Small-car surge is a replay of 1979
Folks too young to remember the oil crises of the 1970s may see the recent small-car surge as the greatest market flip in U.S. auto history. But these aren’t uncharted waters.
For historical perspective on the shocking sales numbers that rolled in last week, put them alongside this passage from Lee Iacocca’s 1984 autobiography: “Never before in the history of the car business had there been such a violent change in the market as the one that occurred that spring,” wrote the former Chrysler chairman.
That sounds like May 2008. But Iacocca was writing about the spring of 1979, a few months after the Shah of Iran was deposed and the disruption of Iran’s oil industry threw world oil markets into a panic. Later that year, 52 U.S. diplomats were taken hostage in Tehran.
“We all had small cars, but in 1978 we couldn’t give them away,” Iacocca wrote. As late as January 1979, just a few weeks before the Iranian crisis, Datsun was offering rebates. Toyota and Honda weren’t selling anything. We ourselves had thousands of unsold Omnis and Horizons. And our small Colt, built by Mitsubishi, was not selling even with a $1,000 rebate. … All of that changed overnight.”
Before that, Iacocca noted, plants that made full-sized cars were working overtime, while “the Japanese had 700,000 small cars sitting on the docks in San Diego and Baltimore.” Those cars were soon snapped up by Americans desperate for fuel-efficient vehicles.
Iacocca wrote that in the first five months in 1979, the small-car share of the market “rose from 43 percent to nearly 58 percent.”
Within a few years, Americans had fallen back in love with large vehicles. Iacocca: “Somebody yelled: ‘April Fool’s! Gas is cheap again, so give us big cars!’ ”
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