Monday, December 8, 2008

Schmeen

It appears that after sufficient groveling by industry execs some sort of bailout for the Big Three is probable. Scattered among the endless debates in the meedja over whether the idea is sound is the frequently invoked shibboleth that Detroit "must" start manufacturing cars that are more fuel efficient, "greener", and that "people want to buy" to assure their future success. To call this idea moronic is to gravely insult the Moron-American population. This blatant idiocy goes largely unchallenged by the MSM who are far less than clueless about not only the current state of automotive technology but also are uncritically approving of the fed's use of bailout funds to blackmail the industry into being good little soldiers in the "fight" to "save the planet".

First of all the market is by far the best teacher of what the public wants in terms of product--by far, by far, by far, by frakkin' far. The progressive politburo has gone way beyond delusional if it thinks it can dictate to the populace what sort of vehicle it should buy. In fact the ever burgeoning nanny state would like us to want to buy the "right" kind of vehicle. Reminds me of Vince Vaughn's crack in the flick "The Breakup" wherein he avers that no one "wants" to do the dishes. If the restless natives refuse to respond to the puppet-string tugs of the State then empowered by its self-righteous hyper-enlightened state of environmental grace it will presumably be forced to cram the "choice" down our throats.

It is a simple plain bald-faced lie that Detroit has not been making vehicles that "people want to buy". Until fuel prices escalated and the economy tanked "people" in their millions bought Detroit product willy-nilly. Of course people bought big vehicles. They seemed like a good deal for the money in the same way that a 3000sq.ft house seems like a better deal to most folks than a 2000sq.ft. house for the same price. That this may not in fact be true is beside the point. When consumers purchase a product, house, car, TV, cell phone, whatever, they will in almost all cases look for what they perceive as a "good deal". A full-size pickup or big SUV seemed like a good deal since it's a whole bunch of vehicle for the same price as a much smaller passenger car. If someone had any need for hauling lots of people or stuff, even on a very occasional basis, then a pickemup or Tahoe/Expedition/et.al. was a better choice in terms of utility and consequent consumer satisfaction. Or at least it was until fuel prices lifted off for the stratosphere.

Fuel prices have spiked before and the U.S. auto industry has responded in such time frames as it was able due to lengthy product development cycles (made ever more lengthy by ever increasing federal regulatory demands). The Asian companies seemed more "agile" in this respect primarily due to the fact that their mix of existing product in their home markets meant that less time and money needed to be spent in responding to variations in consumer demand for greater fuel efficiency. Federalizing a vehicle design already well past its development phase is a lot less expensive than designing new product from scratch although it could hardly be described as cheap. Even at that they were forced to move production to the U.S. as labor costs escalated out of sight in the auld sod of Nippon. Not being idiots the Japanese, among others, established production in southern right-to-work states which perforce meant far fewer hassles from unions. To have sited plants in heavily unionized rust-belt states would have been tantamount to fiduciary malfeasance. Think of this as "unfair" competition as you will but for the foreign firms it was either that or see their market share fade away as rising indigenous labor costs increasingly froze them out of the U.S. market.

By the 90s the market had settled roughly into a two-tier system where Detroit made the big roomy vehicles that people wanted and the foreign makes serviced the smaller, and almost by accident, more fuel efficient market segment. I say "by accident" because with fuel prices at historic lows the higher mileage of smaller vehicles was mere gravy and not a significant driving market force. Honda found that this particular gravy did not attract sufficient interest when in the 90s sales of its very high mileage Civic variant lanquished.

This segmentization was not absolute as evidenced by the success of smallish Detroit product such as the Ford Escort/Focus and the Chevrolet Cavalier/Cobalt. Also going against the grain were Nissan's and Toyota's forays into large pickups and SUVs. The Japanese have had some success in this market but peak sales volumes were never more than a fraction of the sales of big Detroit iron so the two-tiered structure largely persisted.

As the years progressed Pacific-rim makes encroached more and more into the mid-sized market segment since lower production costs meant higher content levels in vehicles that had heretofore been the province of Detroit. It also meant that they could "afford" higher build quality than Detroit could although that gap has narrowed significantly in recent years. In any case to expect that product "quality" is a concept somehow divorced entirely from monetary concerns is to display an advanced level of economic nincompoopery.

Fast forward to summer 2008 whereupon not just Detroit but all manufacturers are hit with a quadruple whammy. Fuel prices skyrocket, the financial sector self-destructs, a full-blown recession rears its head, and deaf dumb and blind climate hysteria revs to the redline amongst the political class. If Detroit firms are so arrogant and stupid in terms of marketing then why have foreign makes declined in sales to virtually the same degree? Those alleged paragons of social responsibility Toyota, Nissan, and Honda have all seen sales plummet and not just in big vehicle sales but across the board. It's the economy stupid. If a rising tide lifts all boats then when the economic tide goes out all are at risk of finding their keels sunk in the mud. In a recession no amount of kowtowing to the environmental gods will ensure sales success. Even if a vehicle could be built that would haul six people and get 50mpg it would not sell if most people were not able to buy it. In such a scenario if you find yourself "stuck" with a newish relatively low mileage vehicle it makes zero financial sense to trade it in on a much smaller higher efficiency vehicle. Not many consumers are willing to take a financial bath on such a deal simply because the political class is fibrillating with climate change hysteria. This makes yet even less sense when considering the yo-yoing fuel price situation.

Progressives leges can mandate, coerce, and tax-credit their backsides off and it won't result in the sale of a single vehicle that would not have otherwise been sold anyway. If you think sales are bad now just wait until you see what the automotive and economic geniuses on the Hill are trying to insist manufacturers build with zero regard for anything resembling real consumer demand. People will stay away in droves from over-priced small hybrids and the envisioned pure electric vehicles that supremely arrogant progressive pols are just sure will lead us all into the sunlit uplands of environmental responsibility. For years these sanctimonious gits have been trying to make a vehicle purchase into an overarching moral exercise and have been busy painting the owners of big vehicles as planetary traitors a goodly distance in social acceptability below axe murderers and Big Oil CEOs.

Congress-critters may bludgeon car makers into "going green" but there are no tactics, however ham-fisted and coercive, that will force consumers to buy vehicles they do not want and/or cannot afford. Consumers certainly won't complain that a new vehicle gets good mileage but bloody few are willing consider an automobile purchase as simply an instrument to advance progressive political ideology--certainly not this consumer and certainly not many millions of others. The automotive industry will rise and fall based on market and economic factors no matter how furiously progs rail in high-dudgeon at obstreperous consumers who will pursue their own interests and not those of their self-anointed moral superiors.

Green schmeen. Regardless of how much more "oversight", and however many more oppressive mandates are added to the already crushing regulatory burden of the auto industry, vehicle sales will not smartly rebound as so dreamily envisioned by progressives. Instead sales are likely to tank even further as the cost of "saving the planet" escalates ever higher than our ability to afford that stupefyingly presumptious and maniacally grandiose project.

Quick update: After having heard some of the bizarre and ludicrous details of the auto bailout bill no surprise whatsoever will be expressed if all three Detroit companies are sunk in bankruptcy within two years.

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