We'll All Be Driving Obamamobiles
by Brent Peterson
by Brent Peterson
of GM and Chrysler the government is getting its wish. It is reaching
its goal of over the last 30 years, to be able to force Americans
to drive what it says they may drive.
In 1976 it
began in force. An auto industry already with quality struggles
and difficulty meeting the emissions and safety regulations got
hit with Corporate Average Fuel Economy standards. In other nations
the tax code was used to encourage people to buy smaller vehicles
that used less gasoline, but that was not good enough for the rulers
of the United States of America, they wanted vehicles that did not
meet their fuel economy standards to simply go away.
While in Europe,
large vehicles can still exist; the buyers simply have a huge tax
bill. This is not a good arrangement, but it at least allows automakers
to decide what they will build and control the mix of their vehicle
lineup. CAFE is different. Should an automakerís lineup not produce
the result that the government has mandated, they are penalized
across their entire lineup. That is they are taxed for every vehicle
they sell. Even if the automaker meets these targets, a vehicle
that has a fuel economy that is too low requires the buyer to pay
a gas-guzzler tax. This tax was impressive in 1976 dollars, $1000
to $7000. Thanks to inflation, itís now usually less than the sales
tax on the vehicles it applies to. (And since itís considered part
of the sales price of the vehicle, there is a tax on the tax.)
The goal of
CAFE was obvious; it was to control what we could buy from the automakers,
to eliminate the large vehicles that Americans prefer. In this goal
it was initially largely successful as by 1985 the big three had
purged their lineup of most of their large car offerings. In their
place were smaller front wheel drive cars. By the late 1990s the
number of large RWD cars had dwindled to a few luxury models and
the aging design of the Ford Crown Victoria. While this looks like
a success for the management of the market by the government, it
had unintended consequences that made it a failure from a fuel economy
In the late
1970s the only people who bought trucks were people who needed them
for work or pleasure purposes. Enclosed trucks like the IH Scout,
Ford Bronco, Chevy Blazer, and AMCís Jeep Grand Cherokee were niche
market vehicles that were typically owned for regular transportation
by people who needed the capabilities of a truck for their chosen
recreation, be it camping or off-roading.
After the great
purge of traditional rear wheel drive GM full-size cars in 1985
(the last automaker to significantly reduce their lineup) to meet
the CAFE requirements, people began to discover that these enclosed
trucks were the next best thing to the full size station wagons
and other large passenger cars that were no longer offered. Sure,
there were a couple wagons and sedans still on the market, but they
werenít enough to satisfy the diverse interests of the buying public.
Sales began to increase for these rather plain trucks with hose-out
vinyl interiors. Detroit took notice. It wasnít long before these
enclosed trucks had everything and more than the finest luxury cars
of the 1970s.
The big three
had never really learned to build cars smaller than Maverick or
Nova very well. Their customers usually didnít want anything smaller
than that. They made attempts with the Pinto, Vega, Omni, and so
on but with little success and often dramatic failure. Their internal
setup and US regulations prevented them from tapping their European
divisions for product with few exceptions. In addition I would not
be surprised if their agreements with the UAW hampered the changes
required to make these small cars profitably.
The big three
were good at making trucks though. This shift in market preference
was just what they needed. They made their investments to produce
these trucks in large numbers. Fleet fuel economy dropped. Little
did the big three know that the shift was not permanent but rather
something closer to a false signal like that created by the Federal
Reserve manipulating interest rates. The federal government has
manipulated the product mix, fuel prices, and interest rates for
car loans and created the conditions whereby only an unusually enlightened
executive would have grasped what was happening. The money was in
trucks and into trucks went the effort. Ford, GM, and Chrysler became
dependent on selling light trucks. Once there was no turning back
the governmentís wars and money creation drove up the price of fuel.
Interest rates increased. The market shifted rapidly and the domestic
automakers couldnít shift with it. The bubble burst.
made by the now formerly big three was systematic. That is every
automaker did it to one degree or another. Even profitable Porsche
created an SUV model. One has to ask, why is it that every automaker
to one degree or another shifted resources away from their traditional
product lines to build enclosed passenger trucks? We are supposed
to believe it was an automaker-driven marketing craze. I donít believe
this. It was driven by a central source that manipulated the market
in ways that produced results it could not foresee. That source
being the one that is rarely looked at for the consequences of its
actions, where someone or something else is always to blame instead,
the US central government.
look at the mismanagement, the UAW, and other assorted problems
that contributed to the current state of affairs in the domestic
auto industry, government gets a pass. Had government not desired
the power to tell Americans what they were allowed to drive, the
automakers would have kept a much more diverse lineup of vehicles.
They would have made different decisions. Their product line would
have evolved instead of going into a bubble mode. Their large passenger
cars would have remained, getting better fuel economy as the market
demanded. Their product line would be more like that of their competition
instead of heavily weighted to light trucks. The bias would still
have been present for larger vehicles, but not to such a degree
backfired and did more harm to fuel economy than help, it now stands
to have led the government to its ultimate goal, the power over
what cars are built. It appears that the government will at minimum
have veto power over every GM model. Nothing that isnít politically
acceptable is likely to see the light of day from GM again.
GM used to
use the government to try and put burdens on its competition. Once
it had the capability for daylight running lamps at relatively low
cost GM pushed to make them mandatory on vehicles sold in the USA.
That effort failed, but imagine a GM owned by the government it
is lobbying. How long could Ford survive in a market competing against
a company owned by the people that regulate the industry? How long
before BMW, Toyota, Honda, and others are forced out of the market
and back to their home countries?
laughing at cars built in the Soviet Union and other nations it
controlled, the plight of the Cubans rebuilding their 1950s iron
over and over again so they wouldnít have to get a Lada. How long
will it be now before Americans have to suffer the same conditions
once the government uses the tools it has to eliminate the competition
to its auto-manufacturing interests?
me, I have a lot of auto parts to order while I can still get them.
Peterson [send him mail] is
a mechanical engineer working in product design and development
living in the Chicago suburbs with interests in history and transportation.
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