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Reason 4,126 Why the American Auto Industry is in Trouble… December 31, 2005, 12:25 pm

Posted by quintapalus in Industry.
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Like a lot of teenagers, when I was in high school I had to use the mom’s wheels whenever I went out. 236,000 miles later, she still has that car that will forever have a special place in my heart: the 1992 Honda Civic hatchback. That car was so good that when I upgraded my wheels in college from my $500 1983 Nissan Sentra, I ended up finding and buying a ’92 Civic hatchback. There’s a certain kind of special comfort in the knowledge that even though you are buying a used car with 65,000 miles on it, it may as well be new since you are going to get another 100K from it. With its manual transmission, that car was not only fuel efficient, but it was also quite zippy in the lower gears. I sold it when I moved to downtown Chicago after college, where cars can be more trouble than they are worth (trust me, after you get a few $50 or $75 parking tickets that double if you don’t pay them in a week, you will want to shoot yourself in the face; not to mention how banged up your car gets just from parking it on the street). Nothing makes me miss that car, however more than my current vehicle.

In 2004, Chevrolet introduced the Aveo, which was supposed to be their version of the Civic. I needed a car again since I was about to move a bit out from the center of the city and a co-worker of mine was good friends with a dealership owner. Although I would have preferred to stick with Honda or another Japanese brand, this guy only sold GM and Ford cars and the discount was enough to get my business. I went for the Aveo with its spacious interior, tight turning radius and solid mileage (26 city, 32 highway). So how did it turn out? Well, let’s just say that I wish I could have my ’92 Civic back. While the Aveo does have those first two attributes in spades, its build quality isn’t as high as I would hope for and its mileage downright stinks. I do get decent mileage on the highway, averaging about 30-32 mpg, but the city driving is a joke. There are some tanks where I only get 13 mpg. THIRTEEN!! This is not an SUV; this is a compact vehicle. And it isn’t my driving style either, as the tanks where I have purposefully driven conservative enough to make a 78 year old Asian granny look like a 16 year old in a Ferrari on crystal meth did not result in any substantial gain in efficiency (1 mpg more). The 2004 Aveo, with its 12 YEARS of technological advantage can’t hold a torch to my old Civic. That car, at approximately the same displacement and performance, got around 30 mpg in the city and over 45 mpg on the highway. So frustrating (and an extremely long winded lead up to the point of this entry) but it brings us to this story.

Honda, like other brands, tends to evolve its auto lines over time. I’m sure you can remember when the Accord was like any other smallish, cheap car out there. Nowadays the Accord is a solid mid-level car that you can easily spend over $30K acquiring. The Civic line is very similar, which means that Honda needs to bring out a new car to occupy that low rung on the ladder that the Civic used to occupy. Although it has been available for a few years already in Japan under the name Jazz, Honda is finally introducing this car to North America. It will be marketed as the Honda Fit. I found this review from 2002 on the Jazz and it contains enough to know that there is no answer or equivalent model from the Big Three US auto companies.

Here’s the most important part of the review:

As if that wasn’t enough, Honda has also come up with an entirely new chain-cam engine for the car. Called i-DSI, it uses two valves and two spark plugs per cylinder to provide a combination of low speed torque, performance and economy that no one else can match either. Just look at the figures: zero to sixty in 11.7 seconds, top speed 106 mph and a combined economy figure of 49.6mpg. Even the urban figure is nearly 41mpg and on a run nearly 60mpg is possible. Naturally enough, this gives the car a low CO2 output of 134g/km which will keep it in the lowest VED class of £100 pa for years to come, and also makes it a very sensible choice for company car drivers. On top of that, insurance is in a rock-bottom Group 3E. And, oh yes, the starter price is just £8,995 on the road with a three-year 80,000-mile warranty. For that sort of money, Ford hopes to get you into a 5-door Fiesta with a 1.3 litre engine that dates from the 1970s.

Emphasis mine, but that is really the main difference. Honda and Toyota understand that with modern technology, it doesn’t have to be a mileage versus power tradeoff. Granted, I am not talking about a 300HP Hemi here, but just comparing my current car to this new Honda, I can get more features and the same performance with triple the mileage. Oh yeah, the Honda is also cheaper with a longer warranty. You don’t exactly need to be able to discover the unified field theory to know what makes more sense here.

Labor costs, expensive and unsustainable defined benefit plans and spiraling health care costs are a huge reason why the American auto makers are in such trouble these days, but the rest of the reasons can be summed up in two words: bad product. When trends emerge, they are not only late to the party, but they showed up with poorly thought out and executed ideas. They are akin to Harry and Lloyd in the movie Dumb and Dumber showing up to the posh Aspen Nature Benefit wearing their brightly colored, ruffled shirt tuxes.

And don’t even get me started on the availability of Hybrid technology from US auto manufacturers because this entry is long enough and that story is even more depressing.

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