Detroit Car Sales: The Gloom is Gone and the Glitter is Back

The lead article in today’s New York Times, “Detroit Goes from Gloom to Economic Bright Spot,” describes a new optimism about the prospects of Ford, General Motors and Chrysler. All three companies are expanding, and the hiring of automobile outsiders as CEOs looks like it’s having a major impact.

The article’s statistics create a compelling story. Ford made more money during the first six months of this year than the previous five years combined. The average price of an automobile has climbed by $1,350 to $30,400, statistically above the overall industry gain of $1,100. The reduction in output, from 13.7 million vehicles to eight million vehicles, has reduced the need to provide expensive incentives to increase sales volume. And the worker paychecks are more in line with foreign automakers in the U.S., $57 an hour at GM compared to $51 an hour at Toyota (they still have a little way to go).

At a time when the overall economy seems sluggish, the good news from the automobile industry must be welcome relief for the Obama administration. They largely shepharded the bankruptcies of General Motors and Chrysler and deserve at least some of the credit for this rebound. Whether the trend continues is still to be determined. But many industry analysts think the current restructuring has a more permanent feel to it than previous efforts in the past, partly because of the outsider CEOs and partly because of the “near death” experience for all involved. We can only hope that they’re right.