ’78 at 52.2″ tall and sold well. Were the low 2-door Vega models included with the tall cars, the program would have become much more expensive, including the need for a second plant. Quality and cost of ownership were important factors to the consumer in these years, and it was here that the Japanese producers got ahead of the domestics. They listened to Deming!
GM had been investigating all sorts of things, including fuel cells. My first visit to the Heritage Center included a surprise discovery of the ’66 Electrovan.
https://www.gmheritagecenter.com/featured/Fuel_Cell_Vehicles.html
And here’s the Electrovette, courtesy Consumer Guide. (Steve – how do we imbed a link into a word the way you do?)
https://blog.consumerguide.com/forgotten-concept-chevrolet-electrovette/
If we as a society want to deal with global warming, I think we need to huddle around facts and go long with creativity.
The Producer
The Big 3 were on a decent track in the 1980s wrt efficiency but made a U-turn with the launch of the ’91 Explorer that started a wave of bigness that is with us today, driven by the Consumer and to a certain extent, the Producer. Am not sure allowing the Producer to buy and sell EV credits in order to continue selling these I/C vehicles is the way to go, for reasons mentioned in a previous comment. Because Producers are not innovating the EV’s body and are instead simply electrifying next gen versions of the familiar sedan, SUV and pick-up, the Consumer continues to too often drive more vehicle than they need, costing them money and adding additional C02 to the air. I would rather see the internal and external costs associated with a vehicle be fully baked into its price. Not sure exactly how to quantify all the external costs to the environment and our society, but an effort should be made to try, and it should be tied to more than just carbon.
The Regulator
A broader view needs to be taken, the goal being to not simply to replace existing I/C vehicles with electrified versions, and to add autonomous EV ride-shares. The plan must be grounded on an acknowledgement that the most efficient EV on the market today is one that we all use. In fact, I am using it right now: electronic communication. It shouldn’t have taken a pandemic to significantly increase work-from-home. Tax incentives to businesses to increase remote work should have been instituted a decade ago. An office worker that works remote one day every other week would reduce their greenhouse gas contribution from commuting by 10%. Working remote two days a week would reduce it by 40%, and the employee would save money and time, congestion would be reduced, and road deterioration would lessen.
In addition, because the average vehicle occupancy in the U.S. is 1.5 people, SBIR, DOE and other loans and grants should include standing RFPs for alternative whole-vehicle-designs that seek to offer a less-is-more value proposition. A start-up shouldn’t have to wait years for someone in government to add an RFP for such a vehicle, and to hope the entrepreneur saw it within its short window.
The Citizen Consumer
I hope we get our arms around this problem, by having a robust but civil discussion, and taking a one-in/one-out approach. If you shoot an idea down, replace it with a better one. Humility is key because no one person or party has a lock on the solution, and there is still much to be learned and discerned. It we walk the path together, keep the pushing and shoving in check and over-achieve on courtesy, we’ll tackle this thing and set an example for future generations, because the coming centuries, like centuries past, are probably not going to be a cake-walk.
The thing is, full-frame V8 engined vehicles are very pleasant to drive (in an unsporting way), and generally durable. It is hard to beat them for isolation. To do so requires expensive engineering solutions which are not as durable. The number of quad cab pickups and full-size SUVs sold today is testament to the enduring appeal of this vehicle type. And in good economic times, absent prohibitive gas prices, they make very good margins for the OEMs.
I find it hard to fault Detroit for being attached to them, even if it is recognized that scarcity of energy and road space required lighter more space efficient vehicles to grow in relative volume.
Could better strategies have been pursued in the 70s and 80s? Surely yes. Most glaringly, Detroit was slow to adopt quality manufacturing techniques pioneered by Toyota.
But Detroit was also handicapped by several factors that defy easy solutions.
One was the legacy of the Bretton Woods fixed exchange rate system, which artificially boosted competitiveness of German and Japanese manufacturers when they made major capital investments in the 60s.
Another was the need to amortize capital investments that had already been made before the competitive threat of the imports was fully understood.
And more generally, North America was for macroeconomic reasons a less attractive place to engineer and manufacture consumer goods. Witness, for example the annihilation of the US consumer electronics industry by the end of the 1980s. By comparison to that, Detroit’s historical record isn’t half bad.
