I’ve been trying to remember whether at anytime in the past 45 years, I’ve ever heard anyone say — on a showroom floor, on the radio show, or by email — that they wanted to buy a new vehicle at a great price, so they didn’t care if the car was unsafe or it had horrendous fuel economy. After racking my brain some time, I just can’t remember that ever occurring. On the other hand, virtually everyone asks about how safe any given vehicle is and what fuel efficiency they can reasonably expect.
Ninety years ago Alfred Sloan, the newly installed president of General Motors, often jumped into his automobile and cruised the country, dropping in at GM dealerships to find out what was happening at retail. Sloan wanted to know what GM’s customers loved about their vehicles and what they wished would be the next stage of development. It was management by driving around.
By the 1960s things had changed. Advanced technology was already remaking the world. GM had first sent engineers to Los Angeles in the late Forties to find the root causes of smog, which they did; but those same engineers also admitted knowing of no existing technology that could clean up a vehicle’s exhaust emissions. Two years later John Hetrick won his patent for the automotive airbag; but, as with the smog problem, no known trigger device was fast enough to activate an airbag for one’s protection in an accident. Ford had offered a safety option in the mid-Fifties that included a padded dash and seatbelts, but no one was interested in purchasing it.
As for fuel economy? The idea of smaller cars and better fuel efficiency had taken hold with a few Americans. Volkswagen’s success here in the Fifties had George Romney, then head of American Motors, pushing the concept of smaller and more fuel-efficient vehicles for everyone. In the end GM would bring the Chevrolet Corvair, a far more stylish and comfortable competitor to the Volkswagen, to market in 1960. Like the VW, the Corvair had its engine in the rear and used a similar swing-axle design.
This happened during the period when Detroit was first becoming concerned about horsepower in its automobiles; GM even went so far as to issue an edict for its automotive divisions, limiting how much horsepower could be put into any given carline. However, John DeLorean at Pontiac found he could bypass that GM corporate rule by making a large-displacement engine just part of an “option package” on the 1964 Tempest, creating the first GTO. And once General Motors realized how much money it was making off that one high-priced option it was, as they say, off to the races.
So, Detroit was worried about what air pollution damage its automobiles were doing, about its cars’ lack of safety equipment, and about the danger of crashes and fatalities resulting from vehicles’ having huge engines. For the most part, their plans came up short. Then again, they were often dipping their corporate toes into the water, not making hard commitments for all their lines of vehicles. Then came Ralph Nader’s 1965 book, Unsafe at Any Speed, the best-selling nonfiction work of 1966. Now Congressional hearings would be held to find out why Detroit made so many unsafe vehicles, and the public groundswell of demand for safer American-made cars was supposedly intense. The result? The National Highway Traffic Safety Administration, created to craft new safety standards for the nation’s cars and to enforce them across the industry. Suddenly the public was walking into dealerships and asking, “How safe is this car I’m thinking about buying?”
And less than 10 years later, in1974, GM was offering a driver’s-side airbag option in its full-sized luxury sedans. Nobody opted to buy it. The next year, when the mandatory seat belt interlock system came out, forcing drivers to buckle up before they could start their cars, that safety measure nearly caused rioting on the showrooms by potential buyers. A huge number gave their dealers an ultimatum: Bypass that system or I won’t purchase the vehicle. And in that we see something of the duality of man; first they ask how safe the car is, then they demand that the most critical safety device be disconnected.
So, nearly a decade after Ralph Nader’s book had literally changed the landscape in the automobile industry, people both demanded cars with advanced safety devices and refused to purchase those devices.
But already there were other troubles on the horizon. On August 1, 1970, the nation’s governors held their annual conference at the Lake of the Ozarks. GM, always in attendance, traditionally handed each governor the keys to a new Cadillac for their use during the retreat; it would be super discounted if any governor chose to purchase his vehicle after the conference. But this time the governors weren’t there to discuss the positives of the auto industry.
No, with the interstate highway system nearing completion, the governors discussed how that highway system had displaced so many of their states’ poorest families; some city planners had intentionally run their particular interstate through the low-income neighborhoods near downtown, forcing the poor to relocate elsewhere. The governors would recommend abolishing the highway trust within five years and using all of the monies collected for mass transit instead. While that did not happen, Congress did start diverting more of the highway funds toward mass transit systems in larger cities, and General Motors executives were furious at this slight. For the record, not one of those Cadillac’s provided for free use at the 1970 governors’ convention was purchased at its conclusion. That was a first too.
