JAPAN & SOUTH KOREA: STILL VIRTUALLY CLOSED TO U.S. VEHICLES

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Truth With Speedzzter has long pointed out the predatory nature of Japan's domestic auto market. Japan's decades of unfair restraints on automotive imports combined with its predatory export/invasion practices are generally ignored by both the internationalist Council on Foreign Relations-types and most clueless "Consumer Distorts" appliance motorists.

With the U.S. reeling under 10.5% unemployment, monsterous trade deficits, the loss of a third of U.S. industrial jobs since the 1980s, and Detroit in tatters, the vast unfairness and stupidity of tolerating Japanese protectionism should be obvious.

For skeptics, Gary Hoffman, a correspondent with AOL Autos, fills in some of details in a brilliant column entitled "Why Don't We Sell More Cars In Japan?"

Hoffman writes,

While Korea and Japan no longer directly restrict U.S. imports, they do put up barriers to them, said Chris Vitale, president of a Michigan-based group, FairImage.org, which promotes open trade in the auto industry.

"For all intents and purposes, the Japanese market is closed to everyone," Vitale said. "No one gets a foothold." . . .

Vitale and other U.S. critics of Japan and Korea point to "barriers to entry" -- obstacles that may be more effective than tariffs and quotas. They include inspections, complicated distribution systems and taxation.

The result is a virtual shut-out for American producers in Japan and Korea.

Chevrolet sold one vehicle in Japan for every 1,300 Toyotas sold in the U.S.

Ford sold about 2,500 vehicles in Korea last year, compared to nearly 330,000 Hyundai and Kia vehicles imported to the U.S.

Those are shameful statistics. Every dealer, salesperson, advertising firm, transplant factory worker, race team, politician, and consumer collaborating with the Japanese (and now the protectionist Korean) invasion and occupation of the U.S. auto market ought to be made to answer for their support of a system that permits such an imbalance.

PEARL HARBOR DAY SPECIAL: FIVE REASONS NEVER TO BUY JAPANESE AUTOS

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Bangshift.com posted a fine tribute to the 2,388 (or more) Americans who lost their lives sixty-eight years ago in the savage, unprovoked attack on Pearl Harbor, Hawaii.

Although Franklin Delano Roosevelt claimed that the Japanese attack would "live in infamy," you could hardly tell it by looking in the average American parking lot today. We might not have had more Japanese cars in America now if the Japanese had won World War II! (Japan may have lost the shooting war, but they've arguably won the "economic war" that followed)

Here's Truth With Speedzzter's comment from Bangshift.com:

I'll bet all the kids and "appliance motorists" driving the Toyotas and Hondas are really moved by all of this. . . .

Awhile back I posted in a discussion at Seeking Alpha (http://seekingalpha.com/article/128958-five-reasons-not-to-buy-american-cars) "Five reasons NEVER TO BUY A SINGLE THING FROM A JAPANESE AUTO COMPANY":

1. Protectionism -- Japan's car makers incubated in protectionist climate which prevented the Detroit 3 from making more than token investments in Japanese OEMs or selling cars in their market.

2. Predatory Business Model -- Japan's car makers were only profitable because of exports, which created huge trade deficits.

3. Lack of Domestic Content -- Just because a Japanese invader car is assembled by non-union labor in the U.S. doesn't mean the parts come from here. American cars support hundreds of thousands more OEM parts supplier jobs than do the invading Japanese transplants.

4. Lack of soul -- excluding a handful of limited-production sports models, Japanese vehicles have all of the driving panache and "soul" of a refrigerator. Buying a Japanese sedan is like wearing a $20-80,000 badge proclaiming that "I'm a self-centered weasel who wouldn't know an exciting car if it ran over me."

5. Government Subsidies -- According to Toyota-ex Jim Press, the Japanese government virtually paid for all of the electric hybrid technology that the tree huggers are ramming down our throats. And its well documented that the Japanese government has provided scads of subsidies and incentives for Japan's invasion of the U.S. auto market.

6. (Just like Joe Isuzu, I lied -- there are more reasons not to send any more American money to Tokyo)

Buying Japanese deprives the Detroit 3 and their suppliers of necessary investment capital.

7. Bataan Death March.

8. Battle of Midway.

9. Iwo Jima.

10. Guadalcanal

11. Battle of Leyte Gulf

12. Saipan

13. Battle of the Java Sea

14. Kamikazes (not the drink)

15. Nanking Massacre (300,000 Chinese People Killed, 20,000 Women Raped)

16. Causes thousands of quality U.S. jobs to be outsourced to Asia.

17. Destroys many American communities who depend on manufacturing.

18. Subsidizes the . . . sexist, and zenophobic Japanese culture.

19. Increases the trade deficit.

20. Hurts the value of the U.S. Dollar

21. Multiplier effect (dollars staying in the U.S. will keep circulating in the U.S. economy, creating more jobs and improving the standards of living)

22. National pride -- Let's act like AMERICANS!

23. There are plenty of excellent vehicles sold by Detroit (don't buy into the sycophantic pro-Japan bias of the elite media and the self-selected, methodologically-invalid "Consumer Distorts" surveys.)

