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Cars Lasting Longer The Real Reason For Auto Industry Woes?

Hmm...

WASHINGTON - Back in the 1970s when Pat Goss was working in automotive repair, 100,000 miles was considered the benchmark of a car's longevity. Well-maintained Dodge Darts with more than 300,000 miles were a rarity. Now, with advanced technology, improved engines and synthetic oils, crossing the 100,000-mark on the odometer is not much cause for celebration.

"We consistently, on any given day, usually have multiple cars with 150,000 to 250,000 miles and quite frequently cars well over that," said Goss, owner of Goss' Garage in Seabrook, Md., and host of radio and TV car-talk shows.

A report released this week by the National Highway Traffic Safety Administration said passenger cars and light trucks are racking up more miles than ever. Typical passenger cars are now surpassing 150,000 miles, while most pickups, sport utility vehicles and vans are crossing the 180,000-mile barrier.

A report in 1995 said most passenger cars broke 125,000 miles and light trucks typically reached the 150,000-mile mark.

Auto industry officials say it underscores the strides made in engineering and quality control in recent years with a focus on longterm durability. Today's vehicles have more advanced engines, improved spark plugs, higher-performance synthetic oils and better exhaust systems.

This makes me wonder...if cars are lasting longer in the market wouldn't it be logical to conclude that this would drive down demand for new cars? And if that's true, couldn't it also be true that this increased durability has played into the woes faced by Ford and General Motors of late?

Foreign auto makers have long outstripped domestic car companies in terms of producing durable automobiles, so I would expect that the increases in longevity detailed above have to do, mostly, with an increase in the quality of domestic car craftsmanship. And if product turnover in the domestic auto market has decreased it means that domestic car companies, primarily Ford and General Motors, are selling fewer cars.

If you couple this reality with the fact that these companies are unable, in a lot of ways, to reduce costs and adapt to a changing market thanks to stiff wage and labor requirements foisted upon them by unions - and to a lesser extent the federal government - you can see where a lot of the problems being faced by Ford and General Motors are coming from.

At least, that's what it looks like to this observer. It may well be that these companies did such a good job increasing the quality of their products that they've worked themselves in to a corner.

You can read more from Rob Port at SayAnythingBlog.com


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Comments (24)

I think that may be true to... (Below threshold)

I think that may be true to some extent, but I would guess that the effect is more than compensated for by the many more cars on the road today. I still think the UAW is the single biggest problem the US automakers have. ;-(

Chris
http://amateureconblog.blogspot.com

No wonder Ford is in troubl... (Below threshold)
JAT0:

No wonder Ford is in trouble. I have a 1926 Model T still going strong. Had I only known...Hum!

I buy fewer new cars than I... (Below threshold)
Jake:

I buy fewer new cars than I used to.

I am obsessed with having a car that will start at 30 below and will not break down. I used to buy a car every 2 years to insure I had that reliability. In the last ten years, I have kept my cars 4 years with no change in reliability.

It is no secret that US car... (Below threshold)
robert:

It is no secret that US car companies have had an advantage in trucks and SUVs. This is a higher profit segment that has served them well over the years, particularly in recent times.

The problem with the US manufactuers has always been oil price shocks, the shift in consumer demand, and the resulting displacement problems.

Three years ago the spot oil price flirted with $ 15 a barrel, then it went to $ 80. As we consumers knee-jerk between Hummers and hybrids, we are fond of complaining what idiots the managers of our auto companies and airlines are, what problems are health care, unions and quality.

The truth is that import car makers are the natural winners in oil price shocks, as are smaller, more nimble, airlines.

The truth is also that is almost impossible to run a major car manufacturer or airline with oil prices fluctuating over such a wide range. The calculations for the purchase of a new plane, for example, are made to four decimal places in passenger costs per mile and expected passenger load - all for a twenty year period. All this goes out the window when the fuel cost goes up so much. Demand changes, everything changes.

Rather than complaining about it, we should try to change everthing we can to reduce shocks. We could start with eliminating most of the special blends, reducing refinery barriers and the like.

