Fewer Hummers, More Hybrids At Auto Show
MICHEL MARTIN, Host:
I'm Michel Martin, and this is Tell Me More from NPR News. Coming up the numbers just confirmed what millions already know. The unemployment rate is at its highest monthly rate in 16 years. We're going to continue a conversation we began yesterday about how new grads with little or no work experience can cope in a market like this. We're going to get some advice from our money coach, Alvin Hall. But first, to an industry that has already seen more than its share of the layoffs, the auto industry. The North American International Auto Show just opened in Detroit. Gone, the fireworks, their free food for the media, in their place, a stripped-down exhibition showcasing more green technology and fewer gas guzzlers. Just after winning a hard-fought battle for a government bailout, the domestic industry is trying to show it is building the cars of the future. But are these efforts enough? Joining us now to talk about this is Marek Fuchs. He writes the Business Press Maven column for thestreet.com. Also with us is Warren Brown, who covers the auto industry for the Washington Post. Welcome to you both. Thank you so much for talking to us.
Mr. WARREN BROWN (Writer, Washington Post): How are you doing, Michel?
Mr. MAREK FUCHS (Writer, thestreet.com): Thanks for having me.
MARTIN: Now Warren, you're just back from the auto show?
Mr. BROWN: Yeah, just back from the auto show, yeah.
MARTIN: What did you notice that was different from last year?
Mr. BROWN: Ah well, you know, there's a lesser glitz, less glam. The interesting thing I noticed this time is that you have a complete row now, of electric vehicles and they aren't put there just, you know, to make some statement. And it goes up...
MARTIN: You said there's a complete row?
Mr. BROWN: Well, it's a complete, you know, section like - for example, the Global Electric Motor Cars people - they make a kind of a little seeming - I call them campus-electric cars. They can't go more than 35 miles per hour, or what have you, but they're make absolutely, perfectly, good sense, in what I want to call it campus environment. Those are relatively inexpensive. And then you go from Global to Tesla. These are very expensive high-end, you know, all-electric vehicles. And then, you know, you go to Dodge and, you know, Dodge has an electric car, and Smart has an electric car in the offering(ph). So, you know, I see that as being real, but in the United States, acceptance and development of those models all depends on a commercially effective energy policy.
MARTIN: Marek, you wrote a recent column that said that GM needs more than new cars. What did you mean by that?
Mr. FUCHS: Well, you know, the focus from the business media traditionally at this concept has always been on the new cars, because they are exciting and they're glitzy, but obviously now, there are so much to do in terms of unloading brands, closing dealerships, negotiating with the UAW. So, the model of covering this concept as one sort of determined by how groovy the cars are just really, you know, has to become a thing of the past.
MARTIN: Hmm, OK, well speaking of groovy cars, Warren, we checked in with you last year after last year's auto show.
Mr. BROWN: Yeah.
MARTIN: And when I asked you why Detroit was still showcasing all these big cars you kind of took my head off. So, I'm going to play a short clip from our conversation last year. Here it is:
(Soundbite of interview clip)
Mr. BROWN: What we don't understand here and the so-called committee case and capitals of the country is that there is this huge thing out there called "America," and when you're driving across America you notice several things. There are lots of farms, lots of factories, lots of small towns, and almost a million or so buyers out there who want and need trucks.
MARTIN: You don't sound as grumpy in this bite as I remember you being at that time.
Mr. BROWN: I'm older, I'm a year older, you know.
(Soundbite of laughter)
Mr. BROWN: But it still - you know, what I stated still applies. I mean, I drove - I and my family drove from Northern Virginia to Detroit for this auto show, because I got an award, and they wanted to come. And so we drove a Chevrolet Traverse, six-cylinder crossover utility vehicle. And we drove from Northern Virginia to Detroit and yeah, you know, we saw exactly the same thing. You know, once you're out of the sophisticated Washington, D.C. area, you know, people want trucks, you know, we want...
MARTIN: But can they afford trucks is the question? Can the country afford...?
Mr. BROWN: Well, apparently the people...
MARTIN: This reliance on big...?
Mr. BROWN: Apparently they can afford them, you know, they have them running around in that gasoline below $2 a gallon, yeah, we're making it affordable.
MARTIN: What, Marek pick up Warren's point here. His - I think what part of Warren's point is that the industry is being blamed for a whole host of issues that are beyond their control like energy policy in the country and consumer preference. What do you say to that? And they are trying to mediate between consumer preference and energy policy. Do you think that's a fair point?
Mr. FUCHS: To a point. The real issue here though, is that poor planning leads to dumb luck, OK. And now you have an industry that wasn't ready with smaller cars. Now for the first time within limited confines, we're getting some signals that there's a little bit going on here and what does it coincide with? Gas under $38 a gallon, where some of this inherent demand that we do have - you know, we're a big country and some of these cars with the smaller range, they look enticing, but they're not going to sell and when does the auto industry come out with these? You know, right when gas is tipping below $38.