24. Your grandchildren -- you won't have to look them in the eye and explain why you selfishly helped bankrupt the U.S. auto industry.

25. The Japanese are apparently incapable of making a Mustang or a Shelby GT500, or a Corvette, or a "real" Challenger, or any legitimate performance car that isn't festooned with a hideous "body kit" and/or a stupid "boy racer" wing.

26. When left to their own devices, Japanese styling is "Tokyo-at-night" terrible. The bland exceptions to this rule are from Western collaborators. Thus, if we give the auto business over to the Japanese, we'll get more bland and hideous vehicles.

27. Safety. For example, Toyota trucks have been recalled for fatal steering, brake and airbag defects. Thousands have been killed in undersized, understructured Japanese cars over the years (just look at how some of them fold up like a cheap suit when crashed). Toyota has been sued over the defective seat belts and deadly door latches of its Corolla models. And this is just the tip of the safety iceberg.

[UPDATE: Here's some more "love" courtesy of Caddy-V -- a reader over at Autoblog:

Quote
"They're only looking at the Toyota's because there's a sign on one end that says
'Please be very quiet and listen carefully and you can hear our frames rust.' [ http://www.toyotaframerust.com/;http://www.tundraheadquarters.com/blog/2009/04/27/toyota-tundra-frame-rust/]
on the other end a sign reads 'Toyota will not be held responsible for any injurys from any display cars that accelerate unexpectedly.' [http://www.safetyresearch.net/2009/09/18/fatal-california-crash-highlights-toyota%E2%80%99s-sudden-unintended-acceleration-problem/]
And then the sign on the Tundra. 'Please do not sit on Tailgate. 25# weight limit strictly enforced. Our rugged Truck that is changing it all is designed for all show and no go.' [http://www.tundrasolutions.com/forums/tundra/115222-toyota-tailgate-facts-2/]
And last but not least is the sign on the Camry. Guaranteed not to sludge for at least two oil changes.'" [ http://www.autosafety.org/toyota-oil-sludge; http://www.youtube.com/watch?v=fs7WI2s-CVw]


28. Repair costs. When they do break down (and they're machines, they all do -- have you ever seen a Japanese traitor/invader dealership without a service department?), Japanese cars are horrendously expensive to repair. One study found that building a typical $20,000 Japanese car out of replacement parts would cost $60,000 (excluding labor, of course). And when was the last time you saw a 20+ year old Japanese car still on the road?

There's probably about 500 more reasons NEVER TO BUY FROM A JAPANESE CAR MAKER!

SETBACKS FOR THE JAPANESE INVADERS

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The May 2009 sales reports show that Ford Motor Company suffered less sales erosion by percentage than any other major auto company in the U.S. market. Although Ford’s sales were off by a reported 24.2 percent compared to May 2008, it actually gained market share.

Meanwhile the leading Japanese invaders cratered. The “Evil Empire” (Toyota) was down a whopping 40.7 percent and was in third place behind GM and Ford in the U.S. market. Honda also tanked, losing a massive 41.5 percent of sales as compared to last May. Nissan was also down by 33.1 percent.

Are Americans starting to figure out that buying Japanese instead of a Detroit 3 product creates huge net losses for our economy?

Are more buyers realizing that it’s simply bad form to turn their backs on American industry at time of grave economic crisis?

Are Americans starting to fight back in a small way against globalization?

Is the message starting to sink in that buying a Detroit 3 product supports more quality OEM jobs than purchasing a foreign vehicle that's merely assembled (often mostly by robots) in a low-wage “invader” plant?

Are Americans finally starting to rally to defend our auto industry from the predatory Japanese takeover?

Are Americans finally starting to discover that Ford quality is competitive with Japan’s government-protected and subsidized automakers?

Or is it something else at work, such as inferior demographics. Most certainly, the credit crisis has damaged the ability of young, sub-prime borrowers to finance new vehicles. Undoubtedly, the customer mix of the Japanese invaders has always trended younger and is most likely less creditworthy. Thus, it seems possible that the Japanese invaders would suffer disproportionately more in a broad market sales downturn.

Or could it be that the Korean attack at the margins is starting to slash the Japanese invaders in entry-level and youth market segments?

It’s hard to get too excited about one month’s sales data. Moreover, FoMoCo is still shrinking, albeit not as fast as everyone else.

Most certainly, Team Japan will engage in brutal “kamikaze” marketing incentives and smashmouth tactics to fight any erosion in their market share. And millions upon millions of short-sighted Americans still fail to realize the danger of Japan’s predatory automotive policies and the unsustainability of our trade deficits. They selfishly ingest the “appliance motorist” myths about Asian imports and cling to dated stereotypes about American vehicles. They give no concern about the greater effects that their vehicle purchases have on sustaining the American economy.

Still, the May 2009 sales figures inspire some hope for supporters of real American vehicles in general and Ford in particular.

