American Car Comeback

The lead article in today’s New York Times, “Making Rebound, Detroit Focuses on Smaller Cars,” shows the power of American industry to innovate and compete against the best of the world. General Motors and Ford are grabbing back the lead in the compact and sub-compact car categories with the new Ford Fiesta and Chevrolet Cruze while Japanese companies such as Toyota have basically sat on their hands.

The turnaround comes after the bankruptices of General Motors and Chrysler who were both forced by the government to focus on fuel efficiency in their comebacks. It also derives from steep concessions by the UAW, thus reducing labor and pension costs.

Originally, U.S. automakers focused on larger cars because they made a larger profit with them, but if there is no market for something, it doesn’t matter how large the profit margin is. U.S. automakers have also learned the lesson that Americans like feature-rich options in their small cars such as heated seats and Bluetooth entertainment systems.

The success in the U.S. auto industry also represents a vindication for President Obama’s handling of these companies during bankruptcy procedures. He has essentially resurrected them to take a leading role in our economy again and deserves effusive praise for the success of his policy.