New Thoughts about The Big Three
By Micheline Maynard ’00
UM President Mary Sue Coleman
and Hovey Speaker Micheline Maynard ’00
connect after the lecture.
Driving around Michigan these days is like being in a rolling time capsule. There are more American cars here than anywhere else in the country. We may as well be living in 1960, when 90% of the vehicles bought in Michigan were built by the Big Three—GM, Ford and Chrysler. Today, that number still holds.
The rest of the country, however, is living in 2006, where the original Big Three no longer reign supreme. This year, Ford announced it’s closing 25 plants and cutting 44,000 jobs—essentially ceding second place in the American car market to Toyota. In 1960, Toyota sold one car model in the United States. Today, Toyota sells almost as many vehicles here as General Motors, which is twice as big. Now it looks like the Big Three will be GM, Toyota and Ford.
How did this happen? The auto industry has changed because American consumers have changed. Look, for example, at toothpaste. Back in the 1960s, most American families used either Crest or Colgate. My family used Crest, which looked exactly the same for its first 25 years. Then in 1980, Crest debuted its first variation, Tartar Control Crest—the first of an onslaught of choices and varieties. Now, different types of Crest take up a quarter aisle at Target.
Similarly, in 1960, there were essentially three competing American car companies and Toyota was barely a blip on the map. The best-selling foreign car was the Volkswagen Beetle. Today, there are more than 26 companies selling cars in the U.S., offering hundreds of models. As a result, Detroit’s grip on the car market is weakening every day.
Three years ago, I wrote a book called The End of Detroit. At that time, the Big Three had 61% of the car market, down almost 30% from 1960. I predicted that if current trends continued, Detroit and foreign companies would divide the market 50–50 by 2010. By July of this year, the market was divided into 52% for Detroit and 48% for imports. The Big Three that month were GM, Toyota and Ford. Coming in at number four? Honda.
So how did Detroit lose 38% of the car market? Part of it was self-inflicted, but we also have to look to ourselves. What does the automobile industry reflect about America? Three key ideas. One, the role of women in society and as consumers. Two, that we buy cars when we want them, not when we need them. Three, that we have many more ways to spend our time and money other than on automobiles.
The popularity of Japanese cars in the U.S. can be summed up in one word: women. Conventional wisdom holds that people buy Japanese cars for quality, reliability and a variety of models. But Toyota and Honda wouldn’t be where they are today without the rise in influence of women buyers. Thirty years ago, when many car companies began measuring the role women play in the car market, women had direct influence in only 28% of car purchases—meaning either they made the decision to buy, or were consulted by someone in their family who made the purchase. Buying a car back then was a man’s job.
During the 1970s and 1980s, women entered the workplace in record numbers and by 1990, buying cars was no longer just up to the guys. Women played a role in 52% of car purchases, and were left out of the process only 1/3 of the time. In other words, women had economic power. By 2005, women participated in 81% of all car-buying decisions, and men were the sole decision-makers just 4% of the time.
When women buy cars, they look for reliability, quality and safety features. They’re also more interested in fuel economy as they typically earn less than men. And the appearance of the car is not actually as important to women as it is to men. Japanese cars tend to fit the bill nicely.
Another byproduct of women entering the car market is increased expectation about our vehicles’ performance. When I was a little girl in the 1960s, on Saturday mornings my dad and I would go off on adventures—to the car wash, the Army-Navy surplus store and to Arlan’s Department Store, where he would go through the cutout bin looking for 99 cent records to add to his vast collection. When we came home, dad went out to the garage and spent hours working on his Chevrolet Impala. For years, I thought he enjoyed working on his car. But I came to realize he wasn’t working on it for fun—he was working on it because he had to. And if he didn’t do the work, he’d take it into the shop, as so many people did for so many years.
Today, few of us spend our time that way. An informal poll of ten of my male colleagues at The New York Times revealed that—except for minor repairs, like changing an oil filter or refilling the washer fluid—none of them works on his own car. Their cars don’t often need repairs but when they do, they go to the dealer. And generally, the only time their cars go in is for routine maintenance. I think this informal and admittedly very specialized sample reflects what’s going on elsewhere.
As recently as 1980, 86% of people bought a new car because their current vehicle was on its last legs. In 2005, only 16% of consumers bought a new car out of necessity. Today, we buy new cars because we want them, not because we need them.
But where does a new car rank on our list of desires? In 1985, cars were number three on our wish list, behind long foreign vacations and new homes. Today, cars rank number nine, far behind new furniture, long vacations, upgrading our houses and home electronics.
If the old adage is true—we are what we drive—then today we have split personalities. There are now more cars on the road than there are licensed drivers. One-third of households in this country have two or more cars. And more than half of cars sold in the U.S. were to single buyers, not families. In other words, we don’t have to choose one car, one SUV, one pickup truck anymore—we can pick two, three or even four vehicles that reflect our wants, our needs, our personalities.
And when we get around to choosing our cars, we know more about them than ever before, thanks to the Internet. That, as much as anything else, has made us the most demanding consumers in history. We walk into car dealerships knowing as much or even more than the people selling cars. Web sites like Edmunds.com let us compare five cars and get 450 different pieces of information about each car.
That means we never have to trust a car company again—and it means that car companies now have to earn our business by proving that they deserve it. They can’t assume you’ll pick them, the way Crest could once count on us to buy their toothpaste because our only other options were Colgate and, perhaps, Pepsodent.
One last question lingers: Is what has happened to Detroit an American tragedy? It is for those who took a job at Ford expecting the equivalent of a civil service position, where they could stay until they retired with wonderful healthcare benefits and a fat pension. But if that situation led to cars not built as well as their Japanese counterparts—and if those Japanese automakers are now employing Americans at their plants in Kentucky and Alabama and Texas—maybe what has happened is not so much a tragedy as it is a reflection of America.