OBAMA, THE U.A.W. AND GM: TWO FLEETS TO THE WIND

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With all the talk of the impending, Obama-backed “part-out” of General Motors (perhaps the new smaller GM will be truthfully known as “Government Motors”), some contrarians are betting that Obama and the Car Czar Central Committee are just bluffing.

The Wall Street Journal’s Holman W. Jenkins, Jr. is apparently one of the “no bankruptcy” contrarians.

Why?

Even a "prepackaged" filing runs too much risk of a judge imposing more "sacrifice" on the UAW than the administration is prepared to tolerate.

GM bondholders understand this: They've been intransigent precisely because they calculate the UAW is too important to Democratic electoral politics for Mr. Obama to risk losing control of the reorganization process to a bankruptcy judge.

The GM bailout has become a political operation run out of the White House. It will stay that way.

Jenkins also succinctly identifies the real problem “the UAW captivity”

That captivity, imposed by the 1935 Wagner Act, is the sole relevant factor distinguishing the Detroit Three from the world's other auto makers. The result is downright weird: "Our" auto companies operate in a world that's less "American," in a sense, than the Japanese and German companies that come here and enjoy a free labor market.

And as Truth With Speedzzter readers already know, the “captivity” is reinforced by the byzantine regime of Corporate Average Fuel Economy Standards (CAFE). Jenkins explains:

The Wagner world was given a second lease on life by a peculiar feature of Congress's 1975 fuel economy law. Known as the "two fleets" rule, it effectively forces Detroit to make its cheap small cars in high-wage domestic UAW factories, even if it means losing money on every car. The rule has no fuel-economy function. Its only purpose is to shield the UAW monopoly inside each Detroit auto maker from global labor competition.

* * *

The UAW's Mr. Gettelfinger had testified, coyly, during Congressional hearings that failing to renew two fleets might cost 17,000 auto workers jobs building small cars. He didn't say that two fleets is in fact the fulcrum by which, for the past 30 years, the UAW has been able to defeat globalization.

Then Senator Obama, of course, voted in lock-step with Ron Gettlefinger in support of the “two fleets” CAFE standard.

The “two fleets” rule has also led to other bizarre market disruptions since 1975, such as the expatriation of assembly operations for V8-powered cars (which leaves Ford’s Mustang and GM's Corvette variants as the sole-surviving U.S. assembled RWD V8 automobiles). Even if GM and Chrysler wanted to build "pony cars" in the U.S.A., the "two fleets" calculus would prevent it.

A bankruptcy judge can’t do anything about the inane “two fleets” standard. But he can attack the very thing that “two fleets” was meant to shelter.

If GM ends up in a “prepackaged” bankruptcy, the U.A.W.’s “captivity” could be slammed (or at least painfully trimmed) by a bankruptcy judge. The “let’em fail” chorus has repeatedly reminded us over the past six months that the airlines have shed unions in bankruptcy. Even though Ford has renegotiated with its “captors” (and even extended them a seat at the big table), the Glass House Gang is certainly worried that the new, post-bankruptcy “Mini General” will receive a more competitive labor deal from the bankruptcy court.

Jenkins and GM’s bondholders are betting that Obama – who certainly doesn’t want to repeat Jimmy Carter’s one-and-done tenure in office – will ultimately do the U.A.W.’s bidding and keep GM out of bankruptcy court.

Of course, one wild-card in this scenario is the union-backed “card check” legislation, a/k/a the Employee Freedom of Choice Act. Obama and the Big-Labor-sycophantic Democrats see this as the “magic bullet” for almost instant unionization of the Japanese invader assembly plants in “Right to Work” states.

Truth With Speedzzter suspects that Obama wants to keep GM on life-support long enough so that the horrible, anti-secret ballot “card check” law can be passed and the U.A.W. will have an opportunity for an expansive new revenue stream.

If the U.A.W. gets this arm-twisting gift from the Obamacrats, the U.A.W. could possibly have a stronger argument against the bankruptcy court’s rejection of GM’s “pattern” contract. Right now, the court would be looking at GM’s “scab” competition as setting the market price for assembly labor. GM’s platinum-plated labor agreement clearly exceeds the prevailing market price. Thus, the court could easily reject it. In Ron Gettelfinger’s probable dream world, "card check" unionization of the Japanese invader plants could slash Tokyo’s cost advantage on U.S. assembled vehicles and would result in a quick windfall for organized labor. It would also drive up the prevailing market price for assembly labor and protect the U.A.W.'s other contracts.

Whether all of this would actually work is conjecture.

But no one should forget that Obama could not have won election (and cannot win re-election) without the strong support of organized labor. And notwithstanding his breezy rhetoric, its unlikely that he won’t continue to “dance with the ones who brung him.”

NOT EXACTLY IMMEDIATE "PARITY" WITH THE JAPANESE INVADERS

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"Over the next couple of years with the buyouts and with the ability to leverage some of the other tools that are now in this agreement, we think we can get there within the next couple of years on parity with the transplants." - Joe Hinrichs, Ford global head of manufacturing."