Much of the problem is of our owm making with stupid regulations and concessions to farmers. If one has any doubt about this consider the costs of diesel versus regular gas. Some may have noticed that sometimes the diesel cost is .50 cents higher than gas, sometimes it is .50 cents lower. It all comes from the same barrel of oil, so this gives you some idea of the impact of refining choices, distribution costs, etc.

For roughly twenty five years Saudi Arabia was able to control the oil price within a range and that resulted in good times. We should look for ways to replace them now that they cannot control it.

If the US managers are idiots now, we must also then, term them geniuses several years ago when they were besting everyone with trucks and SUVs and making fabulous profits. They would have been true idiots if they had not taken advantage of a high-flying, high-profit segment.

Back in the days when I use... (Below threshold)
harmlesslittlefuzzball:

Back in the days when I used to buy only American made cars, I needed a new one about every four years. Then in a weak moment, I let my buddy talk me in to buying my first "Japanese" car (with parts from the four corners of the globe, I'm sure).

About 10 years and about 300,000 miles later, the thing still ran. I eventually had to get rid of it because our county implemented an emissions testing requirement. I handed off the keys and title to a family friend who lived in another county that didn't have to comply with the law. Alas, the ink was barely dry on the title transfer when he totaled it in a wreck. I would have been curious as to how much longer it would have kept chugging along.

So put me down as one of the converted. As long as my car is dependable and relatively maintenance free, I plan to hang onto it as long as possible.

There is no question in my ... (Below threshold)
Jay:

There is no question in my mind that durability is a factor, and while manufacturers have been great about improving that on the one hand, they haven't necessarily adapted their sales expectations on the other hand.

When I was younger, I learned that if a car reached 130k, it would die any time, and getting to anything approaching 150k was a miracle, usually abetted by massive and/or frequent repairs. Assuming that hadn't already been required to reach 130k. If you bought a car with 90k on it, you knew you were buying a disposable car that you might have a couple years and be the final owner of before it got scrapped.

My 1988 Sentra has been owned by me 10 years as of sometime in the next six weeks. It is up over 155k, always runs, and is easy on maintenance, though starting to be less so. It also gets 30 MPG pretty consistently much of the year - it drops in winter. I figure cost of purchase of the car plus repairs over the life of it have run me about $50 a month. Best. Car. Ever.

Granted I'd buy used, but as long as I have owned that reliable car, there has been a lack of incentive to move on. I may buy something a bit bigger this year because of having the kids, but when I do the Sentra will probably go to my nephew, not the junkyard as has traditionally happened with cars I've owned.

My father founded and owned a body shop for 35 years, then did insurance adjusting. He loves new cars and would never go back. There is no comparison in quality, as well as safety.

Another thing to take into ... (Below threshold)
Greg:

Another thing to take into consideration when talking about longevity is that the used cars require spare parts. Based on what I have seen, this should have kept the parts divisions in business as an offset to the lagging auto sales. With today's technologically advanced cars, new parts are not cheap. Unfortunately, Ford and GM's auto parts don't bear this out. Any ideas why?

I agree that automotive lon... (Below threshold)

I agree that automotive longevity is a factor in the auto makers' economic problems, but I think the failure to resolve the pension and medical plans' issues is much greater.

FWIW, although the mechanical parts of cars are being made better and are lasting longer than in the past, today's cars are absolutely dependent on microchip controllers to keep running. This provides the auto makers with an opportunity to institute a new kind of "planned obsolescence," to wit: stop supporting the electronics after a period of years.

My wife drives a 1988 Acura Legend that's really "cherry." About a year ago it started giving false display indications about service requirements and system status. We took it to our mechanic who said there was nothing wrong with the actual systems, and that we'd have to live with the false alarms, because the problem lay in the computer chip that controlled the display and he couldn't get a new one because Acura had quit supporting it--i.e., they weren't making it anymore and the inventory had been drained. I checked on the Internet and could not find the chip at any price.

Because the chips require software which is presumably protected by copyright, there can be no legal aftermarket for the chips without the cooperation of the manufacturer.

