Long but good read.
Avoidable Contact #23: Airbags killed the AM radio star.
By Jack Baruth, on January 21st, 2009
“All I need is a nice basic car. Something like, maybe, a Saturn or something.” This unassuming, if perhaps ungrammatical, combination of sentences has come to be a long-running joke in my family. You see, one of my relatives married a woman back in the Eighties and subsequently provided her with a string of relatively upscale whips ranging from an Infiniti J30 to a Siebener BMW. Every time it was time to go looking for a replacement, however, she would ardently protest to anyone who would listen that “All I need is a nice basic car. Something like, maybe, a Saturn or something.” My relative ignored her and kept shoveling the Audis, Bimmers, and Infinitis her way, and each time she would accept the new ride reluctantly, reminding us about her preference for “a basic car”.
Some fifteen years after their marriage, this woman told me at dinner, “You know what I did today?”
“No. What did you do?”
“I rode in a friend’s Saturn to lunch. You know, I’ve talked about how that’s all I really want.”
“And?”
“It was horrible! It smelled weird, the windows rolled up by hand, it was cramped inside, and it was really noisy, like something was wrong with it.”
“So, what’s your opinion now?”
“Well, I still want a basic car. But now I think I’d be happy with just a basic BMW or Lexus.” I thought this was well-said, because it allowed her to continue to champion the usual liberal virtues of “simplicity” and “consuming less” without actually being forced to drive anything worse than a 328i. As it so happens, her current car is just that – a “nice, basic” two-hundred-and-thirty-horsepower, leather-seated, alloy-wheeled Bimmer sedan.
A quick examination of the product on the floor of the 2009 Detroit Show shows that, in her opinion of what constitutes a “basic car”, my relative’s wife was well ahead of the curve. The era of the “basic car” is dead and gone. The Chevrolet Chevette “Scooters”, Plymouth Horizon “Americas”, and Toyota Tercel “EZ” models which littered the streets and cluttered the left lanes of my youth are long gone. Today’s “basic car” has performance to match some Sixties “musclecars” and equipment which would shame Konrad Adenauer’s Mercedes-Benz state limousine. Naturally, the government is to blame.
Sort of. China’s also part of the problem.
Well, really, it’s your fault. Okay?
The plain truth is this: Government regulation, changes in manufacturing processes, and consumer behavior have all combined to drive a stake through the heart of the “basic car” in this country. Before we discuss why it’s slightly easier to hijack an Israeli airliner than it is to find an American-made car with roll-up windows, though, let’s take a look at the way the car market does not work – at least not any more.
Have you seen the movie “Gran Torino” yet? If you haven’t, consider it recommended to you as of this moment. My father drove a Gran Torino when I was a child, you know. He also made Walt Kowalski, the character Clint Eastwood plays in the movie, look like Carson from “Queer Eye”. But I digress. Anyway, in the film we learn that Kowalski built Gran Torinos and other Fords for thirty years, and that he preserved a 1973 Gran Torino as his most cherished possession. The way Gran Torinos, and all other
American cars, were made in 1973 was pretty simple. You pushed ‘em down the line and you added equipment. The men who built the cars earned a solid “living wage” doing so, and all of the equipment they added, with the occasional minor exception, was also made in America by men earning a living wage.
GM used the “Vette” as a price leader for years, long after the platform had been paid for.
With this fundamental understanding – that everything on the car was made in this country by middle-class Americans – in our heads, it becomes easy to see why cars were priced as they were, and why the options structure functioned as it did. Building an AM radio required a certain amount of time and raw materials. Building an AM/FM radio required more time, because it was more complex and contained more raw materials. Building an 8-track/AM/FM required still more time, money, and materials. You get the idea. The more something cost to build and install, the more it cost as an option. You can apply the same logic to everything from “mag wheels” (which contained more costly raw material than a plain steel wheel) to the additional taillight which graced certain models of the full-sized Chevrolet (it cost more money for two more lights, plus it took time to run the wires). This is not to say that the options were always priced fairly; some options were high-profit, like a Landau vinyl top, and some weren’t, like the combination of parts that made a Hemi Dart. Ever heard of a Hemi Dart, by the way? It was a $4500 “compact car” that could run ten-second quarter miles from the showroom floor. That’s right. If you ever owe anybody a “ten-second car” for some reason, just get in your time machine and buy ‘em a new Hemi Dart. It’s much easier than buying a wrecked Supra and getting all your parts overnighted from Japan. Sorry, we’re off topic a bit here.