A week after that governor’s meeting, General Motors reached an out-of-court settlement with Ralph Nader. For having hired private investigators back in 1966 to find dirt on the consumer advocate in order to discredit him publicly and ruin his reputation, GM had to pay him $425,000 — adjusted for inflation, close to $3 million in today’s money. But forget the money; by investigating Ralph Nader, GM actually improved his image and standing with the public. Because their private investigators couldn’t find any damaging information on Nader, not even when they tried to ply him with “girls as sex lures” as the New York Times put it.
But that wasn’t the industry’s only problem in 1970. That year also marked the most critical update of our Clean Air Acts, one that would force automakers to come up with onboard devices to truly start hammering away at the excessive and polluting emissions from their vehicles. Again the industry screamed, as it had four years earlier over the government’s new involvement in automobile safety. Moreover, because the 1970 Clean Air Act was a demand for technology not yet invented, it was questionable from the start whether the industry could make it happen in the five-year timetable Congress had set. Detroit said it couldn’t be done that quickly. Congress said they would hold more hearings in 1972 to gauge automakers’ progress and, if at that time it was discovered the timeline was not reasonable, it would be extended.
Of course 1972 came around, the Congressional hearings took place and engineer after engineer with the Big Three of Detroit took the witness table and said it was impossible to create this new technology, at least given the deadline Congress had set. Then little Honda, at the time a company selling virtually no vehicles in this country, took its seat in front of Congress and said meeting the 1975 Clean Air Standards was not a problem. In fact, it had already met those standards and the EPA had approved its new CVCC engine. It would debut in late 1974 in the 1975 Honda Civic, which was also the vehicle rated highest for fuel efficiency in America that year.
Detroit, with egg on its face again, went home and Robert Stempel of GM created the catalytic converter by the deadline demanded for cleaner cars. And sure enough, besides the many new-car buyers in 1975 demanding that the seatbelt interlock system be disconnected or they wouldn’t buy the vehicle, a much smaller number demanded that the catalytic converters be cut off their vehicles. Stories abounded that those units ran so hot that a car could start a grassfire, while the rotten-egg smell of converters back then was horrendous. I can’t answer for the nation’s car dealers; but, while the store I worked at would disconnect the interlock system, it would not remove the catalytic converter from any product we sold.
Make safety standard
Although its batting average has been exceptional, the government’s demands on the auto industry are not always right. The part about forcing airbags into cars before they were truly perfected was wrong. And, as we know, when the government is wrong they rarely ever admit it.
For example Joan Claybrook, who developed the airbag rules when she ran NHTSA in the late Seventies, once famously stated that they would save literally tens of thousands of lives per year —but she ducked responsibility when those same airbags were killing drivers and passengers in extremely low-speed deployments. The worst year was 1997, when 53 individuals died as a result of a low-speed airbag deployment: 31 of them were kids. NBC News reported that fact in 2004, along with the fact that at best airbags had saved only 15,000 lives in the first 20 years of use. To put that into perspective, during that same 20-year period 857,173 individuals were killed in automobile accidents; doing the math, airbags saved a life in only 1.75 percent of all potentially fatal accidents.
Among all the cases of the government’s trying to force the automobile industry into the future, the airbag mandate was the one time when Detroit had it right and NHTSA, most specifically Joan Claybrook, wouldn’t listen. (Today she claims the automakers had the technology to do it right from the beginning. They didn’t.)
Now we’re in a different era, in which the government is thinking that its demands on the world’s automobile manufacturers — to increase their entire fleets’ fuel economy to somewhere around 54 miles per gallon by 2025— are far too harsh. EPA head Scott Pruitt was to make the announcement that these rules would be rolled back at Pohanka Chevrolet in Chantilly, Va., on April 3. Only other GM dealers realized that they didn’t want any dealership used as a backdrop for telling the public that their lobbying of our government to back off of demands for higher fuel efficiency in the future had been successful. That event was canceled.
Smart move. Because this time dealers are more in tune with their current educated buyers than ever before. True, people ask about gas mileage, then drive 80 miles an hour when they can, which has the effect of destroying whatever mileage gains their new vehicles gave them. (I do it, too; I’m not chastising anyone here.) But no one in their right mind in corporate America wants to be seen as the guy making sure your automobiles seven years out aren’t more fuel efficient than today’s.
Still, there’s a common thread here that most will miss, even the executives that run the car companies. When safety was an extra-cost option, people passed. Even today when cars are super-efficient based on the most expensive options, like many hybrids, most people pass. When airbags were an option, nobody bought them. But make safety and improved fuel efficiency standard equipment, and the public loves them. In fact, they will then demand these improvements.
Government mandates merely took these items from options on new cars to standard equipment. Car companies hate that; the public loves it.
Here endeth the lesson.
© Ed Wallace 2018 Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: firstname.lastname@example.org