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PICTURE THE WORLD'S AUTO CAPITAL IN THE EAST.
GO EAST, YOUNG MAN. IF ASKED to give advice to heavy manufacturing firms, especially those in the motor vehicle industry, that would be it. Go East. The U.S. auto industry is facing the battle of its life--and with more missteps it could be in 20 years what the U.S. steel industry is today, a pitiable wreck.
Automakers have borrowed sales from the future with their zero-interestrate financing tactics this year. The industry has sold a lot of cars by making consumers the proverbial offer they couldn't refuse. If the choice is between driving a two- or three-year-old vehicle that carries a monthly payment of $350, and a brand-new vehicle with the same monthly payment and no early termination penalty, most consumers will drive away in a new vehicle.
Marvelous.
Just what does Detroit plan to do for an encore--when short-term U.S. interest rates are 4% to 6% and not 1.75%,...