Talk about a flat learning curve - the US auto industry was bailed out back in 2009 as part of the TARP stimulus package for the banking and auto industry, but they're right back to the same business practices that made them vulnerable to global marketing pressures. If things went south again, they'd be right back in the same pickle. Why?
Well, GM, Chrysler and Ford like to do things the old-fashioned way. Every time gas prices dropped, Detroit made bigger, less fuel-efficient vehicles, and sold them on styling. No need for the average urbanite to drive a sensible vehicle when s/he can have a two ton behemoth to pop down to the corner store for a loaf of bread in. I mean, you look GOOD in that SUV, right? In 2008 there were hundreds of thousands of gas-guzzling high-clearance 4WD vehicles sitting in garages all over the country that have never been off the pavement, thanks to the domestic auto industry's marketing and the public's gullibility. Hummers, Lincoln Navigators, Ford Expeditions - these vehicles are large enough to be seen from the moon.
When the 2008 crisis hit, Detroit was caught flat-footed. Gas prices soared, financing dried up, and people were worried about their jobs - IF they still had one. All Detroit had to sell was the same old boats. Car dealerships looked like marinas with hundreds of unsold yachts docked there permanently. The remaining auto market was leaner and heavily skewed toward smaller, more fuel-efficient imports.
The auto industry bailout required $80 billion of taxpayers money, all but $11.7 billion of which was recovered. That's actually a good deal, compared to the alternative - vulture capitalists like Mitt Romney picking over the carcasses, 4.15 million jobs down the toilet, and a $105.3 billion hit to government revenues if the whole industry had collapsed.
You'd think GM, Ford and Chrysler would have learned their lesson, and gone with a different vehicle lineup post-bailout, but NOOOO, gas prices are low and they're cranking out the behemoths again.
Let's look at one of my pet peeves, the small truck market. This is the cash cow for the Big Three - profits come from domestic pickup and SUV sales, and they're just going through the motions of marketing vehicles overseas. Why are foreign sales so bad? Well, nobody wants to buy pickups and SUVs overseas, and Detroit's small cars aren't competitive. European and Asian auto manufacturers do small cars cheaper, better, and with more styling.
Innovative laziness is reinforced by the chicken tax, a 25% tariff on imported small trucks. this has been in effect since the mid-1960s, and ensures that domestic manufacturers have most of the American market to themselves. As a result of this protected environment, North America is the lost continent in the global small truck market, where dinosaurs still roam. Body on frame construction is the rule, something dropped by European and Asian manufacturers 50 years ago in favor of more efficient unibody construction, and while there have been some advances in engine technology, a GM pickup truck or van looks pretty much like the one your parents bought.
Isolationism didn't work out well for the Chinese and Japanese in the 1700s and 1800s, but the US auto industry is still trying it. The problem is, the gunboats are showing up in the harbor, and the barbarians are coming ashore. Mercedes just announced plans to build the next generation of their Sprinter van in South Carolina, eliminating the knock-down disassembly and reassembly dance they have been doing to get around the chicken tax. Chrysler had given up on building domestic vans, and imports the Fiat/Peugeot/Citroen eurovan that has most of the market in Europe now, made in Mexico and immune from the chicken tax under NAFTA. Ford, to its credit, has seen the writing on the wall, and has a domestic production plant in Missouri for their new euro-type Ford Transit van.
GM? They're not worried. They're still plugging away with the Chevy Express/GMC Savanna van they have long ago written off all development costs on. Why change? They still sell, thanks to low gas prices and the chicken tax. Pay for the materials and labor to assemble them, and the rest is profit.
Here's why. Fleet managers are the most unromantic sorts imaginable, and they're buying Sprinters. Do they buy it for the Mercedes cachet? Did the light reflected from the star dazzle and confuse them? No, they're smarter than the average Lincoln Navigator or Ford Expedition buyer. It's operating costs. Fleet managers are green eyeshade guys. You can pay more for a chassis and get your money back - and more - if fuel and maintenance costs are lower.
I know whereof I speak. I am a consumer consultant for a campervan manufacturer that uses various chassis, domestic and imported. After five years of fulltime RVing in a model built on a Chevy chassis, I now have a Sprinter. The difference is amazing - ride comfort and fuel economy are orders of magnitude apart. I have double the interior volume, and get 4 mpg better than I did with the Chevy. If you're an expediter, Chevys hold two pallets of goods; Sprinters carry three. It's like I got in a time machine and went forward 40 years in time - because in a way I did. As more and more people realize the difference, the market for American-made vehicles based on 1960s technology will evaporate like the morning dew. And Detroit really, really doesn't care. Their quarterly profits look fine - this quarter, anyway.