Imagine if American automakers crash and burn. I mean, imagine if they really stop making vehicles altogether or if they shrivel down so much they look like the corporate equivalent of a Mini Cooper parked next to the Escalade of their former selves. What would be the impact on Los Angeles?
Obviously, the domestic dealerships here would be devastated and so would the wheel makers and other local companies that depend on U.S. automakers. L.A.’s significant advertising industry could be roughed up. (General Motors alone is the third biggest advertiser nationally.) It wouldn’t be pretty.
But beyond that, what would be the impact? It’s not hard to imagine that much of it would be good for Los Angeles, perhaps even great. After all, Japanese automakers likely would be even more prominent in a post-GM world. Since Los Angeles County is home to Toyota’s and Honda’s North American headquarters, it stands to reason they could grow.
And since Los Angeles and Orange counties are home to auto designers, since this is the birthplace of the American car culture and since this is the biggest single market for auto sales, it’s not too much of a stretch to imagine that European car makers and nascent domestic car companies would want to plant either their headquarters here or have some significant presence. Heck, Los Angeles could become the next Detroit.
OK, bad choice of words. But I mention this not totally as an expression of crass self-interest. I mention it mainly as a reminder that even if the domestic auto companies went to the great junkyard in the sky, it wouldn’t be all bad. Painful for many, sure, but the eventual outcome may be an improvement. Maybe a big improvement.
Think about the possibility of a raft of quirky startup car companies. As consumers, we may end up with more interesting, experimental cars from little companies that were passionate about design or performance or fuel stinginess or all those and more. It’s hard to dream it now, but maybe new and different car companies could revive interest in cars again. When was the last time people flocked to showrooms to see the new models? Must’ve been the ’60s. We’ve been stuck with the same old SUVs and boring econoboxes from the same old poorly run corporations for what seems like an endless road trip.
Congress apparently is getting serious about rescuing the Detroit automakers. Let’s review. The government bailed out Chrysler in the early ’80s, which postponed the day of reckoning by leaving us with three domestic car companies when market realities were saying we needed two. Later, the feds imposed quotas on the imports of Japanese cars, which made consumers pay more for foreign cars and enabled Detroit to continue its wastrel ways. Then we had the government-imposed fuel economy standards, which ended up pushing Detroit into finding the loophole through which it drove fleets of SUVs and light trucks.
I guess since all those government interventions worked out so well, they want another one. There’s even talk of nationalizing the automakers. Great. GM isn’t bad enough already without making it the next Amtrak.
A wonderful aspect to our system is that once in a while, the inefficient and feckless companies are swept aside. They are replaced by the new and the better and the bold. Consumers end up with new or at least improved and cheaper products. Society moves forward.
The United States can end up with a vibrant auto industry again. Maybe Los Angeles would benefit in the long run. It’s not hard to imagine.
The government just needs to have the courage and wisdom to step aside and allow the inefficient to be swept aside.
Charles Crumpley is editor of the Business Journal. He can be reached at [email protected].
