Detroit has run out of road. The car's future lies in Europe

Will Hutton
The Observer, Sunday December 7 2008

"The car was the symbol of the prewar 20th century. Henry Ford's Model T, Volkswagen's people's car and even Britain's Morris Oxford were more than just industrial products. Suddenly, industrialisation was able to offer the mass of consumers cheap, convenient and individual mobility. The car changed industrial civilisations and their cultures.

Detroit was the undisputed centre of the industry. It manufactured more cars than anywhere else - four out of five across the globe as late as the mid 1950s. Its cars shaped American society. Americans yearned to climb into its Buicks, Cadillacs and Mustangs. The cars denoted your identity and your ambitions. The mobility spawned America's vast, sprawling suburbs. 'What is good for General Motors is good for America,' said its then chairman and chief executive Charlie Wilson. He captured an important truth......

Many different crises coincide here. There is a crisis of lack of demand created by the credit crunch, with November sales down 40 per cent. There is a crisis of production. Detroit has resisted every regulatory measure aimed at making more energy-efficient cars for decades, but it was particularly successful during the Bush administration. It avoided introducing the fuel-efficient cars the big three manufacture in more tightly regulated Europe, opting for high-margin gas guzzlers for the US domestic market. Now it is paying a fearful price.....

There is a realisation that the whole philosophy on which so much American corporate and political decision-making has been based over the last two decades is as bankrupt as the companies. Turn-round depends on wholesale change.

The world is near peak oil production. Energy prices will be volatile, but this summer's top figure is a forerunner of what is to come. Cars and, with them, concepts of how mobility is to be created have to change. That, in turn, demands a new role for public leadership. Governments, consumers and companies must agree a new vision and then it must be regulated and legislated for.

It was telling that as Detroit's CEOs were suffering humiliation in Washington, Germany's BMW was unveiling a battery-powered Mini E two years before GM's Volt hits the streets - and with treble the range. If anything, the German love affair with the car trumps America's and its car companies try to resist regulation no less aggressively. But European political systems are less open to being completely bent by corporate lobbying and regulation is seen as more legitimate.

German greens in particular changed the national political discourse in a way German car companies could not beat back; investing in energy efficiency, new engines and new sources of fuel such as hydrogen became a political, legal and commercial imperative.

American economists, politicians and Detroit mocked the European model. But regulation in response to voters' concerns has an important effect; the political process is another way consumers can signal what they want......"