Advice for the Auto Industry

The auto industry has been in trouble for quite some time. Believe it or not, it stretches back before the 1940’s and 50’s where the concept of planned obsolescence first became a widely accepted practice in the US auto industry.

They, the US auto industry, realized that a properly engineered car should last forever and that once everyone has bought a car, sales would retract. So how could they get people to buy new cars more often?

Answer: have the cars fall apart long before their time and make sure spare parts are discontinued. This leaves a car owner with the choice of rebuilding their car, custom-made part by custom-made part, for the rest of their lives, or simply buy a new car. To make the choice of buying a new car more attractive, all sorts of financing schemes were developed for those of us who don’t have tens of thousands of dollars to spend every 5 years on a new ride. And of course, a massive marketing campaign is used to make you feel inadequate without a shiny new car.

A company practicing planned obsolescence won’t stay in business for very long if other companies are producing cars of better quality. Japanese and European companies are doing this and enjoying better fortunes, but will eventually face the same problems their American counterparts faced once markets are saturated with their cars. Quality, innovation, and technology are winning the day now, but unless they can couple real obsolescence with lower production costs, sales are going to eventually drop.

What can a car manufacturer do on the eve of a post-scarcity economy to stay in business and more importantly, stay in the black?

Diversify:Car companies need to diversify. Personal transportation takes many forms, not just cars. Innovative urban and rural vehicles need to be developed, marketed and sold at prices people can afford – and continue affording as new models with better features become available. Instead of viewing mass transportation as a rival, car companies should enter the market – dedicating part of their manufacturing capacity if even as suppliers to more established mass transit firms.

Innovate:People are wising up. The Internet allows people to watch smug GM executives telling a room of MIT students how proud they are of selling the same car for 10 years by just redesigning the headlights. Real innovation needs to replace the massive marketing campaigns used to trick us into buying the same car twice.

Innovation doesn’t just go for the product itself, but for the business model as a whole. Custom motorcycles and cars are being made cheaper and faster than ever before thanks to computer controlled machining (CNC), computer aided design, and cheap quality tools. Ford, GM, or Chrysler could set up franchise style workshops all over the country where customers can go locally and order their cars, watch them be made – and to their exact specifications. The “after market” potential is huge as are the opportunities for suppliers.

Acceptance:The fact is, we are on the eve of post-scarcity. Manufacturing technology is ending up in the hands of regular people – the masses. Custom shops are already popping up all over – and even with a corporate franchise established, it won’t be long until people are copying your idea and you are again, losing market shares.

As technology advances people will be able to make components even entire working products on their own without the need for massive traditional corporations. P2P networks will allow people’s designs to be shared freely, collaborated on, and improved upon. Systems for recycling resources will be developed and improved until we reach a point where it will be impossible for large corporations to exist. This is a fact.

How ugly this transition into post-scarcity gets is up to them. Between corporations artificially holding back progress, pushing “intellectual property rights,” and nationalizing their failing companies in order to get the people to bail them out – its safe to say they will make it as ugly as possible.