On the morning of September 11, 2001, I awoke in a hotel in Midland, Texas and started to prepare for a meeting I was holding with a large group of West Texas Ford Dealers. It was to be my last such meeting as Chairman of the Ford National Dealers Council. I turned on the TV to glance at the news, a ritual of mine. I shall never forget Charlie Gibson of Good Morning America speculating about why one of the World Trade Center buildings was on fire. We all know the rest of the story, and as hard as it is to believe, it has been a decade since this dark day.
Around the 18th of September 2001, it looked like the economy was going to tank. The Dow had dropped almost 1400 points and had erased all gains that had occurred over the previous four years. It was then-President George W. Bush who called a meeting with the CEOs of General Motors, Ford, and Chrysler. It was widely thought that if we could get the auto industry moving, everything else would improve.
Shortly afterwards, General Motors announced their “Keep America Rolling” campaign. For the first time ever, GM offered 0% financing for a full five years on every car they made. The message was simple and resonated with people. Ford and Chrysler scrambled to quickly match the offer.
Literally overnight, we went from selling no cars to the busiest six-week period I can ever remember. Just about every automaker jumped on board with some sort of blockbuster incentive.
The plan worked to get the economy moving, and to stimulate sales. It was an expensive proposition for the automakers, but it had to be done. The problem afterwards was where do you go from there? What could possibly motivate people after that offer?
When the huge incentives started after 9/11, nobody considered what I call the “pull ahead factor”. Although the dealers were swamped with business, all they did was sell cars to people who were going to buy in the near future anyway. So we took people that were going to buy in October, November and December of that year anyway, and forced them to buy in September. All this was brand new and it looked like a huge business boom, but by the end of 2001, we actually sold about the same number of cars we would have.
After that first round of sales ended, business stopped. I mean it came to a screeching halt. Then the public caught on to the fact that if the incentives were not huge, to just wait. That forced the automakers to keep coming back with more offers. We saw 0% extend to 72 months, then 0% plus cash back, then employee pricing, and the list of expensive incentives continued to grow until 2008.
It became clear that this had to stop or the auto industry would be no more.
We will never know what would have happened had the auto industry not responded in the days after the greatest tragedy to ever hit our country. It is clear looking back that this was the beginning of the decline of the auto industry and contributed to the bankruptcies of General Motors and Chrysler.
The events of September 11, 2001 changed our country and changed the auto industry as well.