Returning to the matter at hand… We are now confronted with the reality of modern manufacturing. In the thirty-five years since Kowalski’s ’73 Gran Torino rolled down the line, nearly everything about the way cars are built and specified has changed. Most of the equipment that makes up a 2009-model car is sourced from “suppliers”, which is a nice way of saying that most of a Cadillac isn’t made by Cadillac after all. These “suppliers” operate on a volume basis, and they are ruthless seekers of efficiency in manufacturing. A 1973 Ford might have many different dashboard assemblies, seats, steering wheels, radios, and door panels, all of them made by Ford in smaller affiliated factories; today those parts are reduced to the minimum possible variety and produced in bulk by the lowest bidder.
Why did power windows cost more than roll-up windows in 1973? It’s easy to understand; it took a man, or a team of men, earning the aforementioned living wage, longer to build, assemble, and install power window components. In 2009, the whole deal is “subbed out” to a supplier who produces snap-in power window assemblies. It’s usually cheaper to get 100,000 power window assemblies than it is to get 50,000 roll-up assemblies and 50,000 power assemblies, plus you don’t have to train the $12/hour temps who (don’t tell anyone!) actually do a lot of “low-skill” jobs on American assembly lines how to install two different kinds of window assemblies. The door can be made simpler because it doesn’t have to accommodate two different kinds of controls, which leads to more volume discounts, and so on.
Still, the idea of a power window being cheaper to build than a roll-up window should offend any reasonable individual. How can that be? The answer is usually found in China. In that vast industrial hellhole of a country, where men and women are marched at gunpoint from their rural homes to be “resettled” in crowded factory shantytowns, children are chained to tables and forced to work from dawn ‘till dusk, and pollution exists at a level that would have shocked Upton Sinclair, production costs are virtually nil. With no EPA to satisfy, it’s cheap to make electronic components. The biggest cost is usually shipping and distribution, and those costs are related to weight and size.
Toyota’s cheapie: the Tercel “EZ”. It was $6,495. Toyota dealers refused to stock it, preferring to sell the Tercel coupes for ten grand.
What’s that? You didn’t realize that China makes a major portion of “American”, “German”, and “Japanese” cars? Well, they do. Sorry about that. It isn’t limited to hidden circuit boards or wiring harnesses, either. That all-American icon of ass-kicking, full-throttle power, the mighty Corvette Z06, rolls on lightweight wheels made by the supplier AmCast. No prizes for guessing that “AmCast” wheels come from China, the same way you can always bet that when a clothing manufacturer uses “New York” or “London” in their name, their stuff really comes from China or Vietnam. In terms of actual, inflation-adjusted costs, it’s very probable that the massive magnesium wheels on a Z06 cost GM less than the set of American-made styled steel 15” wheels on the ’73 Stingray did. That’s progress. If you call it that.
You can see the effects of this by looking through any modern car’s “order book”. Stand-alone options have virtually disappeared; they required too much effort to install, too much differentiation from suppliers, and didn’t create enough possibilities for volume discount. I’ve griped about the lack of option availability in the past, and this lack of availability is a direct consequences of outsourced supplier production. When I visited the Porsche plant two years ago, I was taken to the room where leather is cut and dyed, by men and women earning a living wage, one piece at a time. By contrast, the “leather” at a Toyota or GM plant is delivered by the truckload, already glued to the seat frames, by a supplier. Any wonder that Porsche charges five thousand dollars or more for a “full leather interior” while Toyota offers it as a cheap part of a packaged option group? And is it any wonder that Porsche can offer limitless colors while Toyota offers two or three at the most?
In a world where most of the “little parts” are made by (supposedly) faceless people toiling at faceless suppliers, assembly time has become the Holy Grail of auto manufacturers. There was a time when it took days for a car to travel from one end of the massive River Rouge plant to the other; today it takes Ford thirteen hours to build a Fiesta. There are hundreds of assembly steps required to build that Fiesta, so you can be assured that each one has been massaged into near-perfection. If it takes an extra thirty seconds to determine which radio should go into a slot, it might be cheaper to give everybody the “better” radio and standardize production, particularly when the “better” radio barely costs any more than the “regular” one. These kinds of decisions are made all the way up and down the line, with the end result being that no car sold in this country today comes with a plain AM radio. What’s the point? Your Chinese radio manufacturer couldn’t save you more than a dollar or two, perhaps less, by pulling the FM functionality out of the radio, and your assembly time might go up as a result. And just like that, the AM radio is gone, as dead as the non-prismatic rearview mirror or the fixed-back bench seat.
