PR needed here: Detroit automakers

It shouldn’t surprise you to learn that the heads of the Big Three automakers flew to Washington on three private jets to beg for $25 billion in bailout money. A sensible person would ask: is this on message? Don’t people judge you by your actions? Would it be so bad to fly commercial? At least couldn’t they jet-pool?

Don’t these CEOs have counselors on staff to avoid disasters like this?

Congressman Gary Ackerman (D-NY) noted a “delicious irony in seeing private jets flying into Washington D.C. and people coming off them with tin cups in their hands.”

But this is the the U.S. auto industry we’re talking about. These guys have built their careers running once-great marques into the ground.

It’s hard to understand things like investments and insurance. But almost everyone owns a car. We all have long-standing relationships with automobile brands. We all know something about the auto business. For example, I know that I just replaced the transmission on my daughter’s U.S.-made 2003 Ford Focus, conveniently just a few hundred miles out of warranty and a relatively young car at 61,000 miles. I know it cost me more than $2,000 to keep this economy car on the road for a while longer.

And here’s what else I know: American cars are not the best. If you want the best, the market can easily sort that out for you. Just look and see what five-year-old cars are worth. According to a current study released by Automotive Lease Guide, the cars that hold their value best are made by Honda, Subaru, Volkswagen and Toyota. The worst? The LIncoln Town Car and the Chevrolet Uplander.

An anecdote to illustrate the above point. Chevy’s new Malibu has received very positive reviews. I mentioned it to a friend who was considering a Camry. His response? “Yeah, that might be a good car to pick up off-lease.” Translation: if I buy one new I’ll get hosed. But if I wait and buy it used, I can pick it up at a heavily depreciated price. At that point, I might take a chance on it.

The Wall St. Journal recently noted that the U.S. automakers just can’t catch the leaders. It cited the Honda Civic; the car costs several thousand dollars more than the Chevy Cobalt, and still sells in far greater numbers. But after a few years, more than the initial price difference is recouped in the residual value of the car. Bonus: this comparison does not factor in the Honda’s superior reliability and driving experience.

Here’s how the American car makers have lost our share-of-mind: they fought against CAFE mileage standards. They did this while drunk on SUV profits, which disappeared rapidly when gas prices took another hike. Faced with almost no strategy for making fuel-efficient vehicles, they have latched onto flex-fuel vehicles. But ethanol is a loser technology, and everyone, except for corn farmers, knows it. And I’m sick of hearing about the Chevrolet Volt. How long before GM gets this potential game-changer to market?

And the most egregious tactic of all? The job bank. As of 2005, more than 12,000 autoworkers were paid autoworker wages to show up at an abandoned K-Mart, to work crossword puzzles, read the newspaper or watch TV. It’s a legacy of a 1984 concession the automakers made to auto workers. As their market share grew smaller, the auto companies were forced to keep workers they didn’t need on the payroll. 

This is part of why Mitt Romney – the son of former American Motors CEO and Michigan governor George Romney – wrote in the New York Times, “Let Detroit Go Bankrupt.“

Meanwhile, there are lots of good American cars to buy: a Honda, made in Maryville, Ohio. Or a Subaru, made in Lafayette, Indiana.

The PR lesson in all of this? You can’t build good PR – in this case, consensus that the U.S. auto companies are deserving of a massive subsidy – on poor performance. These companies have failed to show that their business model has a chance to succeed. They’ve showed no humility. Their argument is basically that they’re too big to fail.

But fail they will. And guess what? People will still need and buy cars. They just won’t be buying those cars.

There’s no helping a CEO begging for a $25 billion bailout who shows up in a private jet. The $25 billion, by the way, is to be paid by hard-working Americans who do not participate in the job bank. Americans who won’t get a bailout of their own. Some of whom may be paying for a recent transmission job.