IT’S ALWAYS SOMETHING.
By Peter M. DeLorenzo
Detroit. It looks like the “swirling maelstrom” – aka the auto business as we know it – is slowly but surely grinding to a halt, or damn close, anyway. Sales are down because the microchips are missing in action, and the cars and trucks just aren’t being built.
As reported by Automotive News, Cox Automotive is forecasting that U.S. light-vehicle sales volume this month will fall to its lowest September level since the Great Recession. Cox is predicting that sales volume will drop to 1 million units in September, down 26 percent from a year earlier. The last time September volume fell below 1 million was in 2009. There have only been three months of below 1 million volume in the past decade, according to Cox.
To say that this is sobering news is an understatement. Beyond the sales – and profits – that are blowing in the wind for the automakers, suppliers are being decimated too. Drive around this town for any length of time and you see office buildings for just about every major automotive supplier you can think of. The auto industry permeates this town and the broader region to a degree that you really can’t imagine unless you live here.
It’s not called the “Motor City” for nothing, folks.
This is a “company” town unlike any other company town you can think of (except for maybe Hollywood, which still leads in the self-absorption business by a mile). This bears repeating, because the auto business is pervasive. Executive moves dominate the local news and often show up on the front page of the two local newspapers The Detroit News and Detroit Free Press. And local TV coverage of this industry is just as intensive, if not more so. One way or another, the vast majority of the people who live in this region have either direct or indirect connections to the industry. So, to say that this microchip crisis is perilous to the standard of living around here is another huge understatement.
When you mention the Great Recession in conjunction with the automobile business, it brings back desperate memories of 2008-2009 when this industry basically was forced on the ropes as sales evaporated and two of Detroit’s major automakers were forced into bankruptcy.
So, none of this is funny for people around here.
The ironic thing is that sales were robust last spring, with cars and trucks flying off of the lots. That was when the business and the country were trying to emerge from the coronavirus coma, so it was good. Very, very good. Consumers were buying everything that moved, literally. But if you’ve been around this business long enough, you know that sizzling sales usually have an end date. And the euphoric highs are always punctuated by the devastating lows.
So, when the chip “thing” emerged – on top of the virus variant – the high was doomed to not last, and this business was headed for another deep low. Now? As I said earlier, things are grinding to a halt. Dealers are literally “selling air” because they don’t have any vehicles on hand. In a quick perusal of dealer websites in this area, the average new car inventory seems to fluctuate between 10 and 20 vehicles, total. Even for a rural, small-town dealer this would be problematic. But for these giant dealer groups around here? It is simply devastating.
The euphoria of a receding pandemic was short-lived. This business is facing yet another crisis, not long after a brutal 18-month period that changed this business forever.
No one is unaware of what’s going on around here. The storm clouds have been brewing for months now. The constant coverage in the aforementioned local media has been a combination of feel-good puff pieces about how great things are in the business – complete with the typical executive genuflection profiles and overhyped car intros – punctuated by a constant drumbeat of sobering explanations of how the microchip crisis is a giant bowl of Not Good.
To say that people around here – from the shop floors to the executive suites – have been put through the wringer is not really accurate. This town has been living on the edge for a good 24 months now. And before that, the lingering memories of that devastating two-year period in the last decade are still fresh, complete with scars to prove it.
It’s not like we’re surprised by all of this, however, because if you’ve been around this business long enough you quickly come to understand that you can't get comfortable. But the reality for this town and this region is that this is who we are, and try as we might not want to admit it sometimes, this auto thing is what really matters to us.
We’re not looking for sympathy, because we know what it’s really like to live here and be from around here. We’re a state of mind that’s filled with countless contradictions, and we’re well aware that our history is offset by some lurid realities.
We’ve contributed much to the American fabric, yet we have a historical propensity to make things brutally tough on our day-to-day well-being.
We’ve brought this country a sound like no other, and a gritty, gutty context that’s second to none, yet we’ve created countless problems for ourselves, most all of them self-inflicted.
We created the “Arsenal of Democracy” when our country needed it most, yet we allowed a movement based on fairness to become a disease based on entitlement and rancor.
We’ve contributed much to this nation's progress and standing, yet we can’t seem to get out of our own way at times, which is infuriating and debilitating.
But this isn’t the end, because the story never really ends for Detroit. At least not yet anyway. We know who we are. There’s an exuberance and spirit here that remain intact, through every dip and dive of this giant roller coaster called the auto business.
Yes indeed, it is always something. But we wouldn't have it any other way.
And that’s the High-Octane Truth for this week.