Jeremiah 29:11

Detroit's Perception Problem

Starting in the late 1970s, baby boomers began seeing American cars as inferior to Japanese.
The Big Three haven't done much to fix that handicap

by Ed Wallace


Honda Motor (HMC) should have a warm spot in its heart for the Ayatollah Khomeini. If his followers had not overthrown the Shah of Iran in 1979, the company might still be best known for making motorcycles.

By the time of the Iranian Revolution, the small Japanese automaker had won critical acclaim for both its 1973 Civic and 1976 Accord, but when the Shah's fall led to a subsequent energy crisis, suddenly its small cars were in demand. Sales of its four-door version of the Accord and its pseudo-sports coupe, the Prelude, took off. Soon, the company demanded that its dealers build separate facilities for the sale of its products. (Before that, Honda products were often the secondary line for many of the nation's General Motors (GM) and Ford (F) dealers, much as Buick dealers once sold German-made Opels, Pontiac dealers handled British-made Vauxhalls, and Chrysler dealers apologized for distributing French-made Simca vehicles.) The Japanese had finally arrived.

Even though these early Hondas and Toyotas were not without flaws—Hondas had a nasty reputation for fenders that rusted from inside and engines that could stutter from time to time—they delivered exceptional mileage. But the final act that put the Japanese on top came not from their design engineers or marketing departments, but from Washington: In an attempt to help save Detroit, the Reagan White House forced voluntary import quotas on Japanese cars.

What followed was a prime illustration of the Law of Unintended Consequences.

Reagan's Halo Blunder
Instead of giving Detroit time to get back on its feet, the new quotas kept Japanese cars in short supply. Car buyers often had to wait for six months or more to move to the top of their dealer's allocation list for new Accords or similar Toyota (TM) or Nissan (NSANY) products. And waiting created anticipation, which lent a halo effect of mythic proportions to all Japanese products, helping even import cars that weren't as wonderful as our short memories insist.

Reagan's import quotas also led the Japanese to develop whole new lines of vehicles. Because the proposed new divisions weren't named on the quota list, they could be brought to America exempt from Washington's import quotas, returning even greater profits to their corporations. You know those firms today as Lexus, Infiniti, and Acura.

What great irony. Washington's good intentions to save Detroit 26 years ago put Japan's automakers on the map permanently with the American public. Moreover, it happened at a critical juncture: Just five years earlier, the 84 million baby boomers had started turning 30.

In that period, the boomers left behind their '60s idealism; they began to bow to the need for caution and security as they settled down and started families of their own. The only passion from the '60s that this generation never lost was for automobiles. Even today, according to Art Spinella of CNW Marketing Research, the baby boomer generation (those born roughly between 1945 and 1965) outspends the 18-to-49 age demographic on automobiles and automotive services by 3 to 1. That's just more bad news for Detroit, because this generation's final likes and prejudices were formed on its personal chariots during the oil and financial crises of 1979 to 1982.

Changing A Bad Perception
For Tom LaSorda at Chrysler, Rick Wagoner at GM, and Ford's Alan Mulally, the mission of saving their firms is far more complicated than just delivering exceptional products at reasonable prices. The real task at hand is to undo the effects of three decades, in which the Baby Boom generation came to believe that only Japan offered real value while delivering exceptional quality.

RLSH700

A lot of what this guy says is true. The only thing that I will add to this that the domestic manufactures need to make sure they always match their competition in transmission offerings, fuel economy, and hp & tq. This is the area where their coming up short. GM should have either considered offering the Aura in different division, also they need to offer a NON-hybrid I4 option for those who want good fuel mileage.