Lots of weasel room in that quote.

BUSINESSWEEK’S ED WALLACE GETS IT PARTLY RIGHT

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In a BusinessWeek column entitled “The Boomers Stop Buying,” journalist, historian and talk show host Ed Wallace gets it partly right.

Wallace opines:

Detroit's loss of market share is generational in character. . . . When the first two-thirds of the boomers came of age, Detroit was still king and gasoline was cheap; the last third entered adulthood after two major energy crises and the rise of Japanese automakers. In their youth the larger group of boomers had lusted after Camaros, Mustangs, Monte Carlos, and Cutlasses. Exciting cars didn't exist as the youngest boomers turned 21 in 1985; and though the following year set a record for car sales, it also marked the start of the decline of Oldsmobile.

He further points out that while the parents and grandparents of boomers correctly recognized that Detroit had built much of modern America, “unconditional love, or "Detroit or nothing" started crumbling” with the later generations.

Our parents and grandparents believed in and were loyal to what Detroit stood for: American business and manufacturing dominance, national pride, and superiority. Early boomers focused only on Detroit's products; we were the ones who could become fickle.

The coup de gras was Detroit’s failure to appreciate the Europeanization of the luxury auto market in the 1980s and 1990s, leaving upwardly mobile boomers with no place to go but to imports.

Wallace, of course, is pessimistic, expecting America’s automotive traditions to collapse into a heap of $7.00/gallon gasoline, baby boomer retirement parsimony, and an impoverished middle class with less new vehicle buying power than even during the Great Depression.

Wallace does omit a few points:

1. The seeds of Detroit’s failure to nurture the luxury market were sown in the 1950s with:

(a) Henry Ford II’s abandonment of the Continental Division, leading to the domestic industry abandoning building “World Class” luxury cars and engineering subsequent American luxury cars to a mass market price point;

(b) the public safety lobby which killed any replication of the German Autobahns in America, and saddled our new interstate highway system with excessively low speed limits, which hampered demand for European-style handling and performance capabilty, as well as reducing pressure on American driver education programs to actually teach car control (Thus, America's mass market near-luxury cars became isolation chambers that failed to appeal to boomers who learned about cars in the First Supercar Era);

(c) the 1957 AMA racing ban, which delayed the development and implementation of new motoring technologies;

(d) the recession of 1958, which started Detroit down the road of cheapening the design features of American cars.

Myopic hacks such as Lee Iacocca, Red Poling, and Roger Smith merely were playing the poor hands dealt by these conditions (while being focused only on short-term stock share performance and personal career advancement).

2. The lack of exciting Detroit cars available to the last third of the Boomers was caused in large part by failed fiscal and regulatory policies out of Washington D.C. Washington’s failure to get inflation under control until the late 1980s crushed Detroit’s cost structure.

Washington’s failure to insist on open markets in Japan and its support for preventing American investment there allowed the Japanese auto industry to incubate without any meaningful competition and led directly to their predatory export-driven business model.

The regulatory polices of the 1970s made it almost impossible for Detroit to offer much excitement in the youth market. Corporate Average Fuel Economy regulations restricted supplies of the sorts of cars Americans wanted to buy and artificially drove up prices. Only a few dim lights, such as the Mustang 5.0 and the Buick Grand National were still shining by 1985 – and both of these cars were in short supply at dealerships and not being developed as much as they should have been because of CAFE.

Washington’s labor policies led to the Detroit 3 being saddled with expensive and demanding unions, while the Japanese invaders were free to set up final assembly plants in union-free areas.

The Detroit 3 cost structure created by 1930s forced unionization, 1940s wage and price controls (which created the platinum fringe benefit plans in the first place), inflation, and a steady drip of unfunded regulatory and litigation-driven mandates, made the production of cars developed and built off-shore or partially in non-union plants highly advantageous. (Note that in the light truck market, tariff policy protected domestic trucks, and looser regulations held the prices down, so American trucks and SUVs tended to flourish.)

Thus the “perfect storm” that Wallace writes about started building decades ago and was caused by many forces that were within the government’s control. To blame only Detroit, as Senator Richard Shelby and a number of other know-nothings do, is wholly inaccurate.

Certainly, because it costs virtually as much to engineer, tool and build a big car as it does a small car, Detroit in decades past has produced some poor “entry level” vehicles. And the bean counters did cause Detroit to miss many opinion-leading niches over the years in pursuit of the broader, blander mass market. And certainly model proliferation and brand management diluted the identity and market strength of some brands. Both the Detroit 3 and its automobile dealers have been all too ready to penalize buyers of “exciting” cars with unreasonable mark-ups and limited inventories as well. Moreover, the Detroit 3 have been inconsistent in pursuing increases in efficiency and in integrating these advancements into well-rounded, functional, higher-performing vehicles. So Detroit cannot escape all blame for the current mess.