The Horizon America was pretty fast by the standards of the day: 0-60 in ten seconds. That’s probably faster than a modern Versa 1.6.
With all of that said, it might still be possible to make a standardized low-equipment car nowadays, even knowing what we know about suppliers and volume. Years ago, Chrysler responded to economic trouble in this country by creating a set of what I would call “critical-content cars”: the “America” series. They offered decent engines – usually the 2.2 four-cylinder – and very basic interior equipment. Vinyl seats, cheap radios, no power goodies. They were sold in a limited number of colors and for a very aggressive price. Check it out.: a decent compact car for $6995! It was one hell of an idea, the cars sold pretty well, and you absolutely, positively, couldn’t do it today.
Why not? It really is the government’s fault. The list of modern required safety and emission equipment is pretty long nowadays. You need plenty of airbags, you need a complex diagnostic system to keep emissions in check, and in the very near future you’ll need tire pressure monitoring and stability control, which means you might as well throw ABS and traction control in there for “free” because they’re subsets of the same control assemblies. And what the government doesn’t require, the consumer’s been terrified or bullied into demanding by the media. How many “non-enthusiasts” would buy a car with a vinyl bench seat, no air conditioning, or (gasp) a manual transmission?
The end result of the current manufacturing process, government regulations, and consumer perception is this: There’s a certain cost involved in building an “acceptable” new car. From there, the cost to provide the rest of the “basic stuff” is pretty trivial, so most manufacturers go ahead and do it. A basic Chevrolet Cobalt is sixteen grand. It might be possible to build a “Cobalt America” for fourteen grand, but who’d buy a vinyl-seat, no-A/C, wind-up window ‘ Balt to save a measly forty bucks a month?
There’s one manufacturer in this country who is really willing to test the market in this regard, and that’s Nissan. They are offering a Versa 1.6 for $9,995. Sure, it might be occasionally possible to buy a Kia, Suzuki, or Hyundai for less, but don’t forget, those are all cars built in the low-cost haven of South Korea. Only Nissan is really trying to provide a “Versa America” by just de-contenting an existing Japanese- or American-made car. Your just-under-ten-grand gets you a lot of equipment by the standards of 1973: five-speed manual transmission, curtain airbags, tilt wheel, intermittent wipers, audio system “pre-wiring” with four speakers (and I don’t have to tell you that’s because it’s cheaper to wire ‘em all for sound than it is to stop and check to see if they should be wired or not, right?) and dual mirrors.
I suspect it’s a stunt, and that if Nissan actually sold a million of these cars it would bankrupt the company. But it’s a pretty brave idea, and I wouldn’t mind having a cheap urban runabout, so I decided to spend a little time on the Versa website. The only problem: it really gets hot in Ohio during the summer, so I’d like to have A/C. It’s a pretty basic requirement. And guess what? For $10,990 I can have it. And for $13,100 I can have the bigger 1.8L motor and a six-speed manual, which would be nice too. And they’ll give me a CD player. Not bad for two grand more. For just a little more — $16,100 — I get alloy wheels, MP3 capability, cruise control, and a bunch of other stuff. You see the problem? With a series of little steps, all of them justified, I’ve added 60% more cost to the car.
And that is the raison d’etre of the $9,995 Versa: it will sell a lot of $16,100 Versas. It’s easy to be cynical and think it’s always been that way, but it wasn’t. Most of the Model Ts, Beetles, Rabbits, and Tercels were sold in fairly basic spec. Their manufacturers expected to earn money on the basic car, and they did. The game’s changed, but it’s set to change even further. Last week I saw the “basic car” of the future roll by me on the Detroit carpet. It was called the “Volt”. If they ever actually build the thing, it will cost serious money, and if we’ve really hit the so-called “peak oil”, before long it will be the only choice. At that point, a $33,000 “basic” Bimmer will be as quaint a notion as that old Plymouth Reliant America and we’ll be lining up for $40,000 electric disposable misery-mobiles. Basic cars indeed!
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