It's been decades since Detroit was the car capital of the world. Instead, it's become the world's truck capital. Motown's made millions of 'em, growing fat and happy on the juicy profit margins afforded by selling simple, low-tech pickups and SUVs to folks who never really used them the way they were designed to be used. As a result, the U.S. auto industry -- and by that, I mean the combined engineering, design, and manufacturing capability of the Big Three here in America -- quietly drove itself down a dead-end road to global irrelevance.
How did that happen? Thirty years of CAFE and cheap gas, that's how.
Let me explain. The first go 'round of CAFE in the 1970s meant American cars, which had tougher mileage targets to meet, got worse almost precisely the same time as pickup trucks became more refined and carlike with the addition of sound deadening, carpets, radios, and air-conditioning for totally unrelated marketing reasons.
As a result, pickups, which kept their lazy, torquey V-8s and rear drive, started being purchased as substitutes for what American cars once had been, particularly with the introduction of extended-cab versions. In fact, says longtime industry watcher Jim Hall, of 2953 Analytics, the psychographics of early extended-cab pickup-truck buyers were almost identical to those of Olds Cutlass Supreme, Chevy Monte Carlo, Ford Grand Torino Elite, and even Chrysler Cordoba coupe buyers.
Automakers grudgingly built the more fuel-efficient cars the government mandated under CAFE, but we mostly ignored those and bought gas-guzzling pickups and pickup-derived SUVs by the millions instead because, hey, gas was cheaper than water. Who needed to drive a girly gas-miser?
Here's how bad it got: About 10 years ago, a senior product planning exec at one of the Big Three quietly confided his company's future U.S. model lineup would have no cars. Everything would be a truck-SUV, pickup, and this newfangled thing called a crossover.
These days, in this era of $4/gallon gas, that sort of thinking suddenly doesn't look so smart. Motown's sure been taking a lot of heat for not seeing the gas-price crunch coming, but if you're reading this, I'll bet my 401(k) that, like Rick Wagoner and company, four years ago you didn't figure you'd be paying over four bucks for a gallon of gas today, either.
So maybe we ought to ease up on the finger-pointing; the truth is we're all a bit complicit here. We wanted those big ol' pickups and SUVs, even though many of us hauled nothing but air and never ventured farther off the road than the Blockbuster parking lot. We happily slurped the cheap gas and provided the demand Detroit tooled up to meet. Even the Japanese were seduced: Don't forget, Toyota -- supposedly the smartest guys in the room -- recently spent over a billion dollars on a new factory specifically to build the giant, gas-guzzling Tundra and Sequoia.
Motown's long been a boom-and-bust town, but this time it's different. This time, as truck and SUV sales head -- on fire and engines screaming -- for the basement, it's dealing with a dangerous structural imbalance 30 years in the making. Today's gas price crunch isn't like the oil crises of the 1970s, which were the result of artificial constraints on oil production, and quickly gone. This time, high gas prices are here to stay.
The pain being endured by the U.S. auto industry right now is severe, and a lot of good people are being hurt. But there's some good news amid the wreckage: Detroit is about to get back in the car business. It has to, because it won't survive, otherwise. Motown is about to become leaner, fitter, and more globally relevant than it's been since 1948. And that, ultimately, will be a good thing for America.