Detroit: the road back
When the first Ford Mustang convertible rolls off the assembly line next summer, you can count on Don Petersen behind the wheel.
Donald E. Petersen is president of Ford Motor Company and he likes convertibles. In fact, he likes them a lot. ''I've had convertibles all through my life except when I'm in a pickup truck,'' he smiles, itching to get behind the wheel of that Mustang.
Ford expects to sell about 25,000 softtops the first year after being out of the ragtop business since July 5, 1973, when the last Cougar convertible came off the line.
This month Buick also unveils a new convertible, a Riviera list-priced at $23 ,994. Chrysler Corporation already has a pair of softtops in its Le Baron line and one for the Dodge 400.
Further, the larger American car -- albeit smaller than the big cars of a few short years ago -- is getting more play, helped by the dramatic drop in the price of gasoline over the last few months. High-power cars -- modern versions of the ''muscle car'' of the '60s -- are back on the road.
Big cars! Small cars! Muscle cars! Ragtops!
What does the US car buyer really want when he looks toward Detroit these days?
Indeed, the choice to the car buyer is wide -- as wide as it's been for years.
With it all, however, the industry is forced to dig deep into its own pocket in order to sell the cars it builds -- first the rebates, now low-interest loans , five-year warranties, and all the rest. Yet sales remain on the down side.
With it all, however, the industry has had to dig deeper into its own pocket in order to sell the cars it builds. The rebates, it seems, just go on and on -- and sales continue on the down side.
The US industry, Jan. 1 through the end of March, built a little more than a million cars, down 31 percent from the first three months of 1981, in itself a ''down'' time for Detroit. It was the lowest level for the period in 30 years.
To maintain some semblance of inventory control, the makers have continually shut down parts and assembly plants.
So, licking their wounds, US carmakers are squinting for an indication -- any indicationm -- that sales will soon rise and the long road back can begin. The industry, in fact, is counting on pent-up demand to break loose sometime this year; that is, if interest rates ever drop and the economy starts to pick up.
A reflection of the malaise afflicting Detroit is the loss of thousands of new-car dealerships over the last few years. Last year, for example, nearly 1, 000 General Motors, Ford, Chrysler, and American Motors sales outlets slammed the doors for the last time, according to Automotive News, the trade weekly. In 1980, the figure was 1,607.
Obviously a depressed economy is keeping many people at home. Still, some 2.3 million Americans bought imports in 1981.
While domestic-car ''sticker shock'' has long been a damper on sales, rising worker income has made a new-car purchase an ''easier buy'' today than a decade ago. In other words, it takes fewer hours of labor today to buy an average new car than in 1972 -- or 1952, for that matter.
A problem is that many people just aren't working.
Some dealers say the price of a domestically built car will have to drop by $ 1,000 to $1,500, even if interest rates drop, in order to get the show on the road.
Obviously helping the imports is an unyielding buyer perception that an import contains more value than a domestic.
To counter the view, US automakers are spending vast sums -- tens of billions of dollars -- to bring their products up to date, including a massive switch to front-wheel drive and smaller cars. Better quality is getting far more than a passing wave as well.
Yet even this swing to ''small, not big'' could backfire if falling fuel prices force a return to ''big.''
Why has all this devastation fell on Detroit? Is it all the fault of the Japanese? Not exactly, observers say.
Thirty years ago the Japanese automobile industry didn't exist.
In 1952 there were 130,000 cars in all of Japan - 100,000 of them imports. In 1981, by contrast, the Japanese built 7 million cars, of which more than 3.8 million were shipped overseas, with 1.7 million of them coming to the United States. At the same time, only a few tens of thousands of imported autos made their way to Japan.
Between 1970 and 1980, Japanese auto output increased 122 percent and exports 426 percent, the Commission of the European Communities in Brussels reports. During the same time, community exports fell 23 percent.
Part of the US problem is Detroit's own lack of foresight.
''We evolved in the period since World War II into a pattern of practices, behavior, and wage rates that, at the time, there was no reason to believe that there was anything wrong with it,'' says Donald E. Petersen, president of Ford Motor Company. ''We were clearly the force in industry, and not just in automobiles.
''One of the problems that those of us now active in the industry have to live with is that the US came out of World War II so dominant, so clearly in a position of superiority, that we had a system you could abuse for 25 years, and get away with it.
''It's finally caught up with us, that's all.''
In the last few years, the industry has been forced to change. It had to change under pressure from the Congress, the environmentalists, and even the consumer himself.
Carmakers are making significant gains in engine-control systems for higher mileage on the road, much-improved safety for car occupants, and even better systems for tomorrow.
Indeed, Detroit cannot be blamed for all of the problem. Take the cost of building a car these days.
The Japanese can build, ship, and sell their cars all around the world more cheaply than can the domestic makers -- and still make a profit.m The average $12 -an-hour wage differential between the US and Japan is partly to blame for the imbalance, as are the Japanese management system and the nature and commitment of the workers themselves.
US carmakers are trying to redress the issue by continuing efforts to cut production costs, including the labor-contract readjustments of the past few weeks.
Japan's continuing success is linked to:
* A long-term development strategy in which the Japanese producers have invested twice as much as their European and American counterparts.
''By the expansion of automation in factories, the component sector, and training of workers,'' says a report by the Commission of the European Communities, ''the Japanese have over the past 20 years increased productivity twice as fast as the Europeans and four times as fast as the Americans.''
* A perfectly integrated industrial and commercial system in which automation and the high rate of use of machinery, together with the development of subcontracting and links with suppliers, mean Japanese production costs are between 20 and 30 percent lower than their European counterparts.
''The models offered are based on the needs of users in different markets,'' the report goes on. ''Finally, distributors, assisted by impressive computer backup, have a cheap fleet of transport upon which to call.
''Feeling the hot breath of some US legislators and the American auto industry on its neck, Japan now has agreed to extend through March 31, 1983, its voluntary limit on the number of new cars - 1,680,000 - it ships to the US. When set in motion a year ago, the curb was supposed to help the US auto industry by ''forcing'' buyers to ''shop Detroit'' if they couldn't buy a Japanese car because of lack of supply. The impact, if any, has been minimal.
Whatever the outlook for the US auto industry, one thing is sure. There are a lot more car models in the showroom today than at any time in the last half dozen years.