Memo to Detroit

Posted Dec. 16, 2008, at 6:02 p.m.

It’s not government’s place to tell industry how to operate. But when that industry wants the government to lend it $15 billion, it opens the door to some advice.

If the White House moves forward with an auto industry loan package, there will be a great deal of government oversight built into the deal. But a federal “car czar,” as proposed, can’t bring vision to an industry that has plodded along a familiar boom and bust cycle over the last 30 years.

Many observers are convinced General Motors, Ford and Chrysler are unable to see the horizon, let alone what lies beyond it. No one expects the companies to have fully operational crystal balls, but they certainly could have learned a lesson or two from manufacturers such as Toyota, Honda, Hyundai and Subaru.

Words like “nimble,” “creative” and “savvy” do not come to mind when thinking about how the Big Three reacted to the oil embargoes of 1973 and 1979. While some derided the Japanese cars that started appearing in American driveways that decade as cheaply made, there was no denying their affordability and gas efficiency.

Then, the “Made in Japan” label began to mean reliability. Consumer Reports regularly gives top ratings to models including the Toyota Sienna, Camry and Corolla and Honda Odyssey, Civic, Accord and Pilot, finding they need fewer repairs than American-made vehicles, and that regularly they run far beyond 100,000 miles before giving up the ghost.

Beyond reliability and fuel efficiency, which should be givens, the Big Three also should narrow their aim. Subaru, for example, offers a limited product line in the U.S., relying heavily on just a handful of models — Legacy, Outback, Forester and Impreza. Yet Subaru saw a 4.5 percent sales growth in the first half of this year, from 187,208 to more than 200,000. Meanwhile, GM continues to try to be all things to all people, selling everything from the “microcar” Chevy Geo to the buslike Chevy Suburban.

If Ford and GM are able to merge some of their operations, which has been discussed, they might consider spinning off their pickup trucks into a new unified division. GM, which has been lagging behind Ford in truck sales, might have to give Ford a luxury line such as Cadillac in exchange for a portion of the profits from truck sales.

A strong argument can and has been made for saving the Big Three. But U.S. auto manufacturers resemble IBM, circa 1985. As Apple cornered the personal computer market, IBM plugged along, content that its sway over the electric typewriter market would keep it flush, while chuckling dismissively at the cute little Macintosh. Just barely in time, IBM realized its future lay in personal computers, not typewriters.

The Big Three version of the IBM Selectric is the gas-guzzling SUV, gobbled up in the 1990s and early 2000s, but now out of favor with consumers. Even Ford’s F-150 pickup, a perennial sales leader, was topped this year by Camry and Corolla. Unions, health care costs, CEO salaries not withstanding, the Big Three must show some big vision if they are to win support for a lifeline.

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