Mr. BROWN: Well again, I'm going to say that's another case of blaming the industry for something that it didn't do. Poor policy leads to dumb luck. I think it would be argued that, you know, Toyota certainly in, you know, the U.S. media frequently is held as being the genius of smart policy. And let's look at Toyota's smart policy, the plant in Tupelo, Mississippi, which has yet to be built, originally was planned to be an SUV plant. Then gasoline prices went up to $4.11 a gallon, and then Toyota says, no, we'll make this a Toyota Prius plant, then gasoline prices plunged below $2 a gallon, and now Toyota says, we aren't going to do any plant, at least, not for a while. Poor policy leads to dumb luck. The same Toyota took a look at the Chevrolet Silverado, and the Ford F-150, and the Dodge Ram 1500 and said, my God, they're making a lot of money with those trucks. We want that money. And so, what did Toyota did? You know, they invested a lot of money in the Toyota Tundra, you know, to go after the big three with those trucks. Well, gee whiz, you know, the new Tundra came out when? When the gasoline prices were $4.11 a gallon.
MARTIN: So, what do we draw from this, Warren? What are you saying is that...
Mr. BROWN: We draw from this that in a market where you don't have a common-sense energy policy that drive both manufacturer and buyers, you're going to have this constant confusion.
MARTIN: I'm going to get - let Marek respond, but first I just want to jump in for a minute to say that if you're just joining us this is Tell Me More from NPR News. We're speaking with auto industry analysts Marek Fuchs and Warren Brown, who's just returned from the International Auto Show in Detroit. Marek, your response.
Mr. FUCHS: Well, I mean I agree about Toyota. They've caught the disease, and the disease we've seen from the American automakers, and they've become completely reactive, completely in the moment, and they qualify now as poor planners, and poor planning leads to bad luck. I also completely agree that we don't have the same energy policy. However, this isn't something that was unfurled on the automakers just recently, right? It's a real known quantity, and has to go in to your long-term planning that we don't have the same energy policy, and you know what? Chances are we're not going to have one, but that's the environment you need to operate in.
MARTIN: And Marek, could I just ask you, one the criticisms of your recent columns is not just of the industry, but that the people who cover the industry, I think, is it your view that the business press contributes to a kind of a cheer leading about the industry?
Mr. FUCHS: They are kind of two things going on. I do think that when it comes to making any criticism of the automakers I never get bigger reader reaction. There's a real patriotic correctness going on as if, if you dare criticize them, you're less American. And I also think that a little bit here, especially with the auto show, I think there's a reach for a shift in storyline, which is something that we always see from the business. In other words with the begging for money and the flying the private airplanes to beg the money, there is a lot of negativity going on, so here's the chance to shift gears, and all. And it tends to please readers because it appears like you're being more positive and more supportive. And a real irony that I've seen in some of the coverage that we're reading coming out of Detroit early on is that, you know, the business media is classically very short-term, OK? Now, here with some of these newer cars, they're taking a long-term viewpoint in saying, hey, a couple of these might work out long-term, right? People might - you know, they might go for these cars with 35-mile range, long-term. However, the situation these automakers find themselves in is extremely short-term. We might not have enough cash to go to March.
MARTIN: OK, I'm going to let Warren respond and then I want to get a final thought from each of you. Warren?
Mr. BROWN: OK, where do I start? I get a lot of fight for just the opposite reason, because I'm one of these people who thinks that the media, in general, have been - in the United States - have been awfully biased and not terribly fair. You know, they don't give these companies credit for what they have done right and they have done a lot of things right. And we, at the Washington Post have also pointed out that they've done a lot of things wrong. But when you look at the ongoing research in energy efficiency and clean air and what-have-you - you know, I spent, you know, a lot of my life going into those labs, you know, all around the world looking at what they were doing, and they're doing much more than they've being given credit for. But, you know, we seem to think that, my God, you know, if we are fair in dealing with them all, then we're in their pockets. But if we adopt the stance of being negative, well then, wow, we're being hard-hitting journalists. It's bull.
MARTIN: We only have a couple of minutes left, and I want to hear briefly from each of you. Do you - when you look ahead to the industry - a lot of turmoil right now, do you feel comfortable offering some predictions about 2009? Do you…
Mr. BROWN: No, I think everybody who offered predictions in 2008 got their faces slapped…
(Soundbite of laughter)
Mr. BROWN: And I think coming back doing it in 2009 is not a wise thing. Put it this way, my co-guest is absolutely right about one thing. Unfortunately, the industry is going to have to deal with an America that doesn't have a commercially effective energy policy, and that to me is the crux of the problem. I don't think that you can blame the industry, you know, for their problem. We're all responsible for their problem, and we have to solve it.
MARTIN: Marek? Final thought from you.
Mr. FUCHS: Well, I think one key to understanding the industry going forward is to get away from this phrase that the business media loves the Big Three - formerly known as the Big Three, they're not so big anymore. But I think considering that these companies are now sort of propped up like El Cid, it's very hard to tell how long they will or won't last because part of it is they're depending upon the kindness of the government. And what the government comes in with and how influential and knowledgeable this car czar is - that's a huge variable - will all really determine the fate of these companies going forward.
MARTIN: To be continued. Marek Fuchs writes the Business Press Maven column for thestreet.com. His latest book is "Cold Blooded Business." He was on the line with us from New York. And Warren Brown covers the automobile industry for the Washington Post. He was recently named a 'Living Legend' by Road and Travel Magazine. He was kind enough to join us in our studio in Washington. Gentlemen, thank you both so much.
Mr. BROWN: Thank you.
Mr. FUCHS: Thank you very much.
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