Detroit myths

CBS/CNET does a “reality check” on the auto industry, including the myth it says that Detroit was out of touch with the auto market by making trucks and SUVs.


Around the urban United States you find hostility toward Detroit because it makes so many trucks and large SUVs – 5.35 million in 2007. But they didn’t just make that many, they sold that many. We snapped them up. Should we have bought all of those? Probably not, but these are Wall Street-driven companies and the margins on trucks & SUVs were great business. For the consumer populace to wash its hands of any involvement in Detroit’s product plans is disingenuous.

  • http://erikhare.wordpress.com/ Erik Hare

    Exactly.

    Who is to blame for SUVs? The public.

    Who is to blame for yield chasing bad investments? The public.

    Who is to blame for deregulation? I seem to remember that was popular, too.

    We can blame the incredibly poor quality of leadership at all levels in this nation for all the problems we have, but the truth is that they were promoted in systems that everyone participated in – and only a few wackos like me said anything about it.

    What happened was inevitable, I’d say, given the system we have. So let’s stop with the blame and do what we have to.

  • http://www.oldtokyo.com noodleman

    Who was it who said “there’s a sucker born every minute?” Yes, the public be damned. But they were being sold a bill of goods (read: advertising) that glorified not only SUVs but also cheap credit, deregulation, etc. even when some available evidence pointed to better, more logical, and more prudent choices.

  • Bob Collins

    There’s a lot of hypocrisy with the Congressional people. The SUVs and minivans existed because they were a loophole in emissions and mileage rules. Congress could’ve closed the loopholes at any time if they REALLY were interested in seeing the automakers be more “in tune” with the consumer. But they didn’t.

  • Michele

    Good point, Bob.

    The legislation was written so that there were many loopholes so that professional people with no legitimate (read soccer moms) business need for a large SUV or truck could buy one and benefit from the tax right-off. It would be interesting to review the Congressional voting record and correlate that to the double speak coming out of Capital Hill now. Hmmmm

  • http://erikhare.wordpress.com/ Erik Hare

    I think it’s a lot of whining to blame Congress or any other institution.

    We live in the most open society in the history of the planet. Can you honestly say that we do not have the institutions, including government, that we deserve?

    The situation in front of us includes a failure or near failure of every institution that we have. More to the point, nearly everyone claims they didn’t see it coming. How is that?

    Singling out Detroit for blame is utterly bizarre. The only thing I can think of is a disdain for manufacturing jobs and the people that have them. Otherwise, it makes no sense at all. I have yet to see the same length of argument regarding the financial packages that were “what the consumer wanted”. Why is that?

    This isn’t about Detroit, it’s about our nation and its future. Let’s talk about the future and stop with the blame – there’s plenty of that to go ’round.

  • Bob

    I think companies that are as large in our culture and economy as the Big Three owe the pubic more than just giving us what we want. I think they’re obligated to show leadership on major issues like energy conservation and cutting pollution, and to produce vehicles that accord with such leadership. Instead, they have a legacy of dragging their heels — and even of self-sabotage — regarding these issues, not to mention their opposition to such safety measures as air bags.

    Just because we want to be idiots and drive vehicles that don’t make sense doesn’t mean Detroit is/was obligated to produce them.

    But given the unleavened nature of capitalism, I guess that’s all we can expect…

  • GregS

    Bob, the author of that article was being coy.

    The problem with Detroit was not that they made SUV’s and light trucks because other auto makers did the same.

    Noe was it that they made so many, nor sold so many.

    The problem was the mix.

    It is like living on a beer diet, punctuated by the weekly head of brocolli then complaining then wondering why despite the balanced diet, you are gaining so much weight in the belly.

    One would think that they would have learned their lesson the first time.

  • Paul

    My spidey sense tells me there’s a couple straw men floating around. No one ever suggested that the government or anyone else tell Detroit what to make or how much to sell. As a matter of public policy, those who have since turned out have known what they were talking about suggested way back in the 80s and 90s:

    a) Mileage standards. Build and sell whatever you want, but it’s got to get at least 30 miles to the gallon. The advantages to having enacted rational mileage standards are numerous. This was low hanging fruit that the Auto industry and the energy lobby fought off.

    b) Regulate the markets. You can’t trust markets to regulate themselves, they have proven time and time again that they will just create one bubble after another and drag the economy into recession. Properly regulated markets would have prevented every bubble we’ve experienced since the savings and loan debacle in the 80s. Had common sense regulations been adopted in the late 90s the hedge fund/mortgage/credit/blah blah bubble would not have developed in the first place. No bubble, no burst. No burst, no recession, no recession no auto industry crises.

    Finally, I think anyone with a brain must surely realize at this point that something funky was going on with oil prices last year. No convincing explanation for either the rise or fall of oil prices other than manipulation has been offered. Some regulation may have prevented the spike, and all the attending chaos that accompanied it.

    We make policy via the government. All this “small” government crap blurred the importance of government and made good policy practically impossible for about 20 years. Policy matters. In most cases the public supported rational policies like air quality standards, mileage standards, and market regulations, but special interests control the government, and they won the day. Yet another reason you can’t trust the private sector to make good public policy.