I enjoyed your response. Thank you. I find it interesting how one wants to sidestep naming those “macroeconomic reasons” – lack of nationalized costs for healthcare and old age pensions, and unsustainable profit margins. It sure wasn’t quality concerns that destroyed RCA.
Socialization, or not, of labor costs can fairly be said to be one element of the macroeconomic picture, but it is more complicated than that. Canada had socialized medicine since the 1960s, but generally has followed the same trajectory in industrial development as the US. Socialization of medicine was a comparative advantage in auto assembly for a time, but didn’t survive lower labor costs in the southern US and Mexico.
Other macroeconomic factors I had in mind include:
– a more developed services sector, which competes for investment and talent;
– higher spending on the military industrial complex, which competes for investment and talent;
– differently oriented equity capital markets, which tend to have a hunter mentality rather than a farmer mentality;
– housing policy, where an emphasis on hime ownership sucks up debt capital that would otherwise be available to industry; and
– deficit spending by governments, which also shucks up debt capital that would otherwise be available to industry.
If you look at the last half century, North America has been a good place for consumer goods and services businesses so long as they are not capital intensive and generate large gross margins. But the businesses with higher capital requirements and lower margins that have thrived have been those which are not consumer focused, and are therefore less sensitive to cyclical factors.
Except that Honda, Nissan, Toyota and VW are based in countries that have “nationalized costs for health care and old age pensions,” and they still have opened plants and engineering centers here, and, in VW’s case, have opened plants in lower-cost eastern European countries. If those factors were such a competitive advantage, one would think that said companies would still centralize all development and production in their home countries, and export vehicles from there.
In the long run, it may matter more where you source your capital than where you spend it. But in the Era Yates was talking about there was almost no engineering or manufacturing by foreign firms in North America.
Work as a temp in Canton, Mississippi and find out.
Is the plant having trouble attracting workers? Is there a law that says once a person has accepted a temporary position at the plant, he or she is barred from ever leaving?
And perhaps we need to look at the employment opportunities that were available to area residents before the plant opened. I would bet that most local residents view working at the plant as a upgrade over prior local job opportunities – even if they are working at the plant as a temporary employee.
That may be so. However, consumer choices can be meaningfully impacted by public-policy decisions, e.g., regarding gas taxes and CAFE standards. The U.S. has by and large kicked the can down the road with regards to climate change. And that is partly because of the enormous political power of the transportation and energy sectors.
Perhaps, but I think that Yates does a particularly good job of showing how the U.S. auto industry’s management culture had become so insular that it was agonizingly slow to recognize the size of the import threat.
So we should see the glass as half full — that U.S. automakers could have experienced an even bigger collapse?
I’m just saying that the historical evidence doesn’t clearly support the thesis that an insular oligopoly is destined to fail when exposed to competition. In the late 60s the US had a highly competitive consumer electronics industry, with 28 firms making TVs, and those firms were not all clustered in one place. But they were destroyed in competition with an oligopoly of half a dozen Japanese firms that shared a very similar mindset.
So are you arguing that the U.S. auto industry was NOT more vulnerable to the rise of imports because it was an insular oligopoly?
BTW, I don’t know how useful it is to compare the manufacture of automobiles with consumer electronics. The basic structure and scale of the two industries were rather different. There’s also the issue of national differences in industrial policy as they relate to oligopolies.
I know the moderator doesn’t want the website pushed in this direction, but…..people needing healthcare = getting beat up on a bridge? Geez, Mr. Geeber. I’m assuming the readers can detect the other fallacies in that response. BTW, GM set a record for profit in 1976. 3 billion 1976 dollars.
Matt, I don’t have a problem with talking about “macro” issues as long as the discussion doesn’t devolve into bumper-sticker sloganeering and flame wars.
The basic challenge in substantively discussing the decline and fall of the U.S. auto industry is that it’s all too easy for the conversation to sound like the proverbial four blind men trying to describe an elephant. Each blind man may be quite accurate in describing the part they can feel but still fail to present an accurate representation of the whole animal.
Our ideological predilections can function as blinders that limit our ability to see the whole picture. Note that I’m not singling you out but making a broader point.
A strawman argument. Arguing that the union needed to help reign in soaring health care costs by trimming their lavish plans (which more generous than those afforded to white-collar retirees) is not the equivalent of completely taking away their health care. By the 21st century, GM’s biggest supplier was…a health insurance company. That is telling.
