Dirty Green Politics and the Auto Bailout

This week, Executives from GM, Ford, Chrysler, and the UAW made a return trip to Washington to grovel before the politicians who, if their egos are sufficiently massaged, have the power to hand them vast amounts of taxpayer money.

The executives submitted to scores of stupid questions, and endured many hours of ignorant opinions from Senators and Congressmen, most of whom have no real business experience, and certainly no comprehension of the massively complex and intensively competitive automobile industry.

What was conspicuously absent from these star chamber hearings was any of the facts leading to the obvious conclusion that much of the cause of Detroit’s financial crisis was green politics in Washington, with blame falling squarely on Congress.

A favorite criticism from the political-media elite is that General Motors has stupidly continued to make cars “nobody wants to buy.”  But, since the early 90s GM has made some of the most wanted vehicles available in America:  Large pickups and large SUVs.

GM didn’t invest Billions on world class engineering and design of these vehicles out of stupidity.  They did it to meet consumer demand – demand that was so great that Nissan began offering similar vehicles.  Toyota, a company that basks in the glow of political-media-green admiration, invested Billions in engineering and a new plant in Texas, to introduce a new product, just one year ago, that competes directly with GM in the large, V8 powered, pickup market.

Through October of this year, even with gasoline prices spiking to record highs and a financial crisis that has disqualified half or more potential buyers from auto loans, General Motors has still sold over 1.2 million of these popular vehicles including:

  • 67,000 of America’s largest SUV, the Chevrolet Suburban and it’s nearly identical cousins, the GMC Yukon XL and the Cadillac Escalade EXT.

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  • 141,775 of GM’s slightly smaller but still large SUVs, the Chevrolet Tahoe and GMC Yukon and Cadillac Escalade.

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  • 1,009,069 full sized pickups, including the Chevrolet Silverado and Avalanche, and the GMC Sierra.

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A lot of politicians are chauffeured around daily in the huge Suburbans and Escalades.     But, political-media establishment opinion leaders have always been opposed to large vehicles for us common people.

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When politicians say “nobody wants to buy” an SUV or large pickup, listen between the lines for the real meaning: the environmental lobby that rules Washington these days doesn’t want these vehicles offered for sale, because too may customers like them and buy them.

For three decades the government has attacked Americans who want or need large vehicles through a regulation called Corporate Average Fuel Economy, or CAFE.  CAFE imposes an arbitrary fuel consumption standard, based entirely on political rather than engineering considerations.  Currently, the standard is 27.5 miles per gallon average for all cars sold by a given company.

If too many of us customers defy the elites and  buy larger pickups and SUVs instead of tiny sedans, the auto company’s CAFE average falls below the standard and it must pay a penalty.  And who does the penalty cash go to?  Not to customers to help pay for gasoline.  It goes to the government, of course.

How much is the penalty?  Currently, the penalty is $5.50 per car for each tenth of a mile per gallon under the 27.5 MPG standard.  So, if  Joe the Plumber buys a Chevy pickup for his business with an EPA rating of 17.5 MPG, GM must pay the government $550.

GM can pay cash or, theoretically, it could offset the penalty on the pickup by selling small cars that exceed the 27.5 MPG standard.  But this is can’t happen in the real world.

To understand the problem, consider this tiny car called the Yaris,  made by Toyota, the company most favored by the “green” blowhards.  It’s rated at 31 MPG.  So, in order to avoid penalties for selling 17.5 MPG pickups, GM would have to develop a car like the Yaris and sell three of them for each pickup.  But there are not nearly enough customers who actually want to drive a Yaris-sized car to make this equation work.

Besides, the limited market for miniature cars is already saturated with models from foreign companies, many assembled in American plants, that have a huge competitive advantage in that they do not have burden of the United Auto Workers Union.

On top of the CAFE penalty are decades of relentless political pressure from Congress, adverse publicity from the know-nothing media, and continuous attack by “green” activist groups.

GM does offer several, newly engineered, world-class quality cars that are roughly the same size, and achieve the same mileage ratings as the Camry, the most popular car sold by politically favored Toyota, with ratings from 24 to 26 MPG.  But GM gets no political or media praise for these cars because it continues serve American customers who wish to drive Pickups and SUVs.

If the Senators and Congressmen really wanted to help they could start by killing the politically motivated CAFE law that punishes families and businesses who need large vehicles, and punishes the companies that provide those vehicles.

But that won’t happen because their first allegiance is to the “green” lobby, not to the auto companies, not even to the union workers they claim to care so much about.

1 Comment so far

  1. BookSeekers on March 3rd, 2009

    Hello Guys,

    Greetings. Introducing me.

    By the way, I am looking for book I ching translated by Kerson Huang. I cannot find those book anywhere. Do you know where I can find those? Thanks