However, what Wallace brushes over is the prime role that Washington D.C. played in the destruction of the “Arsenal of Democracy” and the Detroit-based engine which powered the growth of America’s middle class in the 20th Century. He ignores that Washington D.C. facilitated the Japanese invasion and takeover of the American automobile market. He apparently doesn’t see that America’s politicians wholly missed the “second Pearl Harbor” which occurred in our automobile markets.

IS TURBO MAGAZINE THE LATEST VICTIM OF THE BAD ECONOMY?

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As the Detroit 3's "Drive On Washington" has arrived and the honchos of the General Motors, Ford Motor Company, and Chrysler are fighting for the very life of the U.S. Auto industry, here's a grim diversion.

The Turbo Magazine message board has a post questioning whether Turbo Magazine is about to be shuttered by corporate parent Source Interlink.

While the poobahs at Turbo apparently can't put down the latest "JDM" bits off the boat from Tokyo long enough to squelch or confirm this nasty rumor, the question did prompt this prescient response from one reader:

It wouldn't surprise me if it did [shut down].

I started reading Turbo with Volume 1, Issue 1 back in the mid '80s. I have a copy of every issue of Turbo ever published (except one that the post office lost back in 1993).

The quality of the magazine has declined precipitously over the past fifteen years. When Turbo started it had a balance of American and import cars, as well as D-I-Y hacks and all-out pro builds.

When the U.S. automakers abandoned OEM turbocharging in the early 1990s, Turbo started changing into a blingy Japanese tuner rag. At some point, it even became hostile to power-adder V8s, notwithstanding huge advances in big-inch turbocharging and an explosion of "heads-up" V8 turbo cars in drag racing.

Turbo missed out on grassroots legends such as Mike Sitar They ignored the huge "turbomustangs" message board and on-line community. They never covered the sorts of budget hacks and hops common to Australia's Autospeed magazine. They ignored a whole generation of American high-tech performance cars.

Instead, they concentrated on trying to push Japanese products and bottomless-wallet professional builds.

If someone relies only on Turbo these days, they'd be mislead into thinking only four- and six-cylinder cars of 3.8 literes or less are ever turbocharged.

Sure, Turbo had to do what it took to survive and it needed to serve its advertisers (readers are the product magazines deliver to their real customers -- adverstisers). But Turbo's myopic shift to an exclusive focus on the trendy "JDM" tuner "lifestyle" has left it very vulnerable.

The latest USPS report on subscribers, sales and readership shows that Turbo is not delivering very many eyeballs to their advertisers anymore.

TURBO DIDN'T EVEN BOTHER TO ACKNOWLEDGE OR CELEBRATE ITS 25th ANNIVERSARY! That ought to be a sign that the current editors don't really have a clue.

The collapse of the Japanese tuning scene hurts the American imitators,too(In Japan there's been lots of bankruptcies, fewer big-buck builds, too much "youth market" action in the 660 cc micro-vehicle class).

One of the Turbo editorials this month attempted to downplay the collapse of the tuner scene, claiming that the "hard core" would keep advancing the sport. But it sounded a bit like whistling past the graveyard to this "OG" reader.

Now with the American economy in the tank, weak books like Turbo are not well-equipped to weather the crisis.

A broader readership base might have saved Turbo. But spending 15 years running off almost all of the readers interested in "turbos and high-tech performance" as applied to (a) V8s,(b) cheap used cars, (c)American cars, and (d)in innovative home-builds is a formula for ruin.

Perhaps I fall outside of Turbo's coveted Wii/PlayStation demographic (after all I'm still ticked over that Pearl Harbor thing & post-WWII Japanese protectionism in their domestic auto market), but my subscription money spends just as well as the duckets of somebody born in 1990.

If Turbo folds, I just hope that they don't start sending me garbage like Super Street or Sport Compact Car to fill out my subscription . . . .

Well said! Let's hope that the staff of Turbo takes this criticism to heart.

IS HIGH PERFORMANCE IMPORTANT TO FORD MOTOR COMPANY?

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Ford Motor Company's rumored decision to abandon efforts to create a RWD sedan from the Australian Falcon and Speedzzter's negative reaction have triggered a debate about the importance of high performance models at Ford over on Autoblog.

Red Star: Why is performance so much important? How many performance vehicles does Toyota have? NONE. And they are doing better than any other manufacturer in the world.

Speedzzter responds:

1. As any Lexus dealer will be overjoyed to tell you, Lexus (a marketing division of Toyota) offers more RWD vehicles with in excess of 280 horsepower than does the now-Jaguar-less Ford Motor Company. Moreover, Toyota has heavily marketed the performance of the DOHC V8 version of the Tundra pickup truck. So it's wholly inaccurate to claim that Toyota offers no performance vehicles.

2. Toyota is also outspending Ford on world motorsports competition, strongly suggesting that Toyota recognizes the importance of at least the perception of "performance" to a significant number of vehicle buyers.

