Car Guy

New Year New Car Resolutions

Are there any the flabby, saggy auto industry can stick with?

By 12.30.09

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Making New Year's resolutions is easy; keeping them not so much -- as anyone who has sworn to drop 20 pounds and start hitting the gym come Jan. 2 will tell you. But the idea of at least trying to make a positive change is sound nonetheless.

So how about the flabby, saggy car industry? What resolutions might be worth making -- and at least trying to stick with?

* Pay back the government, get the government out of the boardroom.

This resolution is mainly for GM and Chrysler -- who made a deal with the devil by accepting enormous government subsidies to stave off the total reorganization that would otherwise have occurred last year. The catch that came with the cash was that Uncle Sam now has a big say in how GM and Chrysler will do business -- including what kinds of cars they'll make. This is worse than having Don Corleone as your silent partner. The Don, at least, would probably stay out of day-to-day operations so long as you make your payment. But the Doers of Big Things in Washington won't be able to resist the temptation to have Detroit build their proverbial dream car -- which will end up just like that episode of "The Simpsons" when Homer was allowed to do the same thing.

So, for your own well-being, resolve to send as much money back to D.C. as quickly as possible -- and divest yourselves of a partner who will never remain silent.

* Resolve to de-content new cars to make them more affordable.

One reason new cars are so expensive (a typical mid-sized family sedan has a transaction price around $25,000) is that they're fitted with so many standard amenities such as power windows, door locks and AC that used to be optional extras. "Standard equipment" just means you're forced to buy what used to be optional (if you want to buy the car). There's nothing wrong with power gadgets, if you want to buy them -- and more to the point, if you can afford to buy them. The problem is that the average American's income/buying power has flatlined since the collapse of the real estate/credit bubble -- while the cost of new cars continues to trend upward as though nothing had changed. It's economically delusional to keep on building "economy" cars with all the bells and whistles and expecting buyers to pony up when so many are no longer in a position to do so. Thousands could be shaved off the MSRP of the typical car by making power windows and locks, AC, fancy alloy rims and high-priced tires etc. optional extras that people could skip on if they so chose -- or buy à la carte, as individual options rather than being forced to buy a "package" to get the one thing they do want. This might lower the profit per car but if more cars are sold as a result, the net profit overall will be higher -- and the industry that much healthier.

* Resolve to at least provide an "off" switch for annoying buzzers.

You can make a reasonable argument that a commercial garbage truck or similarly super-sized vehicle with limited rearward visibility needs to have a loud buzzer that comes on whenever the thing's put into reverse -- so as to warn anyone who might be back there to get out of the way, pronto. But are buzzers really necessary in a compact-sized passenger car? Toyota is most guilty here but not the only one doing it. Ditto seat belt "reminders" that virtually every new car now comes with. Yes, it's important to buckle up for safety but these buzzers can create enough annoyance and distraction to negate the benefits of buckling up. A person ought to be able to drive his car down his driveway, to the mailbox, without being mercilessly assaulted by the buzzer for not buckling up. Sometimes, even being buckled-up won't save you from the buzzer -- if you have a package on the passenger's seat. Sensors in the seat aren't smart enough to distinguish between a human and a bag of groceries. An "off" switch for these well-intended but often-infuriating buzzing, beeping hellhounds would be welcome.

* Resolve to cut the fat.

Like America, new cars have put on a few pounds -- about 500 pounds, on average. Heavier cars need bigger/stronger engines to perform adequately -- which is why the economy cars of 2010 are actually less fuel-efficient than the economy cars of the late 1980s, despite the huge strides that have been made in engineering and technology. A quarter-century ago, 40 mpg compacts were commonplace. Today, they are virtually nonexistent. And the only reason why is their weight. If the typical fuel-injected, variable valve/cam-timing equipped modern economy car weighed closer to 2,000 lbs. than 3,000 lbs., 50 mpg would be no problem -- and hybrids (and diesel-powered) compacts could probably hit 60 or even 70 mpg.

* Resolve to build more cars in the United States.

Henry Ford was a pretty smart guy. He knew that he could sell cars only if his potential buyers were financially able to purchase them. He thus paid his workers a higher-than-average wage, which he repeatedly increased as the profitability of Ford Motor Co. increased. Modern CEOs and corporate boards have upended this winning formula. They are interested in maximizing "shareholder value" -- the payout to stockholders and holders of high management positions -- by paying workers less and less while demanding ever-higher productivity. If next quarter's earnings can be increased a few cents per share by closing a factory in Detroit and moving the line to Mexico, it will be done -- even though the long-term result of such practices is that average workers can no longer afford to buy new cars. Which of course eventually kills "shareholder value," too.

The problem is that today's corporate boards are often extremely short-sighted. They care about next quarter's earning -- but the company's health five years down the road is something many don't think much about.

If the car industry wants to sell new cars, it needs potential buyers who can afford them. Outsourcing their jobs to Mexico and China so that management and shareholders can make a fast buck off the backs of low-wage stoop labor may be profitable for them right now -- but it's a disaster for America in the long run.

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About the Author

Eric Peters is an automotive columnist and author of Automotive Atrocities: The Cars You Love to Hate (Motor Books International) and a new book, Road Hogs.