Are You Worried about The Decline of the U.S. Auto Industry ?

What will be the effect of an ailing American car industry on the next car you buy? Are you wondering whether you should buy American or not? Here, below, are some of the reasons the US auto industry has been failing in recent years, reasons other than producing an inferior product. The answer to whether you should buy an American car depends on whether you are trying to help yourself, or help the industry. There is of course a controversy at the highest levels of government and policy debate as to whether protectionism is good for the economy as a whole. But, as to whether you should buy a domestic or imported HYBRID or other alternative fuel car, my personal opinion is that the Japanese industry is far ahead technologically in hybrids. The Europeans are far ahead in diesel technology. So if you do want a hybrid car, I must recommend a Japanese car. If you want a diesel car, go European. If you want an economical, small, fuel efficient car, the American car is right for you. All three choices will save you money and save the environment from further damage.

Regulation: The American auto industry’s traditional position of fighting many types of regulation, particularly environmental, has drained resources that in other countries is channeled more directly to R&D. One example of this is the way in which the US industry fought the alternative fuel vehicle regulations, beginning in California in 1991, while Toyota developed and patented a hybrid technology which Ford ended up licensing, and GM missed altogether, betting unwisely instead on the all-electric vehicle, which was a total commercial failure. Ironically, the US leads the world in strictness of environmental standards for cars, while our car manufacturers seem to be the last to figure out how to meet those standards profitably.

Market Research and Product Range: America’s automakers fall victim to this country’s demand for too many choices. GM produces over three times as many models of vehicles in over twice as many divisions as Toyota. In the end, Americans are choosing the fewer Toyota models, which are redesigned more frequently.

Design: Detroit has been very slow to design cars for women. That is changing, but it has not changed fast enough. Luckily for the Japanese, American women and Japanese men are similar in size, and so Japanese cars have traditionally been more comfortable for American women, who are now loyal to those brands.

Foreign Competition: Foreign car manufacturers have many advantages over US automakers, including but not limited to labor costs, health care costs and environmental regulations. Perhaps we should wonder why the US auto giants did not see Daimler’s purchase of Chrysler not as a failure of a single company, but as an omen of things to come.

War, Global Economic Growth, and Oil: As foreign economies, especially China, expand, demand for oil has and will continue to increase. And, as tensions and costs in Iraq continue to increase, OPEC will continue to squeeze oil supply in order to generate higher revenues. Both of these trends point to the need for increased energy efficiency, yet the US automakers have continued to produce SUVs in higher proportions than foreign car makers. For this decision, their profit margins have decreased sharply over the last few years.

Marketing: Detroit generally markets to our dumbest instincts, not to our highest minds. American men are trained to buy cars with a lot of gas-guzzling horsepower and off-road capability. American women have been trained to buy Saturns, and they do so in great numbers, because they think they cannot negotiate with dealers the way men can. But in an increasingly troubled economy, Americans are thinking smarter and responding to the more intelligent marketing of foreign automakers.

Robin Segal, PhD

Need some more advice? Dr. Robin Segal has a lot more tips. Author of THE CAR BUYER’S BIBLE, Robin sold cars in a high-pressure car dealership. Being behind the scenes and seeing what car buyers went through broker her heart, so she wrote a book to help people avoid stress and save money. She has been helping car buyers save money on their car purchases for years. Robin has also worked on clean air transportation planning for the United Nations, The World Bank, The EPA, and The US Department of Energy . Find THE CAR BUYER’S BIBLE at: www.thecarbuyersbible.com