Policymakers Need to Remember: The Consumer Is King

By Warren Brown
Sunday, February 8, 2009

The media don't get it, particularly not that part of the general media ensconced in Washington and the Northeast. Their stock and trade are politics and finance. Erroneously, they tend to strain and interpret everything through those filters.

Capitol Hill has never gotten it and seems no closer to getting it now. It is an ignorance born of self-interest. Rather than suffer a possible penalty of leadership -- lost votes in response to legislative imposition of a federal gas-tax increase -- our lawmakers choose to attack a convenient scapegoat. They have one in the automobile industry.

Some people in the automobile industry get it, as indicated by Hyundai Motor's understanding that relieving consumer angst over possible unemployment could increase sales.

Under the Hyundai Assurance program that took effect last month, Hyundai customers who lose jobs through no fault of their own, within a year of a new-vehicle purchase, simply have to return the affected car or truck. There's no negative equity, no bad credit rating, no penalty.

Hyundai's U.S. sales were up 14.3 percent last month in a market where all vehicle sales declined 37 percent.

What has Hyundai figured out?

It's the consumer, stupid.

I posit this argument, dear readers, in response to a Business section article that appeared Feb. 4 in The Washington Post. The complete headline read: "Congress in the Driver's Seat; Its Clout Waning, the Auto Industry Is Losing Its Ability to Steer Policy."

It's typical Washington thinking, the result of this city's statutory and regulatory significance and the resulting self-importance of so many of us who live and work here. I, too, had fallen victim to it, urging the Washington Area New Automobile Dealers Association, the promoters of the Washington Auto Show, which ends today, to turn that exhibit into a public policy bazaar.

It made sense. It still makes sense. Washington makes laws governing the design and manufacture of cars and trucks. Washington issues and enforces regulations with respect to vehicle safety. In that regard, as one of the taglines of the Washington Auto Show states, it is "the automotive seat of power."

But Washington is not now, has never been, and probably never will be the seat from which the industry is driven. That seat belongs to the consumer. If you negatively affect the consumer's comfort in that seat, cars and trucks don't sell. If you remove the consumer from that seat, as has been done through rising unemployment and frozen credit, the industry crashes altogether.

It matters not that Rep. John D. Dingell (D-Mich.), a stalwart defender of Detroit's automobile manufacturers, is no longer chairman of the House Energy and Commerce Committee, through which so many federal laws affecting the automobile industry pass. Nor does it matter much that Dingell has been replaced in that position by Rep. Henry A. Waxman (D-Calif.), seen as a liberal champion who is determined to work with liberal President Obama to force the car companies to produce more fuel-efficient cars and trucks.

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