And, by the way, GM and the UAW were bailed out by taxpayers in 2010 because the company was bankrupt. The profits recorded by GM in 1976 are therefore irrelevant to this discussion.
No it isn’t, and you know why. Instead of asking that question, why don’t you ask why those health care costs were soaring? Maybe the white collar employees should have unionized at GM like they did at Chrysler. What’s your point? And, of course, this discussion is about the “collapse” of the big 3 in the face of foreign competition. I don’t think even you would say that started in 2010. The first oil crisis was in ’73, the second in ’79. I picked ’76. Go ahead and pick another year. Results are the same. I guess this is a case where America could’ve lead the way, it looks like, according to you, the American system doesn’t work all that well, since collectively bargained contracts (which MANAGEMENT agreed to) didn’t seem to work as well as competing systems. OK I’m done. Thanks for the thoughtful discussion
White collar employees should have unionized and demanded the same level of health benefits enjoyed by UAW members? (Let’s note that the federal Wagner Act, which regulates union/management relations, does not allow management employees to unionize.) So the company could have gone bankrupt even faster? That hardly seems like a viable solution.
The solution is to realize that health care costs are a huge expense, and the only way to reign them in is to increase employee co-payments and have employees make some contribution towards the cost of coverage. That is hardly the end of the world, and isn’t going to drive anyone to the poorhouse.
An examination of European nations shows that many of them are struggling with health care costs, too, and many citizens who can afford to do so supplements their government-provided health care with a private insurance plan. In 2004, a big news story in Germany was Daimler-Benz demanding concessions from workers on the company’s health care benefits. If nationalized health care were a panacea, this would not have happened (nor would citizens still be buying private health insurance policies).
The French system, which has been widely praised by Americans seeking to institute a nationalized health care system here, has run up large deficits.
The problem isn’t “collective bargaining.” The problem is a failure on the part of the union to realize that there is only one way to reign in health care costs – increase co-pays and trim benefits (note that is not the same as eliminating benefits). Management did contribute by not holding fast and demanding the needed changes, but I have the sneaking suspicion that if management had taken the necessary hard line on this one issue, you would have been the first blast it as being anti-worker. So management would have been condemned no matter which path it had ultimately chosen.
I wonder if Datsun alias Nissan had caught the “Detroit mind” or a variant of it when they almost faced bankruptcy in the late 1990s and was rescued by Renault?
This has been a robust discussion, and I appreciate Steve for facilitating it.
When using the Vega as a gauge on GM’s attitude towards small cars at that time is, we have to get the big elephant out of the room to get a real answer to that question. The Vega turned out to be a complete disaster in everything from reliability to build quality to refinement on the road. The implication over the years has therefore become that GM DELIBERATELY made the Vega this bad as a ploy to get people to buy a more profitable Nova or Chevelle instead of a low-profit small car. That is the way the quote I referenced in Yates’s book has been taken over the years in some quarters.
But that quote was offered by someone who did not work for GM, and had not been involved in the car’s development. The car had just been introduced, so he had no idea of how it would ultimately fare in the hands of actual owners.
I don’t believe that GM deliberately turned in a slipshod effort with the Vega. The real problem was that GM’s internal systems were increasingly unable to execute ambitious programs that required new technology. Over the next 15 years, the Oldsmobile Diesel, Cadillac HT 4100 engine and 1986 E-body downsizing would be disastrous in their own ways – and they did not involve low-profit economy cars. These programs involved some of GM’s most profitable vehicles. In retrospect, the Vega was the canary in the coal mine in that regard.
Whether GM handicapped the Vega by withholding certain features is an entirely different question, and often gets mixed up with how bad the Vega turned out to be. I don’t believe that the lack of a four-door sedan (or five-door hatchback) is proof of that so much as proof that GM was hyper-focused on VW, which had become the leading import by far while only offering two-doors.
The interior trim of the base models was stark, but a fair amount of that was driven by the cost of Ed Cole’s engine. If the program had used the engine designed by Chevrolet, the engine’s cost would have been lower, while reliability and even overall refinement would have been dramatically improved. Whether GM’s bean counters would have allowed the extra money to be put into upgraded interior trim is another question. GM was already struggling with a higher cost structure than the imported competition of that eras…and a low list price was seen as crucial to attracting customers. And GM wasn’t going to lose money on the Vega. No one reasonably expected GM to do that.