3. Every Scion (a marketing division of Toyota) catalog from the inception of the marque has featured page-after-page of tuner information and Toyota Racing Development (TRD) parts in an effort to position the Scion brand as a credible youth market alternative to Honda, Subaru and Mitsubishi.

Thus, it's a vast oversimplification to suggest that because Toyota's mainstream sedans (Corolla, Camry, Avalon and Prius) are as bland as warm milk and as fun to drive as a flaccid rental car that Toyota has no interest in "performance."

However the success of Toyota and the other members of "Team Japan" is a far more complicated topic.

A couple of other Autobloggers weighed in on that point.

The Other Bob @ Mar 26th 2008 10:19PM
Red Star- The American companies already tried to "out Toyota" Toyota. That did not work. They are succesful [sic] when they return to their roots, as Chrysler used to do and GM is now doing.


Mike Ishi @ Mar 27th 2008 1:44AM
The Other Bob - (Please note that this is just my opinion.)

The American companies did an awful job at trying to beat Toyota. They didn't offer reliable, easy to love, family oriented vehicles. They didn't find a vaguely defined niche like Honda and offer reliable, easy to love, and fun vehicles over purely powerful vehicles like the pony cars of the American companies.
* * *
The American companies have to offer universality over testosterone. It changes the entire feel of the company and the company's products. It makes the company more universal. For the most part, niches aren't useful unless they're vague. And I know a lot of people will pull up the "oh yeah, but in the late 60's the pony car niche did excellent!" Well, times are completely different now and focusing too much on a "pony car" niche (that truly isn't as big as domestic fans wish it was) is an excellent way of walking closer and closer toward bankruptcy. The American companies should still offer a pony car, but leave the whole "pure performance" thing in that car and not let it trickle out into the company's other products. And here we learn the lesson of diversifying.

As a financial analyst, I have absolutely no idea how they cannot understand what they've been doing wrong for so long.

Speedzzter responds:

It's a given that the bean counters always hate niches and, more specifically, performance cars. Such "specials" always offend the bean counter's inherent "lowest cost per unit" mentality.

Yet the success of Toyota and the other Japanese brands cannot be reduced down to empty platitudes such as the "easy to love, fun vehicles" or "universality over testosterone." Such oversimplification ignores both the sweep of automotive progress and the unique factors which positions Japan to capitalize on the marketing automobiles in the "regulated age" of motoring.

A HISTORICAL PERSPECTIVE

Legendary road tester Tom McCahill once ran a retrospective comparison test between a couple of well-preserved 1946 cars with their descendants then being sold in 1966. The performance difference was virtually night and day. From the 1946 baseline, the rather ordinary, non-"muscle car", bread-and-butter 1966 sedans were supercars.

One could run a similar test between current mass market models and an average 1966 "mainstream" model today, and while the differences wouldn't be as dramatic as McCahill reported, the modern cars would be significantly higher performing in virtually every measure.

If one could somehow transport an average 2008 car back to 1966, it would be instantly viewed as a supercar and would outperform virtually 98% of what was offered for sale during the "First Musclecar Era."

The point is that progress in automobility has always focused on improved performance at ever lower relative price points.

One only need to watch a collector car auction or walk through a well-stocked automobile museum to see evidence of this phenomenon. An 1886 Daimler has as much in common with a current Mercedes-Benz as a hacksaw does with a plasma cutter.

Henry Ford -- who arguably is the inventor of the "universal car" and of the mass marketing of automobiles -- could not have conceived of even the performance in a Hybrid Escape as a mass market vehicle during the days when he was promoting the Model T as the apogee of the "universal car." But the market quickly passed the Model T by, and Ford was forced to respond.

The brilliant monoblock flathead V8 eventually resulted. And Ford's "democratization" of V8 power fueled explosive growth in the social movement of "hot rodding" and created the expectation that advanced performance wasn't an entitlement limited to those who could afford large, handbuilt, state-of-the-art luxury cars.

Of course, Ford's flathead V8 was soon passed by as high compression, overhead valve technology took hold.

Automotive progress, for the most part, is a history of improving the performance of virtually every aspect of motoring.

Thus, what stands in a particular age as "high performance" is that which is on the leading edge of progress. However it is usually objectively benchmarked by objective and subjective factors of acceleration, lateral acceleration, deceleration, and speed.

Given human psychology and physiology (which change, if at all, much more slowly than automotive evolution), our collective perceptions of legendary high performance start forming a consensus around easily recalled objective measurements and our subjective perceptions of them. Most people would "feel" that a vehicle pulling over .8g in lateral acceleration has a high level of grip. Most would "feel" that 0-60 m.p.h. (or 0-100 k.p.h.) times of less than 6-7 seconds are quick and times under 5 seconds as extremely quick. Most would "feel" that the ability to hit 100 m.p.h. or better in the standing start quarter mile is very potent.

Certainly, the bean counters would start pointing out the law of diminishing returns and claim that nobody "needs" such performance. Speedzzter has previously addressed many of these arguments in "Click, Clack and the Five Hundred Horsepower Ford."

