Automotive Bailout Problems

As I write this, I’m watching Meet the Press that I recorded earlier.  The topic of the day is the potential bailout of the US auto industry and T. Boone Pickens’ energy plan.  And I bet I’m not the only one absolutely sick of hearing about corporate bailouts. And plenty of people who know that I am a fairly liberal person are surprised when they hear me say that I don’t approve of the various corporate bailouts.

Here are some of the problems I see.  As an individual with a household to take care of, I need to be responsible with my money and have enough foresight to anticipate potential future problems.  There is no one that will bail me out if I make bad decision after bad decision for years.  As a matter of fact, I have watched both my parents deal with the problems created from serial bad-decision making.  With help from relatives and friends and repeated visits to bankruptcy court, they are no closer to being financially comfortable than in the past.  Regardless, in order to survive and thrive, we all need to be financially responsible and adapt to changing markets, job outlooks, and changing needs.  The American automotive industry has failed to execute this most basic responsibility.  Technology is amazing and has come so far, yet the big 3 have failed to keep up with this technology and give consumers the vehicles they want to buy.

GM claims to have more hybrids and vehicles that get over 30mpg than any other car company.  These statistics may be true, however, the amount of cars GM has on the market far exceeds that of any other company.  In addition, I can’t believe that people will buy the claim that gasoline consumption of 30mpg or more is an accomplishment.  For one, check out this article from Mother Earth magazine in 1979 about a car that achieved 75mpg.  IN 1979!  Furthermore, there was the legendary EV1 produced by GM in the 1990’s that, of course, required no gasoline at all.  There is even more information on the history and evolution of electric cars on this page.  Here’s the clincher, though.  Without taking into account the alternative engines and power sources for vehicles, we were still achieving 30+mpg 15-20 years ago.  When I graduated high school, I bought a car that consumed 35mpg and wondered how awesome consumption would be in 10 years, 15 years, etc.  Well, it’s been 12 years and we haven’t come far.

Right now in the mainstream auto industry, there are only a handful of cars that have achieved anything of note in the consumption department.  There is the Toyota Prius, available all over the country, and with an mpg rating of about 48.  As a Prius owner, I can say that we have consistently achieved about 50mpg with regular use.  There is also the Honda FCX Clarity, a hydrogen fuel-cell vehicle available only in California right now.  The previously-available Honda Insight (and set to come back for the 2010 model year, according to Honda’s website) had a spectacular consumption rating of 70mpg. Also notable is the Smart car, with gas mileage of up to 41mpg (and an incredibly cute design), and the Toyota Yaris, with gas mileage of up to 40mpg.  Both the Yaris and the Smart car have affordable sticker prices, high gas mileage, and nice feature availability.

The other hybrid models on the market are feel-good cars.  They improve gas mileage nominally, making the yuppies, soccer-moms, and wealthy feel like they are doing something for the environment and saving money and fuel while still driving the car they want to drive.  In fact, most of these vehicles have consumption ratings lower than my 2004 manual Kia Rio, that gets me about 34mpg.

So the cars that are really making a dent in consumption are foreign models (which probably have more American-made components than most “domestic” models – even Harley-Davidson uses a carburetor from Japan made by Keihin Fuel Systems).  Obviously, Detroit dropped the ball here and is flailing in it’s attempt to catch up.

There are some companies that are changing the landscape of the auto manufacturing industry.  An example of what can be done to achieve 0mpg, while maintaining a sports car look and performance, is the Tesla, with its price tag of over $100,000.  This car is beautiful and serves those with lots of money who prefer the fancy cars.  Another important company to watch is Aptera.  This car is a two-seater on three wheels – basically an enclosed motorcycle.  Its hybrid model gets 100mpg, while there is also an electric model that (obviously) uses no gasoline.  There are also many new commuter car companies making small (1-2 seats) cars just meant for going short distances on a daily commute, like Commuter Cars Corporation, Motor Development International, and Zap (which stands for Zero Air Pollution).

Why does this all matter?  This matters because, no matter what you believe, the oil supply on this planet is finite.  The price of gasoline will skyrocket again and we will all be feeling the pain.  By buying gasoline in the present, we are funding those we consider to be our enemies.  The continued use of gasoline will continue to pollute the environment and accelerate global climate change.

The cutting edge technology is not coming out of Detroit, and it’s nobody’s fault but their own that they decided to stop being innovative.  Our country should not be funding the antiquated businesses and technologies embodied by the traditional American auto industry.  GM, Ford, and Chrysler all deserve to lose a whole lot of money, downsize like crazy (if not close) and restructure their entore business models, if they remain in business.  If the government wants to invest in jobs for Americans, we need to be financing the new companies with new ideas about fuel and technology.  Investing in these companies would keep America on the cutting edge of technology and provide plenty of new manufacturing and sales jobs as the industry grows.  The failure of Detroit to keep up with the changing market and changing world conditions does not constitute an emergency on the part of American taxpayers.  Period.  Let them take responsibility for their actions.

One Comment On “Automotive Bailout Problems”

  1. I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

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