All You Need Is A Perfect Product!

After months of describing how the Big Three need to be forcibly reinvented, and required to build cars under government-imposed environmental and fuel efficiency standards that don't apply to their foreign competitors, Thomas Friedman has shifted course. Sort of.

Over the years, Detroit bosses kept repeating: “We have to make the cars people want.” That’s why they’re in trouble. Their job is to make the cars people don’t know they want but will buy like crazy when they see them. I would have been happy with my Sony Walkman had Apple not invented the iPod. Now I can’t live without my iPod. I didn’t know I wanted it, but Apple did. Same with my Toyota hybrid.

It says something about Friedman's candor that he writes "Toyota" instead of "Lexus", and "hybrid" instead of "SUV hybrid". There's a world of difference between Toyota's least fuel efficient hybrid and the Prius. Had Friedman wanted a roughly equivalent vehicle at a slightly lower price, with slightly greater fuel efficiency, he would have purchased a Highlander hybrid. Was he paying extra for the additional power of the Lexus, even at the expense of fuel efficiency? Real wood trim instead of plastic?

I have a Toyota hybrid. It's nice, it's quiet, it has very low emissions, it's... fuel efficient for a car with its feature set, but hardly the most fuel efficient vehicle on the market. Could I live without it, or easily substitute another vehicle for it? Sure. It's a car. I would love to hear Friedman explain why he can't live without his hybrid, rather than having him simply suggest that it rounds out his life like his... iPod. The fact is, Friedman can easily afford a luxury SUV. He can easily afford the gas that fills it, and could easily afford it at $4, $6, or $10/gallon. When he has argued for higher gas taxes to force consumers to buy vehicles like... his? He sounds a bit like a modern Marie Antoinette.

As for building the cars people want to buy, let's go back a year ago to Friedman's et tu, Toyota, after that company joined the Big Three in opposing more stringent CAFE standards.

Now why would Toyota, which has used the Prius to brand itself as the greenest car company, pull such a stunt? Is it because Toyota wants to slow down innovation in Detroit on more energy efficient vehicles, which Toyota already dominates, while also keeping mileage room to build giant pickup trucks, like the Toyota Tundra, at the gas-guzzler end of the U.S. market?

“Toyota wants to keep its green halo and beat G.M. in the big trucks, too,” said Deron Lovaas, vehicles expert at the Natural Resources Defense Council.

Friedman has consistently conflated two different questions - what vehicles consumers want, and how gas prices affect their choices. Remove gas prices from the equation and, as I quipped the other day, it appears that Americans want a vehicle the size of a small house that does 0-60 in less than 10 seconds and is available for a price between $20-$30K. Toyota's ability to produce vehicles that people want in an era of high gas prices comes, in no small part, from the fact that their domestic market has faced very high gas taxes, and thus very high gas prices, for many years. They, like the Big Three, also wanted to be able to take advantage of U.S. consumer preferences for large, low MPG vehicles.

When I was last shopping for cars, I really didn't see anything transformational. I saw a lot of sameness from one auto manufacturer to the next - domestic, European, Japanese, Korean.... Within the category of vehicles I was considering (and giant SUV's, trucks and Hummers weren't under consideration), my decision was made in part on fuel efficiency (a hybrid versus a non-hybrid model), but that was well behind issues of vehicle quality and expected longevity on my "wish list". My sentiment is apparently not atypical, and presumably is why Lexus offers Friedman's SUV in a better-selling non-hybrid model, and Toyota offers the Camry and Highlander in better-selling non-hybrid models.

But isn't that the rub? Friedman wants Detroit to develop a one-size-fits-all vehicle, popular with consumers regardless of gas prices, but also green and fuel-efficient. A wonderful concept, but something that nobody in the auto industry, including the most innovative, efficient, environmentally conscious manufacturers, believes exists. You want to force consumer choices in that direction? Go back to arguing for high gas taxes or setting floors on gas prices, such that consumers are compelled to buy the vehicles you want them to buy, but don't pretend that you're arguing for a context in which they will be able to buy the vehicles they want.