The “have it your way” approach to options was the Detroit way of doing business in this era. A very low base price was advertised, but customers were expected to pony up for high-profit options if they wanted a decent car. But that approach was even used on the Chevelle and Impala of that era. A stripped B-body was not a very pleasant car to drive. The expectation was that most customers would pay for a deluxe interior, power steering, power brakes, AM/FM radio and air conditioning to make the car much more pleasant to drive.
GM didn’t “think outside the box” by boosting the Vega’s appeal by making several features standard, but, again even the VWs of this era were hardly luxury models. The idea of an upscale economy car really didn’t go mainstream in the U.S. until the debut of the 1976 Honda Accord. (Although the 1974 Ford Mustang II was sold with a relatively high level of interior trim as standard equipment, but it was clearly merchandised as a step up from the typical economy car of that period. If buyers wanted a low price above all else, they were expected to buy a Pinto.)
Good stuff Geeber. One can see the seeds of the future processes that the Big 3 would create. If my memory hasn’t twisted the acronyms, Ford calls their process FPDS (Ford Product Development System). GM’s is GVDP (Global Vehicle Development Process) and is run by the Quality group, and every gateway requires the completion of a myriad of activities, if they apply. No doubt the Vega program drove a bunch of them!
The “have it your way” method of driving revenue is now universal, though is tempered by the need to reduce part and plant complexity. Trim levels – oops, my bad – “personas” are all the rage, and they really do improve the business case. I can’t remember how many weeks we spent defining the current Terrain Denali’s equipment.
Was wiki’ing Corvair and Chevy II the other day and read how GM discovered that the Corvair was seen by the market as a specialty vehicle rather than mainstream, which is one reason why they did the Chevy II. Am starting to think that they saw Vega similarly, which might have been another reason why they opted out of a 4-door. Nova served that market, though here one can see how GM failed to see the market potential for the subcompact 4-door sedan. But like was said, Accord was originally a 3-door only. The inclusion of the Vega wagon was probably seen as low hanging fruit given that it was only a unique greenhouse, and was in keeping with the program’s specialty mission. Maybe the original Rambler program might have crossed the planner’s minds, because that is what the Vega program most closely resembles.
For some reason the appeal of the Beetle’s tall package didn’t register with the American auto industry back then. No doubt styling was the big reason why, but now we see that Americans have largely abandoned the low sedan in favor of tall crossovers.
One thing that would probably shock a lot of folks is, at any given time, the number of cars sold by manufacturers that are not profitable. When you see a car discontinued you better believe it was a money-loser and had been for some time, maybe the whole time. It is also the case that the Big 3 struggled to profit from small cars while the imports found success. That salaried workforce reduction at GM in 2019 that washed away 6000 of us was to move the needle on one number on the business case: SG&A. I don’t blame them for doing it, only the indiscriminate way they did it, mostly 50+ year-olds being let go. Their loss.
Paul, I’m sorry to hear about the layoff. It is indeed their loss. I’ve been through a number of downsizings and it seems to bring out the worst in people.
Back in the day I had an Opel 1900 wagon. The Vega looked swoopier but the 1900 struck me as the more capable subcompact — even if you ignore the Vega’s engine problems.
Thanks Steve. You would have loved it there. I spent my first two years in the Studio as a cost lead, helping them get more knowledgeable. The Camaro/Vette studio always had good tunes going. And of course, the famous Design Center building was really something. A few months after I started, a bad storm hit the area and the building’s basement and tunnels got flooded with 8 feet of water. Some historic material was unfortunately ruined by I know they were also able to save a lot of stuff. They also have a great library. Soon after I started, I checked to see if it had Simon Moore’s Immortal 2.9 (Alfa) and sure enough, they did! I had looked long and hard to find a copy back in 1990, so was impressed. My last three years were in Advanced Vehicle Development, which vetted all the new program proposals from Strategy. Great experience and I liked the people. Ford’s culture was quite different, for the worse. But lots of great people there.
In high school a friend that I worked with had an Open Manta and boy did I like it! Now see that it’s height was 53.3 inches… higher than Vega, lower than your wagon, and just about right overall. Am now amazed at how narrow the small cars were back then. Never thought much of it at the time.
Paul, I appreciate learning about your experiences in the industry, so do keep sharing them if you are inspired to do so.