A few years ago, I got tire... (Below threshold)
Dave:

A few years ago, I got tired of car payments. At the time, my monthly payments totaled over $800. I got rid of the one I owed the most on and bought a 20 year old Blazer. I kept the '93 Ford van and paid it off. I still have auto costs, but now I pay the garage and the parts store, instead of Ford Credit and GMAC. I have just under 150,000 on the Ford and about 180,000 on the Chevy. I intend to drive them until they die. then replace them with something I can pay cash for and continue the process.

I figure the economy still benefits, I'm just shifting the beneficiaries.

Well, here are a few factor... (Below threshold)
Lugnut:

Well, here are a few factors and observations:

1) The recent news that GM's retirement fund is in deep trouble reveals that this is a huge drain on the company's finances. I read somewhere a while back that GM spends more money per car on health care benefits for present and former employees and dependents that it does on steel. The unions have certainly had a hand in the current financial stuggles besetting the domestic automakers.

2) I haven't done any checking, but my gut feeling is that demand for cars is strong and gradually getting stronger all the time. The population keeps increasing, immigrants (be they legal or illegal) become affluent enough to buy cars, people become three and four and five car families, fleets routinely flush their cars and get new ones, etc, etc.

3) Yes, cars last longer now, but people are driving more and more miles all the time. When I was a kid, cars were pretty much toast when they hit a hundred thou, but it took the average driver seven or eight years to run one up that high. Nowadays people are crossing the 100k milestone in three or four years.

4) The Japanese still build better cars than the Americans do. By "better," I mean start-first-time-every-time reliability and going forever. This does convert people to Asian cars, as some of the testimonials above show. They usually don't go back. Toyota has 19% of the market share and that number increases every year.

5) It DOES usually cost more to fix Asian cars than American stuff, but since they last longer and you don't have to fix them as often, it all evens out.

6) One thing that particularly peeves me about American stuff is parts availability. The parts supply from the dealership is generally cut off after about 10 years, so even if you get an American car that lasts longer than that, you're hosed if you need some interior trim part. After that, the car gradually becomes a hoopty, and then people get rid of them. You can get Asian stuff, on the other hand, seemingly forever. It's easier to maintain a car in top condition if you can get parts for it.

7) Government intrusion has been a factor. An example: Back in the '80's when emission laws became stiffer and everything went fuel injected, it was against the law for the domestic manufactures to share technology back and forth with each other. They all had to do their own R&D independently and come up with their own systems. This undoubtedly cost a huge sum of money on duplicated effort. The Japanese on the other hand had no such restrictions and colluded freely with each other when they were developing their new technology. In fact, the Japanese government encouraged it. Who can guess how much time, money and effort that saved them?


Hmmm.If the domest... (Below threshold)
Denny Crane:

Hmmm.

If the domestic makers have dramatically improved their quality, then wouldn't you expect them to regain some market points from the foriegn makers? That ain't happening.

Toyota continues to improve it's quality, yet its sales also continue to increase (even in years that are horrible for the auto industry), and it's market share continues to rise. How would you explain Toyota's seeming immunity from the adverse sales effects of increased quality?

You can't; it's a silly hypothesis.

Detroit's quality may be improving, but it's still not where it should be in most cases. Moreover, Detroit does not build what most consumers seem to want. And then there's the price of oil. In other words, Detroit has been unable to pull it's head out of it's ass since the late 1960's. To suggest Detroit's trouble results from excessive quality is, well, far from realistic in my humble opinion.

I have 3 cars. A 96 Acura I... (Below threshold)
Faith+1:

I have 3 cars. A 96 Acura Integra with 125,000 miles, a 1994 Toyota Corolla with 230,000 miles and a 1999 Benz E320 with only 75,000 miles. That's my "new" car. No payments on any of them and routine maintenance runs me about $1000 to $1500 a year. Have a son who is a junior in high school. I figure about the time he graduates college I'll get a new car.

Prior to the Corolla I had an "American" car. Got rid of it after 2 years and umpteen trips to the dealership and various mechanics. It went through no less than 4 factory recalls in that time period to replace various key components like the entire electrical system, the transmission--twice and the power steering system.

