Autos: Back on the Fast Track

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Smith bluntly concedes that GM is starting out well behind the rest of the Detroit pack. "The problem was never the people," he says. "It was the screwed-up structure we had. We had to change it. It took us years to understand that. You go through a denial phase. Ford went through its own changes a lot earlier than we did, and is very good today. Chrysler really went to the wall and got its act together. We had a history I'd like not to repeat. Now we'd like to get this baby fixed."

The U.S. industry that once took its lumps together is now finding common cause in areas from public policy to jointly financed advanced research. Ford's McTague, Chrysler's Castaing and their GM counterpart, Arvin Mueller, meet monthly for private dinners in Detroit, overseeing their joint-research programs under a consortium called USCAR, which invests $300 million annually (including $75 million in federal grants) in a range of projects including advanced batteries for electric vehicles, lightweight composite materials for better fuel economy, and environmental improvements on paint and fuel emissions and recyclable parts. No project is more ambitious than the agreement, announced in October, to share with the U.S. government the 10- year, $1 billion development costs of new ultralight, low-pollution vehicles.

The three chief executives have also begun holding private dinners once a month, covering mostly trade and political issues (almost anything, in fact, but pricing). Such collegiality would have been unthinkable in the past, mostly because it would have invited a federal investigation into price fixing. Says GM's Hoglund: "The cooperation symbolizes a whole new era of cooperation. Because of the personalities and government suspicions that existed in the past, we were conditioned to not even risk it. Now we are basically testing it all the time."

The new spirit includes meeting with President Clinton, Vice President Gore and other officials of a surprisingly friendly Administration. The recent alliances are a curious reversal of habit: the Americans, who watched Japanese carmakers bust up their market dominance, are countering that assault by building very Japanese-like bonds among themselves and with their government. "The three of us have had more direct contact with this Administration in the past nine months than existed for the past 12 years," says Eaton.

Chrysler president Bob Lutz says competition among the Big Three is no longer aimed solely at creating distress or celebrating the misfortunes of their rivals. "Many of us are at the point where we celebrate each other's successes. We were pleased to see Cadillac's Seville come out as an American luxury car that can hold its own against the best of the imports. Many of us were pleased with Saturn. I know Detroit executives were pleased when we brought out the Viper ((high-powered sports car)). It was, goddam, that's great."