Auto Bailouts: Where Did We Go Wrong?

This is likely to be a fairly long post, but I'll try to make it as readable as possible. The information here is condensed from a couple of research projects and a number of articles from the auto industry.

At one time, the American auto industry was king. Nobody in the world produced the quality of cars, with the technology and engineering at the prices that the United States was producing before and after World War II. That ended around the 1970s and 1980s. (It's hard to pinpoint an exact year, but for the purposes of this article, within a decade or so is accurate enough).

After 1980, the Japanese auto industry, which already had a foothold in the U.S. began to take off by leaps and bounds. At the same time, Americans were discovering the quality and drivability of European makes like BMW, Saab, Volvo, Mercedes and others. Around this time, foreign makes were jumping ahead of American manufacturers with regard to quality, engineering, technology and, especially, design.

Many auto industry insiders view the "beginning of the end" of the dominance of American auto companies to be the book "Unsafe at any Speed" by Ralph Nadar.

The book was written about Chevrolet's unique car, the Corvair. The Corvair was designed in the late 1950's by very forward-thinking GM engineers and designers. These people inside GM were looking at Porsche and Volkswagen and they wanted to see what they could learn from the popularity of those German cars. In terms of handling, reliability and technology, these cars were simple designs with sporty performance (at least Porsche was) and were noted for reliability in extreme weather and road conditions.

Chevrolet wanted to see what it could do with a similar concept. They wanted to create a rear-engine, air-cooled, rear-wheel-drive car. Unlike Porsche and Volkswagen, they wanted to make the car a little larger so that it could be used as both a sporty car as well as a small family sedan.

The Corvair was introduced in 1959 (as a 1960 model) and was Motor Trend's Car of the Year. It brought to market a number of firsts and innovations for an American car: A rear-engine air-cooled aluminum flat six cylinder engine with rear transaxle, four wheel independent suspension, with the front and rear suspension components each attached independently to the subframe. In terms of design, technology, innovation and concept, it was different in every way from every other car Detroit was producing and different than anything Detroit had ever produced.

A few years later, Ralph Nadar wrote his book in which he alleged that the Corvair was an unsafe vehicle. Nadar was an unknown "consumer advocate" looking for a cause, and he found it in the Corvair. He alleged that the vehicle was prone to turn over easier than other vehicles, that it was more prone to catch fire in a front end collision and that it was more likely to cause injury to passengers in a rear end collision than any other car.

These allegations were proven false. The government held hearings and then conducted its own safety tests of the car. Their findings: The car was as safe, or safer, than any other vehicle on the road. (The government actually found that the car was less likely to catch fire in a collision than other cars.)

The damage, however, had been done. Sales of the car dropped and it was phased out in 1969, to be replaced by the more conventional Chevrolet Vega, a car with all the disadvantages of a small car along with poor fuel economy and poor handling. The lesson the Big Three Automakers took from this episode of automotive history is this: Don't innovate. Just make your traditional vehicles like you've always done, and don't try anything new, exciting or innovative.

When Subaru introduced front wheel drive to small asian imports, (Saab actually beat them to it in the American market), the other imports followed. By the mid 1980s, Honda, Toyota, Nissan and Mazda had front-drive on most of their car models. The U.S. manufacturers did not follow suit until it became apparent that they were losing sales because of this feature. The same can be said of smaller, four cylinder, more fuel efficient models. Most other innovations and engineering breakthroughs after the 1960s came from either European or Japanese manufacturers. The Japanese in the 1980s and 1990s and later on the European manufacturers even began leading the way in styling. Today, if you take the nameplate off of a car and show it to the average consumer, most people would pick a foreign car to most domestic models.

All of this has led up to our current situation in which the government "had" to bail out two of the Big Three automakers.

I would be the last person to suggest that Ralph Nadar is single-handedly responsible for all of the ills of the auto industry. Over the past 40 years, there has been enough bad decisions, bad design and stupidity within the industry for a lot of folks to share the blame.

The question I have is, who is holding Nadar's feet to the fire? If industry insiders had lied and conspired in some way to bring an entire industry to its knees, no doubt those folks would be held accountable. Yet, Nadar is a darling of the left; a champion of the "little guy"; even a "green" presidential candidate. I doubt the American public is even aware of his role in the decline of the American auto industry (and by extension, American manufacturing).

While this post probably isn't as timely as it could have been (I recently ran across a series of articles that spurred this entry), I suppose the whole point is that I'm now doing my part to help people understand why we are where we are, today. Something as seemingly small and innocuous as a little book with a few little lies has had an effect that has spread to every American some 45 years later.

Now, use your imagination and look ahead to the next thirty or forty years. How do you think the lies currently being spread by O.B.A.M.,A., and Reid and Pelosi about health care and how much universal coverage will "save us" is going to affect America in the coming years?