Most I ever did to the other 3 was a timing belt that went out on the Corolla at 125,000 miles.

Through the '70s and '80s, ... (Below threshold)
JohnAnnArbor:

Through the '70s and '80s, GM cars had no 100,000 digit on the odometer; apparently they didn't think it necessary. People suspected then that cars were designed to fail after a certain amount of time to force you to get another. They even had a name for that: "planned obsolesence."

Other comments already poin... (Below threshold)
K:

Other comments already point to the problem. Put in a couple of adjectives and it becomes clear.

Your wuestion ls "Cars Lasting Longer The Real Reason For Auto Industry Woes?"

The answer is
"Foreign Cars Lasting Longer, The Real Reason For American Auto Industry Woes."

From the ghastly mismanagement teams of Detroit.

And sadly, no one in high management will ever suffer. Those fired get golden parachutes, those staying get huge salaries topped of by a bonus even in bad years, top dogs get pension guarantees fully funded and not subject to bankruptcy.

The disaster will fall on good lower managers amd employees who may well never find another great job. Even vested pensions will probably shrink, their expected medical will vanish.

Those from thirty to fifty who did not make the decisions get the shaft.

When we were kids growing u... (Below threshold) About 3 years ago, my boss ... (Below threshold)
Kevin Haryett:

About 3 years ago, my boss finally sold his 1990 Honda Accord EXR. At the time, it had over 750K Km on it. (about 450K miles).

The new owner was a former employee. I ran into him about a month before Christmas. I asked about the car. He is still running it, same engine, same tranny. The body he said needs some work, but its a daily driver for his wife.

As far as the milage, he said it rolled 1 Million last summer on the way to florida and currently has about 1.1 mil on it, or about 700K miles.

We have a few vehicles in our fleet that are still going with 450K+ (km) including Pontiac Grand Am's, Chrysler Sundance, Toyota Tercels, and a couple of Honda Civics.

Regular Maintenance, and taking care of the small problem quickly before they become large is the key.

I had a 91 civic that I drove the snot out of, and it had over 500K (km) when the heads cracked and it wasn't worth me fixing. Sold it for parts for over $1000.

I also had a '97 Cavalier that had over $7000 in warranty repairs in 2 years. Power Steering Rack, ABS system (including calipers and rotor damage), Airbag controller and main computer failure, Rear Axle failure, Cracked intake and "premature" failure of the Stainless Steel muffler.

POS it was. Found out it was built on a Tuesday after a long weekend. :)

Interesting to speculate, b... (Below threshold)
yetanotherjohn:

Interesting to speculate, but check out the number of cars being sold (still going up, but logically not as fast as it could if the cars weren't lasting as long) and the price of cars (I haven't seen an inflation adjusted car price trend). If you assume productivity is relatively fixed (X cars per factory with Y people building them), then the profitability would only hurt if the factories were underutilized or the factory required increased captilization (new factory or tools) the were out of line with the original capitalization.

Having sold into detroit as a supplier, the issue isn't the number of cars being sold. The issue is as antiquidated management style and corporate structure as the MSM is an antiquidated news delivery mechanism. Add in competition that is trying harder, huge barriers to entry keeping out new blood and you get a bloated industry that can't make the difficult decisions to come out of their problems. The potential for productivity gains that could radically improve their bottom line are their, but not the will.

Quality is a hard thing to ... (Below threshold)
robert:

Quality is a hard thing to measure. Each of us have experiences that go far back and shade our views. To those who argue, for and against, that US quality has improved, I offer one measure. Here are the top ten rated in initial quality by JD Power (# problems for so many new cars, 2004):

Lexus 87
Cadillac 93
Jaguar 98
Honda 99
Buick 100
Mercury 100
Hyundai 102
Infiniti 104
Toyota 104
Mercedes-Benz 106

By this measure, it would seem that the US companies are in there kicking, 'tho this may not apply to that '77 pinto you remember and write about.