Certainly, even if the "need" point is conceded for the purposes of argument, an influential and loyal segment of the automobile market "wants" such performance.

However, the important point to remember is that real progress requires continuing to "push the envelope." It requires continuing to press for greater subjective and objective performance.

We wouldn't have light, efficient twin-cam, multi-valve engines or sticky radial tires or life-saving anti-lock disc brakes as mainstream features if prior generations of automakers hadn't developed such technologies in motorsports and high-performance road cars.

German cars are held in high esteem not simply because of Germany's traditions of detailed craftsmanship. German cars are respected and used as benchmarks (even by the Japanese) because they are typically engineered to withstand the rigors of the unlimited sections of the German Autobahns. Consequently, Germany has developed a strong tradition towards advancing the art of the automobile and broadening the availability of its performance.

America, on the other hand, has too often focused on the myopic bean counter's mentality. Although American automobility experienced significant developments in the years immediately after World War II, after 1957 Detroit's pursuit of new performance technologies ossified toward the end of the unregulated age (Although some of this was the fault of economic conditions and the emerging power of the trial-lawyer-driven safety lobby, the predominant American motorsports sanctioning bodies and the hegemony of the bean counters deserve the lion's share of the blame). Thus, for all of its celebration as the ultimate expression of the unregulated automobile, the 1960s American muscle car was a primitive, inefficient and under-developed machine.

The first regulated automobiles of the 1970s and early 1980s regressed in many objective measures of performance as the automakers struggled with scores of unfunded mandates and inflationary pressures. But the regression of the 1970s and early 1980s has proven to be an anomaly, as once regulatory stability and technology caught up, the march towards improved performance resumed in full force.

It was during the doldrums of the 1970s and early 1980s that Toyota and other Japanese manufacturers started asserting their power.

The success of the Japanese has been built on a complex foundation. Japanese automakers, even in their domesticated transplants, have traditionally had a much better labor cost structure.

Japan, as a small country, has been forced to become predatory in international trade. Japanese automakers were allowed to incubate in a totally protectionist home market and have received massive governmental subsidies at critical times from the Ministry of International Trade and Industry. Even recently, Toyota-ex Jim Press admits that the Japanese government funded virtually 100% of the electric hybrid and battery technology that is showcased in the iconic Toyota Prius.

At the same time, the U.S. government has maintained an almost adversarial relationship with Detroit automakers, only easing a bit at times -- such as when Chrysler faced bankruptcy in the late 1970s and early 1980s. With the exceptions of the so-called "chicken tariff" on imported light trucks, the Reagan Administration's voluntary import quota system, and the North American Free Trade Agreement, Washington has done almost nothing to help Detroit adjust to the world of the highly-regulated automobile. Instead, it has piled on regulation after regulation and unfunded mandate after unfunded mandate. It has sided with organized labor at most every turn (except NAFTA) and has expected the Detroit manufacturers to do more with less. And Detroit has underwritten the vast majority of the costs for developing compliance technologies which the World's other automakers have grabbed at fractions of the price.

But fundamentally, Japan had (and still has) another advantage over Detroit: a one-thousand year tradition of miniaturization and reductionism.

Over twenty years ago, Tom Peters wrote the following in Thriving on Chaos:

[I]n Smaller is Better: Japan's Mastery of the Miniature, Korean writer O-Young Lee suggests that "Japan, with its tradition of smaller is better . . . its sensitivity to information, is perfectly positioned to take the lead in the coming age of reductionism." . . . The language is the most important clue. For instance the Japanese word for "craftsmanship" is literally "delicate workmanship," and that for feminine beauty is "detailed woman. On the other hand, "large" is literally "not delicately crafted" and "worthless" is "not packed in" There are so many more prefixes, more frequently used, that mean "small" than "big." And so on.
The folding fan, miniature gardening, the tea ceremony, and other ritual staples of Japanese life all stem, according to Lee, from a passion for reductionism . . . . In fact, the Japanese are contemptuous of almost everything large, says Lee, adding "Nothing comes harder to the Japanese than living with objects of no use. They cannot bear the unnecessary, the excess." . . . "It has been a thousand years since Sei Shonagon wrote 'All things small, no matter what they are, all things are beautiful.'"

W. Edwards Deming's statistical process control of quality and "continuous improvements" thus fell on very fertile soil when it was introduced during the post-World War II industrial reconstruction of Japan. Its focus of efficiency through quality obviously dovetailed with Japan's thousand-year tradition toward smallness, detail and miniaturized efficiency.

Thus, when it came to competing with the hastily conceived, rushed-to-market Chevrolet Vega, Ford Pinto, AMC Gremlin and other early U.S. subcompacts in the 1970s the Japanese -- and Toyota in particular -- responded with a diverse and highly- developed FULL LINE of brilliantly miniaturized vehicles. And as the Japanese OEMs have steadily moved upmarket, they have blended their thousand-year tradition for detailed miniaturization with the best European technologies and Western aesthetics.

