Auto Industry Blues
July 9th, 2008 by SBG
GM in huge trouble as people have stopped buying their big gas guzzlers. The company is hemorrhaging $1 billion a month and may face bankruptcy in a couple of years. One wonders when the auto industry goes belly up whether there will be more of a push to improve transit systems.
This entry was posted by SBG on Wednesday, July 9th, 2008 at 8:11 am and is filed under WGOM Headlines. It is one of 2465 entries by the author. We are no longer accepting Letters to the Editor on this post.
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Algonad replied on July 9, 2008 at 10:19:10 am
It's too bad that we've never had a period of high gas prices in the past that could have foreshadowed this for the industry.
SBG replied on July 9, 2008 at 10:26:48 am
Exactly. For example, if we would have had a runup in prices and shortages, say, 35 years ago, we could have changed things so that by now we wouldn't be still driving inefficient vehicles and have no other real alternatives.
Rhubarb_Runner replied on July 9, 2008 at 11:15:48 am
I agree, Stick. It's too bad people couldn't have thought fiscally/environmentally in the past, and driven (pun, sorry) the auto industry to make cars they should have been all along, instead of Hummers/Navigators/SUX 6000. I wouldn't say we have no real alternatives; I've been driving Honda's since 1983. Still, I'd love to have been able to cherry pick a 50MPH car instead of a 33MPH car, though.
brianS replied on July 9, 2008 at 11:58:58 am
Haven't you people ever seen Who Framed Roger Rabbit?? It's all a big conspiracy.
slightly more seriously, the auto industry has improved quality immensely since the 1960s (remember Unsafe At Any Speed??). 100,000 miles used to be a nearly unobtainable milestone for a car. Indeed, odometers only went to 99,999.9 then flipped over. Now I would wager that it is unusual for an intact vehicle to fail before 100,000. Powertrain warranties can go as high as 10 years. Emissions per mile have dropped to a tiny fraction of what they were when regulation began in the 1970s. And cars are much, much, much safer.
It's hard to blame the auto industry for making high profit-margin vehicles that people want to buy. Better to blame Congress and the Prez for leaving gaping holes in CAFE and emissions policies for "light-duty trucks", which unduly subsidized the growth of the SUV, pickup truck and minivan market segments.
SBG replied on July 9, 2008 at 12:08:13 pm
All true. I can tell you that the auto industry wanted the Government to impose more tax on fuel all along (I heard that repeatedly at the auto conventions that I used to attend). They didn't like CAFE, though, that's for sure. Our government failed to do what it should have -- use gas taxes and CAFE standards to force change, both in our reliance on cars as they are currently constructed and in the fuel efficiency that said cars have. That would have been a great public policy. Instead, we get all caught up in nonsense about taxes and the government's ability to do anything and how the market knows best. We're now reaping what we as a society have sown. We deserve it.
twayn replied on July 10, 2008 at 10:57:17 am
I get pretty upset by all the free market as economic panacea crap I hear and read, especially since it always seems to be used to promote more and more deregulation. Yeah, that sure works. Just ask the airlines, and savings and loans, and utilities, and telecoms.
brianS replied on July 10, 2008 at 11:17:59 am
actually, twayn, I believe the evidence is pretty strongly in favor of consumers on airline, trucking and (the original) telecoms deregulation (all of which happened in the Carter administration). Just saying. For example, see here, here (scroll down to the two papers from 1988) and here for discussion.
the savings & loan/banking industries and 1996 telecoms perhaps not so much. Utilities? Who deregulated utilities?
Rhubarb_Runner replied on July 9, 2008 at 12:32:08 pm
I think Japanese cars did the most to steer (pun, sorry) the US auto industry towards better construction and durability. I'm always fascinated too at the virtual extinction of rust on the exteriors of cars nowadays, too.
brianS replied on July 10, 2008 at 11:20:11 am
yup. the wonders of competition at work there. Sadly, the Big 3 never seemed really to recover. Part of the blame goes to the UAW, but most of it goes to management.
SBG replied on July 10, 2008 at 11:26:05 am
Sadly, the Big 3 never seemed really to recover.
Huh? The big 3 made billions and billions of dollars selling their gas pigs -- until the roof caved in.
brianS replied on July 10, 2008 at 11:40:12 am
Ok, hyperbole.
But...Chevrolet went from producing 2.2m+ Chevy-branded vehicles per year in the late 1970s to under 1.5m per year for the 1980s to ~600K per year in the 1990s.
Ford went from producing 2+m Ford-branded vehicles per year in the early 1970s to ~1.8m per year in the late 1970s to ~1.2m per year in the late 1980s to ~a million per year in the 1990s.
see here.
The Big 3 went from dominating the US market to increasingly narrow production of high-margin vehicles. Kind of like Apple. Remember when Apple dominated the PC market in the early 1980s? And then chose to go with high quality/high margin machines and almost went belly-up as a result.
SBG replied on July 10, 2008 at 11:50:53 am
Computers:Cars::Apples:Oranges
I just had to do that.
brianS replied on July 10, 2008 at 12:00:28 pm
Toyotas:Fords::Peaches:Lemons.
SBG replied on July 10, 2008 at 12:04:48 pm
Ah, crikey, substitute lemons for oranges and my analogy is actually funny.
brianS replied on July 10, 2008 at 12:11:34 pm
You gave me a nice setup, however.
Algonad replied on July 10, 2008 at 11:34:29 am
It's hard to blame the auto industry for making high profit-margin vehicles that people want to buy.
I don't blame them for that. I blame them for not plowing those profits into R&D for more fuel efficient cars. Everything is cyclical. They had to know this day was coming. They just chose to focus on the short-term.
SBG replied on July 10, 2008 at 11:38:20 am
Well, it's hard to tell the shareholders that sometimes. It's one thing if you are selling cosmetics, but when the industry is so important to the nation, the government should have done something to make sure that we didn't drive our Hummers off a cliff. But, people believe, or have been educated to believe, that the government has no business meddling in such things. So, we wake up with a garage full of SUVs and $4 gas and everyone says, "No one could have predicted..."
Algonad replied on July 10, 2008 at 11:35:08 am
It's hard to blame the auto industry for making high profit-margin vehicles that people want to buy.
I don't blame them for that. I blame them for not plowing those profits into R&D for more fuel efficient cars. Everything is cyclical. They had to know this day was coming. They just chose to focus on the short-term.