Car industry on way to mammoth changes

Will it lead to a rational car, engineered for function without the trappings of status?

Will the fuel shortage permanently change the American motorist's taste in favor of small cars, or will buyers return to big cars when and if the fuel shortage ends?

Those questions, which deal with the course of the auto industry for years to come, are being kicked around and debated in offices and conference rooms at the automakers.

PERSPECTIVE 2000

Clearly, the auto industry was shook, scared, shellshocked - pick your own term to denote disaster.

Sales had been roaring along. A record 10.4 million cars were sold in 1972, and 1973 was even better. The industry sold 11.2 million cars in 1973, but doom loomed, starting in the fall.

On Oct. 16, 1973, the Organization of Petroleum Exporting Countries - the Middle East oil producers - halted shipments to the United States. That left this country 6 million barrels a day (at 42 gallons a barrel) short of its needs. Thirty-nine percent of that was earmarked for gasoline for cars and trucks.

Lines at filling stations snaked around the block, and every driver had a horror story about being the next car at the pump when the owner posted an 'out of gas' sign. So it was on to the next station - and the end of the line.

Americans weren't buying cars; why buy a car if you can't get gasoline for it? The Arab nations ended the embargo March 18, 1974, but the market did not bounce back. Car sales totaled 8.6 million in 1974, down 23 percent from 1973. The numerical loss of 2.6 million was the largest year-to-year slide in the history of the U.S. auto industry. The percentage dip was the steepest since 1938.

Ford and Chrysler talked about small cars, and General Motors was sold on 'downsizing' - taking inches and pounds out of its large cars. But it couldn't be done overnight. A case in point: The downsized Chevrolet Caprice appeared in September 1976 as a 1977 model.

And it would be incorrect to say that imported-car sellers made hay immediately while drivers of domestic models sat in gas lines. Sales of imported cars declined 20 percent in 1974.

Automotive News headlines tell the story of that dreary year: 'Jan. sales plunge 25 pct., but big-car hopes rise'; 'Early-February sales are lowest since 1961'; '1st-quarter car sales decline 28 percent'; 'Mid-April sales chill hopes for big upturn'; 'October sales sink to 7-year low.'

Bad as 1974 was, 1975 was even worse, and the manufacturers had no one to blame but themselves. In introducing their 1975 models, the four domestic makers raised prices 9.5 to 13 percent.

Dealers reported that showroom visitors peeked at the price label, panicked and fled, without even talking to a salesperson. And thus the term 'sticker shock' entered the automotive vocabulary.

The dismal sales climate led to cash rebates to buyers. Chrysler Corp. started it Super Bowl Sunday in January 1975, and the rest of the industry played piggyback.

The rebates were temporary measures designed to get sales moving. But it didn't work out that way. They have endured 25 years without a break, and they are higher and more far-reaching today than Chrysler ever could have imagined when planning its 1975 Super Bowl ads.

Another gasoline scare developed in January 1979 when the Shah of Iran was overthrown and the Ayatollah Khomeini came to power. He cut Iran's oil production, which reduced shipments of crude to the United States.

Gasoline prices soared, and the nation fell into a recession. Car sales dropped for four years; each of the Big 3 lost big bucks in 1980. Chrysler was hardest hit; it sought - and received - federal loan guarantees to stay afloat.

This time sales of imported cars went up. They rose 16 percent during the 1979-82 recession.

And just for the record: The 1973 story displayed at the beginning of this section asked whether the fuel shortage would permanently switch Americans to small cars or whether they would return to big cars when it ended.

The answer in today's terms is clear: Big cars? No. Even bigger, gas-swilling sport-utilities? You betcha!