My last post helped define an important dichotomy in the current debate on the future of the economy between those who think Detroit should be rescued, and those who don’t. Fueling the don’t-rescue group is a set of sentiments that can be summed up in the following way: Detroit makes cars no one wants to buy, and the UAW is responsible for a wage and benefit structure that has helped propel Detroit into the current morass. These twin sentiments help drive its proponents’ to their solution for the current mess: let Detroit go bankrupt, and let the UAW effectively be destroyed in the process.
As I strenuously oppose both those sentiments, I think it’s important to shed a little light on the reality of the situation. And hopefully help everyone on both sides of the issue separate reality from fiction. I’ll start in this post by shining some much-needed light on the question about what Detroit makes and what Americans buy, and then in a subsequent post I’ll tackle the issue of why the UAW matters.
So, it seems that everyone agrees that Detroit can’t make a car that anyone wants to buy. I saw an almost embarrassing version of this sentiment in an interview on Hardball between host Chris Matthews and Representatives Gregory Meeks (D NY) and Dan Lundgren (R CA). (Thanks to my Enterprise Irregular colleague Zoli Erdos for pointing it out.) These poorly coached public servants did a great job of fumbling Matthews’ key question: what kind of car does each of them drive. The conclusion that the anti-Detroit crowd can gleefully draw from this interview is that neither of these representatives are big Detroit car buyers (Meeks owns a Honda and Lundgren owns a Ford and two Toyotas), and that this is emblematic of the problem: We want to bail out an industry that isn’t making cars people want to buy.
Feels like Matthews nailed it, right?
Okay, now on to reality. Who can name the number-one selling vehicle in the United States in recent time, if not in the last 20-plus years? How about number two? You’d think the answer would be something made by Toyota or Honda, judging from the current anti-Detroit sentiment and self-righteousness of Matthews smirky takedown of the two Representatives.
Wrong. So wrong.
For your information, and hopefully that of a fact-deprived nation, the number one vehicle sold in the US is the Ford F-Series truck, followed by the Chevrolet Silverado. And it’s been this way for years – according to Ford, the F-Series has been the number one vehicle sold in the U.S. for 26 years. The F-Series’ status even held up in 2007, when the automotive slump really got started, and considering that Toyota’s sales are down 30-plus percent this year, I’m guessing the F-Series will keep the number one spot in 2008 too.
So if you think Detroit doesn’t sell cars that Americans want to buy, it’s time to realize that you’ve been trapped in a nomenclature game that carries more than a faint whiff of elitism to it. Yes, the Camry is the best-selling passenger car in the U.S., but it’s far from being the number one vehicle: in 2007 Toyota sold 473,000 Camrys, while Ford sold 690,000 F-Series.
Sure Toyota and Honda makes great cars, but Americans want trucks more, and will buy them, despite what members of the House of not-so-Representatives drive. Take that, you latte-sipping, French-loving, eastern elites. (For the record, I quaff, not sip, lattes, actually speak French, am a Midwestern elite transplanted to California, and until we had our second child, I owned a succession of three pickups. Okay, they were Toyotas – though the last one was made down the road in Fremont’s Nummi plant – but that was mostly because I didn’t want a full-size pickup and Detroit only sells the big trucks. The point is, I share a love of pickups that apparently puts me in closer touch with the rest of my country than I thought.)
In case you’re tempted, don’t go thinking that Detroit is a one-trick pony, either. The number two vehicle sold in the U.S. is the Chevy Silverado, and, when combined with the F-Series, these two trucks beat the pants off the Japanese In 2005, Detroit sold more than 1.5 million F-Series and Silverados, beating sales of Camry, Corolla/Matrix, Accord, and Civic combined. This disparity continued in 2006 and 2007, though it diminished as gas prices rose.
Throw a couple of best-selling cars into the mix, and it becomes evident that American manufacturers are doing an even better job building cars – er, vehicles – that Americans want to buy. If we look at the top five American versus Japanese vehicles sold in 2005, total U.S.-made vehicle sales were over 2.4 million units, versus Japan’s 1.7 million. (In case you’re wondering, the top five American vehicles are the F-Series, Silverado, Dodge Ram Pickup, Dodge Caravan, and Chevy Impala. Topping the list for Japan is the Camry, Corolla/Matrix, Accord, Civic, and Altima.)
As gas prices crept up in 2006, there was, admittedly, a shift in Japan’s favor: Detroit’s top five only sold 2,246,250 units, while Japan’s top five sold 1,739,369 units. I don’t have complete 2007 data, but it’s hard to imagine Japan was able to beat Detroit in the top five category based on a 500,000 unit gap in 2006.
Back to my elitist comment. (I can’t believe I’m about to call the media elitist, but here goes.) The reporting on the car crisis has reflected this elitist view that it’s about cars, not vehicles. If you’ve ever been in the hinterlands of this great country, and I’ve spent many months wandering the blue highways over the years, far from the latte-sipping crowd, you would have probably figured this one out by now. In pretty much every corner of rural America, it’s the pickup that dominates. It’s not a style issue for many of these buyers: They use pickups in their work and in their daily lives in ways for which there is simply no substitute short of dialing back a century and hitching up the horse and wagon.
So let’s not kid ourselves, this a class issue as much as anything else. The pickup is the workhorse of the solidly middle class in this country, and Detroit has been making these buyers happy for, in the case of the F-Series, 26 years. So, can Detroit build cars that Americans want to buy? Not well enough. But it builds vehicles for Americans really really well, much better than the Japanese competition ever could. (Toyota’s heavy truck sales in 2007 were approximately 170,000, pretty wimpy by comparison.)
It’s time to retool the argument about rescuing Detroit. We should rescue Detroit because, while it does a lot of things wrong, it’s also doing a lot of things right. There are some massive structural and cost problems, and lots to fix. But the point is that, when it comes to rescuing Detroit, there is indeed something to fix. Detroit isn’t just the “arsenal of Democracy”, as FDR called it as he recognized Detroit’s ability to retool in support of the war effort. This is also a vital industry that provides an important segment of our nation’s overall economy – the non-car driving non-elite – with the vehicle they want and need. And one that Detroit can and does manufacturer at a profit – which you can’t say for the Toyota Prius: every one of the 600,000 Prius’ sold to date have been sold at a loss. And Toyota won’t be able to make a profit on the Prius until it gens up its U.S. battery manufacturing capacity sometime in 2010. If it goes through with those plans.
So you can hate Detroit, and you can hate spending taxpayer money bailing out private industry. But you can’t claim that Detroit doesn’t build vehicles that Americans want. They have always done that, and, if we let them, they always will. Detroit may not make the vehicle that you or your Representatives and T.V. pundits want to drive, but that should be beside the point. It’s time we recognized the different between a car and vehicle, and a salvageable industry and basket case, and make the right decisions. Before we make the kind of ill-informed mistake that will haunt our economy for the rest of our lives.