Here is why I think the aut... (Below threshold)
Li:

Here is why I think the auto industry is not doing well.
Factor one: cars are definitely lasting longer. Once the payments are done and the car is still running fine it is hard for many of us to imagine going back to monthly payments any sooner than absolutely necessary.
Factor two: for the most part cars today all look alike...no fins, no unique headlight and tail-light configurations, few cool trim appointments, etc......auto brands used to have individual personalities and therefore it was fun to go to a showroom. On the road today it is virtually impossible to tell the difference between a four year old car and a brand new one of any make, assuming they are both clean. All the technology in the world cannot make up for boring design.
Factor three: getting a new car doesn't have the same social cachet it once did (partly due to factor two). Now, if you want to impress someone it is more likely through electronics (for a lot less money).

The best thing we could do ... (Below threshold)
Omni:

The best thing we could do for American industries would be to outlaw unions; they forced badly-needed reforms in the distant past, but for a shamefully long time now all they've done is make it necessary to pay workers doing jobs that a trained monkey could do 10X what they're worth.

In my family, we have a long history of buying American cars, mostly Fords, and have never had cause to regret it.

(drives a '79 Ford that still runs perfectly despite indifferent maintenance)

Hi Ken, I just found out yo... (Below threshold)

Hi Ken, I just found out you are a podcaster too. I only knew you as a blogger. I was wondering whether there is something like a group of pro-Bush podcasters like the Liberal anti war, anti Bush grouping http://qpodder.com A sort of pro bush podcast directory.

If you properly maintain it... (Below threshold)
Nemo:

If you properly maintain it, any car will last. Last week at the office someone made a comment about "crappy American cars". He drives a Ford Ranger pickup. I asked him how many miles he had on it, and some other people in the room:

Ranger: 150,000
Explorer: 160,000
Lincoln LS: 100,000
Mustang: 196,000

I then had to ask: what do you mean by "crappy American cars"?

There is so little difference in the cars these days, the main difference is in the resale value - which doesn't matter if you drive a car into the ground. If you trade in new cars often, buy foreign since they hold resale better. If you buy used, buy American since you'll probably get a better deal.

Just keep up the maintenance.

The perspective on US qauli... (Below threshold)
jpm100:

The perspective on US qaulity was burned in the minds of the public during the late 70's & early 80's. Prior to that time, the market wanted the cheapest thing out there. People would climb under the hood and wrench away. When the home situation changed (two full time parents become more common & longer hours at work), the cars become too complex with computers and other gadgets for fuel economy & emissions, customer's were hurt hard when a car needed work. No longer could you put the car up on blocks and fix it while grabbing the wife's car to go to work.

The automakers got hit with pollution and fuel economy standards from the Carter administration that ramped in quicker than the normal new product cycles in Detroit. US companies scrambled to make small cars with low displacement engines to comply with quality being the big sacrifice. Meanwhile the Japanese only needed bring to the US market the smaller cars they were already making for their own market. That diparity never has been corrected in the public's mind.

The lexus took this advantage to a new level. The first lexus was a body that was sold in Japan for eight years and also an older engine. These parts were updated and married. Basically these would were mature products. Quality from autoplants is usually extremely high after the first 3-4 years because all the bugs have been worked out. It's also the time where the public would normally tire of that vehicle type. So no advantage their for US makers. Although they do do minor updates, many are quick to point that out.

This advantage can be seen in other products as well. Now that the HDTV market is defunct in Japan. They can sell their old 1980's technology in the US thanks to the Television's lobbying efforts in Washington to set our new TV standard to closely match 1980's television consumer electronics standards.

The US automakers have had a good time of it with their trucks and SUVs because the Japanese don't have a domestic market to first develop their vehicles then hit the ground running by bringing them to the US.

There's also price advantages due to no legacy costs like healthcare which their government pays for. US quality could improve a magnitude if they could put $2-3000 more into the same vehicle without raising the price. Even so, they've gotten to a reasonably competative position with quality.

But perception will take a long time to change. I means it took centuries for people to realize tomatos aren't poisonous.

The winner is Nemo: "If yo... (Below threshold)
mark m:

The winner is Nemo: "If you properly maintain it, any car will last"

That is the truth. I have never had a vehicle of mine "die" on me. I have never owned a foreign car either.




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