The days when the United States made all of its own cars are gone forever, economist Otto Eckstein warned automakers here today.
"We're never going to make all of our own cars again," particularly not the smaller models, Eckstein told reporters after addressing an international group of car manufacturers, suppliers and dealers attending the seventh annual Automotive News World Congress.
Repeating a comment made a day earlier by General Motors Corp. President F. James McDonald, Eckstein said U.S. automakers are at a competitive disadvantage in the production of small cars, which consume most of the world auto market.
McDonald said U.S. automakers are trying to solve the problem by entering joint venture agreements in manufacturing and sales with foreign automakers. The GM chief said he expects such agreements to be temporary.
But Eckstein said U.S. car producers conceivably may give up small-car production altogether. "They could simply abandon the automobiles" in the small size category, he said. That action would be "an option" for companies struggling to ensure their survival through keeping the lid on labor and capital investment costs, Eckstein said.
The Japanese cost advantage over the United States in small car manufacturing "is so enormous that the economies of scale just cannot be realized in producing these really little cars in this country," said Eckstein, president of Data Resources Inc., of Lexington, Maine, and director of the National Bureau of Economic Research.
GM's agreement to purchase 200,000 front-wheel-drive Suzuki minicars for 1984 sales is an example of "an essential survival strategy" being adopted throughout the U.S. auto industry, Eckstein said. He said the industry's strategy is late in coming, but that it probably will result in long-lasting, if not permanent, joint-venture relationships with foreign manufacturers.
"If these enormous [U.S.] companies are going to survive, they're going to have to make some adjustment to escape the situation they're in," in the small-car arena, Eckstein said.
Eckstein said the overall outlook for the world auto industry "is not appetizing."
"This is not a particularly pleasant time to examine the outlook for the industry," he said. "There is trouble everywhere."
World automakers at first were hurt by increased gasoline costs, beginning in 1973. But that problem has been aggravated by "slowed income growth -- worldwide" and "a worsening under-investment in roads" in the United States and in other countries, Eckstein said.
Without sophisticated road systems, "the automobile becomes a less attractive mode of transportation," he said.
Worldwide auto sales for 1982 probably will amount to 28.5 million units, a modest 2.6 percent increase over the 27.7 million cars sold worldwide last year, Eckstein said.
Falling interest rates, improved stock market performance and cuts in personal income taxes should help the performance of the U.S. auto industry.