Detroit's cost structure and its bean-counter driven pressure for economies of scale have never permitted it to efficiently compete with "Team Japan." For three decades, Detroit has been playing catch up. But given Toyota's huge lead, merely focusing on inferior duplicates of Toyota products would not be sufficient to insure Ford's survival.

That's not to say that Ford shouldn't be focused on diversifying its small vehicle line up. Ford clearly does not have sufficient model diversity in the U.S. to take on a full-line powerhouse such as Toyota, notwithstanding any differences in perceived quality.

As Tom Peters also wrote (back in the days when Ford was setting the standard for profitability) "There are no excellent companies. The old saw 'If it ain't broke, don't fix it' needs revision. I propose: ' If it ain't broke, you haven't looked hard enough.' Fix it anyway."

Peters' philosophy is wholly consistent with a drive toward increasing the performance and efficiency of every aspect of the automobile. Yet Ford basically coasted for over a decade on the inertia of the burst of creativity borne out of its near-death experience in the early 1980s. And for the better part of this decade, Ford has been reaping the bitter harvest of failing to advance.

Ford's D.N.A., for all of its weaknesses, contains a virulent strain of racing and performance. Toyota's heritage is as an automatic loom maker. It has to hire legions of outsiders to copy what seems inherent to the soul of Ford in motorsports. For Ford to limit this persona to a single heritage/retro "pony car" is as foolish as believing that it could fend off Toyota's diverse, highly practical model line-up in the 1970s with the Pinto, Mustang II and the imported Courier.

Ford is at the point where it can either choose to integrate the strengths of its heritage with the demands of the modern World vehicle market, or it can retreat to merely aping the current "flavor-of-the-month." Ford failed when it attempted to copy GM in the 1950s. And it will surely fail if it merely seeks to copy Toyota today.

But on the few occasions since the days of the Model T when Ford has stood out, Ford soared when it adapted elements of its heritage with advances in the art of automobility and packaged them in practical forms that were accessable to middle-class niches. Icons such as the Flathead V8, the Mustang, the Thunderbird, the Explorer and the modern F-series trucks are all examples where Ford took something good at its core and "hit'em where they ain't."

But a practical RWD sedan which can also be offered as a performance niche model has even more important psychological aspects.

The laws of physics and overwhelming amounts of data from motorsports prove the superiority of rear wheel drive for enthusiastic driving on most common surfaces. Thus, RWD remains as an essential element of the modern sports/touring car. A modern RWD Ford sedan would be a statement that Ford is committed to building "athletic, state-of-the-art" vehicles on an architectural par with the market leaders in Germany and Japan (and across town at Cadillac).

It would, at a minimum, also help Ford retain its loyal performance customers when they "outgrow" pony cars, or when pure sports cars prove impractical. Just because one's family is too large to fit in a cramped Mustang or a two-seat GT supercar doesn't mean that the alternative must be the universal blandness of an "orthopedic-shoe-on-wheels" such as an FWD Camry knock-off. There is an obvious middle ground.

Advancing the art of automobility with high performance cars also makes a statement of engineering prowess and an intention towards innovation. BMW is respected as the "Ultimate Driving Machine" because BMW has never remained complacent. Instead it has continued to push the development of all its models with a strong emphasis on high performance. Although most BMW buyers don't select an M model, the engineering and performance image of these BMW halo models permeates the entire lineup. Moreover, BWM's high performance cars are evolutions of its mainstream models. They are not just dedicated sports cars. Developing such vehicles disciplines the entire organization and helps define BMW's unique and exciting niche in the marketplace.

To anyone attending the various automotive events around the U.S.A., it's clear that virtually all remaining enthusiasm for Ford's various brands is heavily centered around performance. Thus, Ford's largest mass of loyal customers are performance customers. One seriously doubts whether there will ever be an outpouring of enthusiasm for the boring Ford Five Hundred/New Taurus or even the SVT-less Focus, notwithstanding their obvious appeal to those bean counters who demand "cost efficiency at all costs," fuzzy niches, economies of scale, and "universal cars."

The dustbin of automotive history is littered with companies that failed because they pursued blandness and boredom instead of uniqueness and excitement.

(In fact, in 1908, when Henry Ford first offered the prosaic Model T, it was muscular in comparison to legions of other cars at that price point. How many of those other companies survive today?)

To truly compete in the marketplace, it's common sense that you need to offer a product that is superior to your competitors in some aspect -- price, quality, functionality, style, value, etc.

RWD performance is one area where Ford is historically and strategically positioned to offer such products. To shrink from doing so merely to imitate Toyota would be gross mismanagement.

A famous quotation from the Bible is "So, because you are lukewarm—neither hot nor cold—I am about to spit you out of my mouth." (Revelation 3:16). The surest path to oblivion is for Ford to avoid excellence and concentrate on building passionless, "lukewarm" copies of FWD Toyotas.

For Ford to have any hope at surviving, it must generate excitement about its products. A RWD sedan with potential appeal to Ford's traditionalist V8 gearheads is merely one large step toward this critical goal.