On the front page of The New York Times today there is an article with the headline: “Automakers Fear a New Normal of Low Sales,” which caught my attention because the fear is so rational that I’m not certain it qualifies as “news.”

The article, by Bill Vlasic and Nick Bunkley, raises the question of “whether the auto industry will ever again have sales levels that it took for granted just a few years ago.” They quote John A. Casesa of Casesa Shapiro Group, a consulting firm, saying: “After an era of excess indulgence, we’re now entering a prolonged period of conservation. Trading in a car every three years is a luxury that the average American can no longer afford.”

That quote makes a point that the rest of the article leaves alone, similar to virtually all business articles that avoid a key point while in pursuit of the statistics and “business” news angle. As I have been saying in some previous posts (including this one prompted by The Washington Post’s columnist Steve Pearlstein’s blog on leadership) the most fundamental root cause of the current economic crisis is not economic in nature, but cultural in nature. If my premise is correct, the resolution of this current crisis will also be – at the most fundamental level – cultural in nature. In short, people will change their priorities and standards.

At This Point, We’ve Entered A Vicious Spiral

This will not be a simple cause-and-effect process. It will be more like a cause-and-effect-and-effect-and-effect process. It will work this way: The American public became a hyper-consumer, and our economy became based on that – to the degree that about 70% of our economy has relied on the consumer consuming. The consumer became economically dominant because for the last six decades or so since the end of WW II and the expansion that ensued, they have been hit – “inundated” is more like it – with a constant barrage of messages urging them to buy for the experience of buying per se. And that messaging worked! It created the culture of: go out there and buy something new, something bigger, something more expensive, something you might not really need but you do want so much, something that will make you feel better because you feel bad, something that will help you celebrate because you feel great, and (by the way) don’t worry about whether you can afford it or not because you can charge it and just run up the tab “for later.”

So, of course, automobiles became more than a vehicle that can take you from Point A to Point B. They delivered “soft benefits” by being symbols of a person’s life style, status, and image. But if the culture changes and those benefits are no longer valued, then there would have to be some other reason for buying a car. Hey! How about buying a car for the sole purpose of getting you efficiently from Point A to Point B? What a novel idea!

But if that becomes the new cultural standard, the automobile industry is in a real fix. That’s where the keen sense of the obvious comes in. At some point, the auto industry will shift their messaging from aspirational to functional – that is, from “buy this car because it makes a statement about you” to “buy this car because it will do the job you need it to do.” As that message shift takes effect, the American public will move even further away from being hyper-consumers and become much more restrained in their spending patterns. And as that occurs, auto sales will go even further down. There will be an incredible irony: the auto industry’s efforts to create better cars cheaper that last longer will translate into people holding on to them longer, resulting in even less sales.

And that smaller market will merit less advertising. And the lesser amount of advertising will mean less “buy this” messaging, and that, in turn, will translate into a further evolution of the American culture away from hyper-consumerism. Extend the logic and you end up at a place where even the current level of auto sales (which in December 2008 were down 31 percent at GM, 32 percent at Ford, and 53 percent at Chrysler) might not be “the new normal” but might well be higher than the new normal.

I learned a long time ago that there is a difference between a vicious cycle and a vicious spiral. In a vicious cycle, if one component of a process is not right, all you have to do is fix that component and things take care of themselves. For example, in the classic case of the successful Chinese restaurant that grew so big that the parking lot became too small to hold all the cars needed to bring the patrons needed to fill the tables, all you have to do is build a bigger parking lot and you’ve fixed the problem. But in the case of a vicious spiral, it isn’t so easy. The problem is more like a spiral of water going down the drain: there is no way to fix it except to let it work itself to the bottom and then start back up. In the case of the auto industry, we’re not near the bottom. What happens if the American public decides that they can hold on to their cars twice as long as they used to? I do not think that is a fantasy, especially with the improved new cars that the auto manufacturers are producing now and going to produce in the future. What happens then? I think what happens then is that the “new normal” of low sales that exists today may become an optimistic goal rather than the sad reality it is today.

But The Auto Industry Won’t Be Alone

I’ve already written fairly extensively about how a similar phenomenon is also taking place in homebuilding, where I believe cultural forces led to a change in the basic law of real estate from location-location-location to product-product-product. The phenomenon will spread to many other industries. The economy will continue to go south as the culture changes. Furthermore, because the US culture tends to become the world culture and the economy has become global, the economic devolution will also become global. In the meantime, new messages will inundate the American public – messages brought about by a political process ushered-in by the Obama Administration and the new Congress, as they fight to create some fundamental changes in many industries and in our daily lives. In place of the “buy this” messages, a new surge of politically motivated “support this” messages will arise, as I’ve discussed in previous posts (including this one). Ultimately, I believe, this will evolve into a new culture that will be less consumer-driven. New priorities and standards will arise. What will they be? I believe that question will loom much more important, with even greater consequences, than how many automobiles are sold each year.