AN AUTHOR who chronicles the "decline and fall" of his subject invites comparison with one of the greatest historians. Although Brock Yates' account of the American auto industry's troubles falls short of Edward Gibbon's masterpiece on the Roman Empire, he has tackled a timely and important subject with verve, insight, and conviction.
Yates, an experienced auto journalist and editor-at-large of Car and Driver magazine, views the American car companies and their foreign rivals from the driver's seat. His extensive knowledge of cars and how and why they perform as they do is the book's greatest strength.
He prefers a tightly-sprung, crisp-handling, reliable, mechanically sophisticated machine with good acceleration and a top speed at least double the legal American limit. Not surprisingly, his first choice is a Mercedes- Benz with BMW, Audi, and various Japanese makes, particularly the Honda Accord, next in line. The Americans' overweight, lurching featherbeds lumber along behind these nimble speedsters.
A moment of contented reflection occurred to the author as he hummed at night along a Bavarian autobahn in a Mercedes-Benz sedan at 100 miles an hour, passengers safely and soundly asleep. Headlight reflections in the rear view mirror signalled the approach of an overtaking vehicle. A Porsche 930 Turbo glided by at 120. Why, Yates asks himself and us, isn't driving in America like this?
The answer, he believes, lies in the failures of mind and taste, "the small-town, bourgeois ideals," of Detroit's auto moguls. "There is nothing that ails the American auto industry," he writes, "that cannot be rectified by the presence of a few lions, preferably hungry ones, in Detroit." In this combative book the once pampered darlings of American business get their comeuppance.
The key figure was General Motor's chairman, Alfred P. Sloan Jr., who abandoned sturdy, honest vehicles for "Hollywood styling," gimmickry, creature comforts, the annual model "change," and a market and product development strategy based on shameless exploitation of the status hunger of a rootless people. As he intoned that "General Motors is not in the business of making automobiles; it is in the business of making money," Sloan directed the industry toward maximizing short- term profits over everything else. For many years it was remarkably successful.
No more is that true, and the blame, according to Yates, rests squarely on the industry's leaders. Limited by midwestern origins, isolated from the consumption vanguards on both coasts, insulated in their closed environments of suburban communities, country clubs, and downtown office suites, and certified successes by virtue of whopping salaries and bonuses, they refused to see that a growing body of consumers simply did not like their product. When sales of foreign cars spurted in the late 1950s and again a decade later, they responded with feeble gestures. Their new small cars were, by and large (except for the innovative but troubled Corvair), cheap, cut down rehashes of conventional auto technology that were dumped as soon as they had stemmed the import tide. Detroit wishfully thought that buyers would come to their senses and return to the showrooms for more of its over-chromed land arks. In the 1970s, when the tide of improved imports flowed in again with a vengeance, the American companies were totally unprepared.
In the meantime, progressive foreign manufacturers had seized the initiative through engineering excellence and innovation, perfected techniques of quality manufacturing (some borrowed from Americans whose ideas the domestic companies ignored), enlarged their manufacturing capacity, and established profitable markets at home and abroad. For years the contrasting approaches to auto needs and design were traced with exquisite irony. In the 1950s Mercedes-Benz engineers, impressed by the superiority of the fuel injection system developed for aircraft engines, began a long and costly but finally successful adaptation to the passenger car. American manufacturers were also impressed by aircraft design, but they translated it into styling fakery: ever larger "tailfins," mock propeller hubs in the grill, and cars christened the "Starfire Golden Rocket" to evoke fantasies of speed and high altitude adventure. For many buyers the American car business seemed to have become a con game.
Most of Yates's book deals with the recent past. A long initial chapter (nearly one fourth of the whole) on the "$5 billion blunder," General Motors hyped but hapless J-car "import fighter," sets the tone. Heavy, sluggish, technically backward and high priced, the Js quickly disappointed in the marketplace. After poking about in the "Detroit Mind," the author goes on to cover, often sketchily, the construction of the German and Japanese industries, the Detroit companies' styling concept ("the automotive equivalent to a Busby Berkeley dance routine"), their disinterest in technical improvements if they were costly, the plight of dealers at the manufacturer's mercy, labor-management relations, and the impact of government regulation which, he rightly notes, has fallen almost equally on both domestic and foreign manufacturers. He concludes with his list of the ten best values in sedans (eight foreign and two American--the latter damned with faint praise) and the ten worst values (six foreign and, surprisingly, only four American).
While no one should discount the importance of car performance and clean styling or of management's leading role in shaping the business, a preoccupation with the product partially begs the question of the causes of the industry's decline. Even if the mechanical, aesthetic, and performance superiority of many foreign-made cars is granted (and Yates ignores some areas, such as the drive train, where American cars are often still better engineered), one must still explain how and why that superiority was gained and maintained. To say that it was due simply to a lack of taste and brains at the top fails to come to grips with a complex, many-layered historical phenomenon. After all, quite a number of technically oriented American industries--optics, electronics, and steel, to name three--have had similar, in some cases even more devastating, problems. Were they all run into the ground by narrow-minded midwesterners? There is more to the car business than can be observed from the driver's seat.
Missing in this account is a serious, comparative analysis of the industry's structure within its different national and international contexts. Recent estimates (Harbour and Associates) of comparative costs for producing a subcompact car give the Japanese manufacturer a net advantage (after subtracting shipping costs) of about $1700. Approximately two-thirds of this amount derives from better management systems (superior manufacturing technology, quality control, the "just-in-time" production technique, quality circles, and job classifications) and the remaining one-third from union-management relations including wages and fringe benefits. The development of each of these contrasts is in itself an involved story. With the money generated by this immense per car advantage, huge sums become available to put into quality, product innovation, and other goodies that sell cars. In order to understand the failure of the American industry, we need to know how and why this difference came about. Yates dismisses the cost differential as a convenient rationalization for management failures, and no doubt it has been used for that purpose. It seems likely, however, that in making possible much of the quality and innovation, the cost differential lies at the heart of the problem.
It is a telling and still unexplained irony that General tras Motors, who Peter F. Drucker (in The Concept of the Corporation, 1946) saw as the model business organization, recently signed a contract with Toyota to manufacture subcompacts in America in order, in part, to learn how to conduct a successful enterprise.