Will Green Cars Make Detroit Profitable? 17 comments
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Doug MacEachern asked a pretty important question in an opinion piece yesterday. He wants the Obama administration to declare its intentions with regard to its car company ownership.
They will have to declare a goal.
Do they want to rebuild an industry that is now a smoking wreck? Which is another way of asking: Do they intend to build and sell lots of cars and make a bunch of money in the process? Like, you know, in the olden days? Or do they have something else in mind?
It’s a great question and honestly one I hadn’t thought much about. I sort of assumed that the White House auto task force had some great Excel spread sheets that laid out the entire strategy. Free market sort of guy that I am, I figured that they planned to get these companies back to profitability.
What else would they have in mind? Well, MacEachern provides a clue to what it might be.
Like the entire American auto industry, the future for Chrysler is now in the hands of Lisa P. Jackson, a chemical engineer and the director of the Environmental Protection Agency under President Barack Obama.
Last month, Jackson declared that her agency would regulate a number of greenhouse gases, including carbon dioxide. Since cars and trucks are among the largest sources of that newly declared pollutant, Jackson’s views regarding the industry suddenly have great relevance.
Here is what the nation’s new Queen of Cars told National Public Radio last week, just before Chrysler teetered into bankruptcy:
“The president has said, and I couldn’t agree more, that what this country needs is one single national road map that tells automakers that are trying to become solvent again what kind of car it is that they need to be designing and building for the American people.”
Even her NPR interviewer felt compelled to ask if designing road maps for critical industries really should be a role of the federal government. “That doesn’t sound like free enterprise,” said NPR’s Michele Norris.
Jackson responded, in part, that it was “free enterprise” that got the country into the economic mess it’s in now.
Well, OK that puts a pretty fine point on at least one view from the Obama camp. She certainly doesn’t appear to think that a private approach to the companies is the way to go. Actually, it sounds as if she has little use for the private sector at all.
Now it’s a pretty well established fact that Americans haven’t flocked to small green cars. There was a flurry of interest in hybrids when gas went to $4 a gallon but that quickly faded as prices came back down. So it sounds as if Ms. Jackson plans to tell Detroit what kind of cars to build and then hope (?) that their customers will buy them. That doesn’t sound like a real solid plan to once again become solvent. Certainly it’s not the type of product that has produced profits in the past.
It seems obvious then that there’s another part to her plan. Tell Detroit what kind of cars to build and then tell buyers what kind of cars they are expected to buy — is that how it’s going to work? Or maybe you don’t give them a choice. There’s ways to do that through incentives for buying green and penalties for buying what you want. Or, I suppose, you could just make it a losing proposition for the manufacturers to build and sell any car that doesn’t fit the template.
Implicit in all of this seems to be an attitude that the public won’t push back. I don’t know that I would be quite so comfortable with this proposition as the administration seems to be. They might be able to pull it off over time — I’m talking a decade here — but forcing it down the public’s throat is a dangerous game. Americans get a little psychotic when you mess with their guns or cars.
In the meantime there is that pesky problem about profits. Escalades and mini-vans get the cash rolling in, gas sippers don’t. So do they try and roll to the green side gradually or do they force the consumer to buy what the government wants them to build?
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most people will not voluntarily give up their comfort zone but have to be forced to do so. there is an energy crisis coming that defies imagination. if not ready for it, too bad for all.
the administration realizes this and is acting accordingly.
we cant keep using 25% of the worlds energy and expect to be strong.
The way to turn this country "green" is by changing public opinion not forcing policies and frankly if Mrs. Jackson maintains her course she isn't going to last very long as director of the EPA. After all politics always trumps idealism.
it has a 2 litre engine.
it gets 33 mpg if i keep rebuilding the carburetor.
it has a 5-speed manual xmission (automatics waste gas).
it has no a/c (they waste gas too).
i bought it new in 1974. i had to fight off other would-be buyers because the dealer couldn't get product from the factory (he would have sold it to someone else for 500 over list).
it was built in japan.
i think i'll keep it.
am i ahead of a trend somehow?
> jack
On May 04 08:24 AM bart2009 wrote:
> american lives on private vehicle transportation. if their choice
> is only fuel efficient vehicles they will have to buy them. they
> will not give up their cars, whatever size they become. that is fact.
> they may balk for a short time at not being able to buy big, but
> sooner or later will have to buy.
>
> most people will not voluntarily give up their comfort zone but have
> to be forced to do so. there is an energy crisis coming that defies
> imagination. if not ready for it, too bad for all.
>
> the administration realizes this and is acting accordingly.
> we cant keep using 25% of the worlds energy and expect to be strong.
Electricnick.com
On May 04 09:11 AM john s. gordon wrote:
> i have a small green car (green paint was redone a couple yrs ago).
>
> it has a 2 litre engine.
> it gets 33 mpg if i keep rebuilding the carburetor.
> it has a 5-speed manual xmission (automatics waste gas).
> it has no a/c (they waste gas too).
> i bought it new in 1974. i had to fight off other would-be buyers
> because the dealer couldn't get product from the factory (he would
> have sold it to someone else for 500 over list).
> it was built in japan.
> i think i'll keep it.
> am i ahead of a trend somehow?
On May 04 09:11 AM john s. gordon wrote:
> i have a small green car (green paint was redone a couple yrs ago).
>
> it has a 2 litre engine.
> it gets 33 mpg if i keep rebuilding the carburetor.
> it has a 5-speed manual xmission (automatics waste gas).
> it has no a/c (they waste gas too).
> i bought it new in 1974. i had to fight off other would-be buyers
> because the dealer couldn't get product from the factory (he would
> have sold it to someone else for 500 over list).
> it was built in japan.
> i think i'll keep it.
> am i ahead of a trend somehow?
I have no sympathy for these obstinate fools. The old and inefficient has to die to make room for the new and useful. It's a pity the government had to be involved, but really their only role-- Ms. Jackson's unfortunate rhetoric notwithstanding -- has been to provide a "soft landing" for companies that were already bankrupt.
Like the Europeans have been doing for 75 years, taxing gasoline up to $5 per gallon. Nothing to do with Ms Jackson or her agency.
Your thinking will create the United Socialist States of America. Good-bye liberty and free enterprise.
john s. gordon
Older fuel efficient cars are not necessarily green. ExxonMobil has an ad that points out that today's cars are much cleaner than those that were built in 1990.
Alan Young
Japan was building fuel-efficient, reliable cars for decades because the Japanese government taxed cars based on engine size and its physical footprint. Notice that Japan's automakers make a sizable profit by exporting larger less fuel efficient cars, not by exporting compacts or subcompacts.
TinyTim
I personally agree that taxing fuel is the way to convince people and automakers to be more efficient. It levels the playing field and also abolishes that abomination: CAFE - corporate average fuel economy - which penalizes only American automakers.
Without that the american public will gravitate to larger, safer and more comfortable products with $2/gallon gas, as evidenced by the Prius' collecting dust in Toyota dealerships recently.