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Tuesday, June 17, 2008

The American auto industry never learns
Posted by Jill | 6:26 AM
You'd think that after the oil shocks of the 1970s, the Big Three would have learned that putting all your eggs in the Behemoth Basket may generate short-term profits, but is a lousy strategy in the long run.

I don't know if it's fossilized management or a function of the American corporation's unwillingness to think any farther than the next quarter,but anyone could have seen the demise of the SUV coming a mile away. We didn't see it happening today, or tomorrow, or even the next day, but it was clear that when you have vehicles guzzling a finite resource, sooner or later something's going to give.

And now General Motors is once again taking the hit:


Playing the urban warrior in a Hummer was a fairly inexpensive thrill when a gallon of gas cost just over $1. But at $4 a gallon, driving a full-powered Hummer H3 or a big Ford F-150 would cost a typical driver, who drives 15,000 miles a year, almost $4,300 in gas. This is more than 10 percent of the median earnings of full-time workers and about $2,200 more than it would cost to drive the same distance in a Honda Civic.

By May, there were signs that the S.U.V.-era was over. For the first time, Detroit’s Big Three automakers and their trucks were outsold in the United States by fuel-efficient cars made by Asian companies. And monthly sales of Ford’s muscular F-series pickups fell by a third, bumping it five spots from its previous perch as America’s best-selling vehicle, behind the Honda Civic, the Toyota Corolla, the Toyota Camry and the Honda Accord. It was the first time since December 1992 that a car, not a truck, claimed the top spot in monthly sales.

The F-series pickup has been the nation’s best-selling vehicle, on an annual basis, since 1981. But last month, the Ford Motor Company said that it would slash production of pickups and S.U.V.’s. Its full-size pickup plant in Cuautitlán, Mexico, is expected to be used to produce the Ford Fiesta, a subcompact car, instead.


None of this is going to help the U.S. automakers, who for two generations now have demonstrated that they are congenitally unable to build a reliable fuel-efficient car. The Ford Fiesta mentioned in the above article used to be sold here in the U.S. It was a hunk of junk, and I don't expect the newer version to be significantly better. The Fiesta is expected to replace the Focus, which was reasonably well-rated by Consumer Reports until 2008, when they said this about the "retooled" version:

The original Focus was agile and fun to drive, but the freshening for 2008 has taken away from that, with handling that is less crisp than before. The seating position is high and commanding, controls are clear and logically placed, and cabin access is easy. The ride is firm yet supple but the car is still noisy. Interior quality is lackluster.


The problem for the U.S. automakers is that for almost 40 years, they have ceded the fuel-efficient vehicle market to the Asian carmakers, to the point that no one in their right mind would even consider buying a Ford or General Motors compact car when for the same money you can get a proven-to-be-reliable player from Toyota, Honda, and now apparently even Hyundai has improved its quality.

Of course the last thing that American autoworkers need is the shuttering of more plants and the destruction of more jobs. But I wonder when the executives who make decisions like that to focus on gas-guzzlers are going to start paying some of the consequences of their actions instead of it always being the rank-and-file. General Motors CEO Rick Wagoner received a 64% bump in compensation while GM stock fell 19%. How many people below the CEO level would even still have their jobs with a performance like that?

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Anonymous Anonymous said...
Meanwhile, Minnesota transportation officials have announced a major "fast-tracking" of 11 bridge projects in The Gopher State over ten years, @ a cost of some $2.5 billion.

One such target is the Winona Interstate Bridge, recently closed for a fortnight owing to corroded gusset plates and now open only to passenger cars, vans and pickup trucks pending completion of emergency repair work.

(Which also figures prominently on the Postal Service's stamp commemorating the 150-year anniversary of Minnesota statehood.)
6/17/08, 1:23 PM  
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