The dissection of the “Detroit Mind” reveals trace elements of two things: WW2 and MBA.
When I joined Ford in 2000 I found a military-like hierarchy. Orders were given, orders were carried out. I suspect that the mindset permeated GM and Chrysler too, but especially in Dearborn I have to wonder if World War 2 had a strong influence given that Henry Ford II and his Wiz Kids had all served, and because top-down rule had already been ingrained by Henry Ford. It only needed formal structure. The problem is that the top layers doesn’t always get it right, and voices of council from below don’t always get heard.
When James Nance joined Packard in 1952 he new nothing about the auto industry but was selected on the assumption that a professional manager could run any company. He was perhaps a precursor to what the MBA became: creator of the quantitative technician. The problem is that such a person and their “key men” (as he put it) management team are great at numerically managing an existing business but challenged to creatively rethink it.
In the auto industry, product strategy is by far the hardest element to get right. Harder than quality, harder than technology, harder than sales and marketing. It is historically, the most common reason for business failure. It can’t be taught in an MBA school.
If I recall correctly, Nance was chosen by the Packard board because he was seen as a marketing whiz. He had turned around Hotpoint Appliances, and the thought was that he could apply some of this magic to Packard.
George Christopher’s strength was manufacturing, but he had absolutely no feel for marketing or styling. The “pregnant elephant” 1948-50 Packards were graphic proof of that. Nance was supposed to give the company vital direction in these increasingly critical areas.
Nance, of course, would completely mishandle the loss of Packard’s body business with the sale of Briggs to Chrysler. He approved the disastrous decision to move all production to the cramped Conner Avenue plant for 1955. The delays and quality problems experienced as a result of that move arguably killed the company.
Ironically, Christopher, with his knowledge of manufacturing, would have most likely handled that decision much better. Nance, meanwhile would not have likely approved the ungainly 1948-50 models, and not retreated as quickly from the upper reaches of the market. Packard had the right leaders – but at the wrong time.
Hmm, it doesn’t seem like either consistently distinguished himself in any area.
To his credit, Christopher set up the One Twenty line. But he had just came from GM and surly must have known what they were planning, particularly the ’35 Oldsmobile’s all steel body, turret top with split windshield, and pontoon fenders separated from running boards. Why didn’t he speak up, maybe even flat refuse to help unless Packard’s design was made to be fully competitive? As it turned out, the ’35 One Twenty was a fine car… for 1934, and the ’38 was a good car for ’35. It was also Christopher who let his boss cut a deal with Briggs to outsource the ’41 Clipper’s body, causing all those problems post-war. He had no business leading Packard at any time in its history.
Then there’s JJN. No, he probably would not have approved the bathtubs. Instead he would have bled the company dry developing a full line of middle-priced and luxury cars that the company could not afford, and that looked questionable just as the ’57 Program did.
Most automotive historians tend to pay little attention to the hiring managers of all these automotive CEOs but it really is the BoD that determines a corporation’s probability of success.
These last comments were great. I agree with the points both Gerber and Paul West made. I don’t necessarily know about the 35 120s, but they did seem a tad out of date. I also notice the junior Packards matched the seniors in styling all too well. They had the beautiful crisp and stately lines. And this is a problem. It is the curse of the mid price/premium cars. Ask the man who owns one? You mean the guy who traded in his three year old Pontiac and a Christmas bonus with low low monthly payments for that sharp 120 sedan that looks at first glance EXACTLY like a 180?
There was nothing innovative about the 65 Mustang. I dont call a longer hood and shorter tail innovative. It was a Falcon rehash with cleaver marketing courtesy of Lee Iacocca. and He failed with the 1974 Mustang II. Sales were good but the reviews were terrible. It was basically a mini T-bird and missed the mark for what it should have been which finally did arrive in 1979.
Ford will slap a Mustang nameplate on anything with wheels these days which proves a name is more important to most buyers than the product itself. Chevrolet has done it less often but jumped in on Ford’s strategy a few times with the Impala and Malibu nameplates which have (had) no resemblance in design or appearance to previous versions.
Bottom line, The best selling nameplates get reintroduced on new products if all else fails. I could care less what the name is. It’s what I’m getting, not what they name it.
The Fiero could have instead launched as a DeLorean, looking much more like his original design and being the third and final model, or second and final if the Cavalier hatchback-based car didn’t happen.