No. 1010
August 21, 2019
 

About The UjianNasional

Peter M. DeLorenzo has been immersed in all things automotive since childhood. Privileged to be an up-close-and-personal witness to the glory days of the U.S. auto industry, DeLorenzo combines that historical legacy with his own 22-year career in automotive marketing and advertising to bring unmatched industry perspectives to the Internet with Ujian-nasional.info, which was founded on June 1, 1999. DeLorenzo is known for his incendiary commentaries and laser-accurate analysis of the automobile business, as well as racing and the business of motorsports. Author. Commentator. Influencer. The Consigliere. Minister of the High-Octane Truth. DeLorenzo is considered to be one of the most influential voices commenting on the business today.

DeLorenzo's latest book is Witch Hunt (Octane Press  ). It is available on Amazon in both hardcover and Kindle formats, as well as on iBookstore. DeLorenzo is also the author of The United States of Toyota.

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Tuesday
Aug062019

THE LINGERING INTERREGNUM, PART II.

By Peter M. DeLorenzo

Detroit. Two and a half years ago, I wrote a column about the coming changes roiling the automobile business. At that time the future of this business was being painted with brooding clouds of doom and gloom, a grim landscape dominated by faceless autonomous transportation modules that will come in small, medium and large, a dystopian scenario sure to send traditional car companies and luxury brands to the scrap heap of history. Frankly, if that’s our final destination at the dawn of this alleged autonomous era, then to paraphrase Samuel Goldwyn’s famous quote, “Ladies and gentlemen, you may include me out.” And we will make the seamless transition to our new website: LawnOrnamentExtremist dot com.

Fortunately, that doomsday scenario wasn’t even remotely accurate.

In fact, I’ve grown tired of the subject, because despite the prognostications, we’re talking far into the future. And though some members of the future of transportation "intelligentsia" have expressed irrational exuberance for all things autonomous, salivating at the thought of a Jetson-esque nirvana of effortless transportation unburdened by driver involvement, I decline to get excited about it, because for most of the country, it’s simply not going to happen in our lifetime except for very limited applications. 

I prefer to look at it this way: If we maximized the mass transportation systems already in place in this country, and added to them judiciously, the whole autonomy thing would be a sideshow, but because there are massive dollars on the table, and corporate entities both real and imagined are clamoring for their piece of the action, rest assured that autonomous vehicles are going to be sold as the panacea that society is waiting for and duly shoved down our collective throats. But until that nasty scenario unfurls, there are a few pressing issues facing this business right now, issues that seem to crop up about every seven or eight years or so like clockwork. 

Let’s start with subprime financing. Make no mistake, it’s still a thing. A very big thing. When this business finds itself in the throes of a slowdown – and that’s where we are at this very moment – the seething cauldron of sales pressure builds to the point that the measured responses and rational thinking that drive the business in “normal” times are left like a house by the side of the road. In their place, the fervor takes over, and an urgency swallows the business whole, which means keeping sales momentum at all costs. 

This has been a plague in the auto business on and off for years, in fact some manufacturers – particularly FCA in recent times – have made it part of their standard operating procedure. It’s just sad to see the other manufacturers being sucked into the swirling maelstrom, as they try to prop up sales in a flat market by relaxing their own loan standards. 

And this is just one aspect of how this business can be its own worst enemy. There’s another dimension to this ugliness, and that is the reemergence of excruciatingly long loan terms. Now we’re seeing the return of 84-month financing, and I can’t stress enough how bad this is for consumers. You might as well call this “Upside Down” financing from the get-go, as consumers find out the hard way that getting out of this kind of loan commitment three years into the duration requires “rolling in” a sizable chunk of cash into the new loan for a new vehicle. In other words, it’s a giant bowl of Not Good, and it makes for very unhappy customers.

The manufacturers willingly offer this kind of financing when their backs are against the wall, and the way they look at it is if the consumers are naïve enough to get wrapped-up in one of these long-term loans, that’s their responsibility. I’m not sure if these companies actually think they’re doing consumers a favor by offering these death-march-length loans, or they just simply don’t give a shit. I vote for the latter. 

What it comes down to is the manufacturers taking the path of least resistance by taking advantage of consumers, all for the sake of sales momentum. Anyone who believes this industry no longer lives by 30-day sales reports is delusional. Make no mistake, it’s still an essential part of the daily reality of this business, and it still sucks.

But that’s just one aspect of this business that’s annoying. The other grating thing about this business for me right now is that irrational thinking seems to have taken hold when it comes to the relentless proliferation of SUVs and crossovers. Yes, I get it, “that’s what sells,” as I am reminded by top execs in this business almost daily, but still, there seems to be no rhyme or reason associated with it. More is better and no niche will be left unsullied, it seems. The German manufacturers are most guilty of it, but the rest of the world’s manufacturers have caught up and are right in lockstep.

It all started to go wrong for me when Audi proclaimed that SUVs were “the new sports car.” And it snowballed from there. Auto writers began to get sucked in to this canard too. Now, maybe it’s because most of the vehicles media-types get to drive these days are SUVs, given the production numbers, but still, SUVs and crossovers are in no way, shape or form, “sports cars” – no matter how you squint when you’re looking at them, or how far you go out of your way to suspend reality while driving them. (And yes, that goes for Porsche too.) They’re heavy and have a higher center of gravity; it’s simple physics that cannot be denied. And every time I see a manufacturer claiming its SUV/crossover is the fastest, especially at the Nürburgring Nordschleife, I cringe, because it’s just silly and stupid.

I'd much prefer a manufacturer touting its SUV/crossover du jour as being good at something that has nothing to do with performance and everything to do with the overall integrity and capability of the vehicle in question. Is that too much to ask? Apparently, it is. I applaud Honda with its Accord and Toyota with its Camry for still caring about building quality cars, because when the pendulum swings back – and it will, because it always does – they can sit back and smile.

So, as we wait for the death of the automobile and the industry as we know it, and suffer through this lingering interregnum, I have a message for the True Believers at all of the car companies: Don’t ever forget that you’re in the business of designing, engineering and building the best cars and trucks that you can possibly muster right now and in the foreseeable future. As long as you relentlessly execute to that goal, this industry will continue to not only be relevant and survive, but maybe even thrive. 

Because this just in: the Jetsons, at least for now and until further notice, was just a cartoon.

And that’s the High-Octane Truth for this week.

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