Auto Bailout: Facts Vs Elite Media-Political Opinion (1)

It now appears likely that the auto makers will receive about $18 Billion from Washington this week.

The so-called “debate” over this issue has been a classic example of how ignorant and out of touch with reality the Washington media-political machine has become.  The continuous flow of ignorant opinion and misinformation showcases the utter laziness and sloth of the elite media.  It appears that nobody who steps in front of a camera has bothered to consider even the most easily understood facts and data.

It appears that decisions that will ultimately cost taxpayers $38 Billion, or probably much more, will be based on myths and folklore, rather than genuine facts and data, and therefore will lead inescapably, to even bigger problems than  the auto makers already face.

Consider this exchange between TV reporter Tom Brokaw and President-elect Barack Obama on Meet the Press yesterday:

MR. BROKAW:

One of the great concerns in this country, of course, is additional job loss, which would be considerable if the Big Three in the auto industry in this country–GM, Ford and Chrysler–were to go down…Do you think the Big Three deserve to survive?

PRES.-ELECT OBAMA:

Well, I, I think that the Big Three U.S. automakers have made repeated strategic mistakes.  They have not managed that industry the way they should have, and I’ve been a strong critic of the auto industry’s failure to adapt to changing times–building small cars and energy efficient cars that are going to adapt to a new market.

Obama is merely regurgitating the establishment chant we hear every time we switch on the TV, that the Detroit auto makers are in trouble because they don’t produce “small, energy efficient” cars.

Let’s see if the data supports this assertion.   We’ll compare General Motors, the company currently suffering the most criticism, with Toyota, the company most admired by the political-media Elite.

GM’s two models with the highest gas mileage are the Chevrolet Aveo and Cobalt both with an EPA rating of 27.  Toyota offers three modles that exceed GM’s highest mileage cars:

  • The Prius Hybrid with an EPA rating of 46 MPG
  • The Yaris with an EPA rating of 32 MPG
  • The Carolla with an EPA rating of 31 MPG

FACT: As of November, sales of these thee models add up to 596,802 units, or 4.8% of all vehicles sold in the US this year.  That means, of course, that 95.2% of all vehicles sold, including hundreds of thousands sold by Toyota, are rated at less than 31 MPG.

On the other hand, the three GM vehicles with the lowest gas mileage are

  • Suburban SUV
  • Tahoe/Yukon SUV
  • Sierra/Silverado pickups

FACT: As of November, Sales of these three GM vehicles add up to 765,701, or 6.1% of all vehicles sold in the US this year.

So in this, the worst year ever for GM, with gasoline prices spiking to record highs, It’s three lowest mileage vehicles are still outselling Toyota’s three highest mileage vehicles by 27%.

FACT: Toyota’s best selling model, is not one of those three highest mileage vehicles.  It’s the somewhat larger Camry, rated at 25 MPG.

FACT: GM’s Chevrolet Malibu, comparable to the Camry, is also rated at 25 MPG.

FACT: GM’s best selling car the larger Chevrolet Impala with a rating of 22 MPG,  has had sales of 231,841 units as of November.

FACT: Toyota’s Avalon, is comparable to the Impala, is also rated at 22 MPG and has had sales of only 37,852 units as of November.

How could someone who actually looked at the data conclude that GM’s problem is that it’s vehicles are not small enough?  Or, not fuel efficient enough compared to the competition?

Obama says GM’s decisions over the past 20 years to continue selling large SUVs, pickups, and sedans were “strategic mistakes.”  What if GM had, instead, done what the politicians and media favor, switch all production over to small cars like the Toyota Corolla?   The answer seems pretty obvious: GM would have ceased to exist and Toyota, with it’s full line larger vehicles and full size pickups would now have a 30%+ market share instead of 17%.

GM management has certainly made mistakes.  Some of those mistakes were made decades ago and still haunt the company today.  But producing vehicles that customers want to buy is NOT a “strategic mistake.”

The biggest “strategic mistake” of all will be a big taxpayer investment in the auto companies that gives politicians a seat at the management table, and the power to veto product lines based on political considerations.

It would cost the taxpayers less, and ultimatley save more auto company jobs if Congress would just hurl the $18 Billion into the Patomic, and let the companies go through Chapter 11 bankruptcy reorganization.

2 Comments so far

  1. theclassiclib on December 9th, 2008

    Excellent Post!

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