What do we do about American cars?

Welcome to post number 172 (JOSH!!!) of The Way by WiredForStereo. Here's another post about EV's and Politics (JOSH!!!).

As you may have heard, American car companies are not doing well. GM is asking for a bailout because they say they may not have enough cash to last the year. Obama wants to help, Bush does not.

This is a transcendent problem and one years in the making and multi-causal. Let's start with some of the causes. First, American cars are widely considered to be crap. While this is likely not so true now as it has been in the past, it's something to be taken into consideration as a function of name recognition and reputation. Number two, and I think very important is that our tax and tariff policy makes it favorable for an American company to ship it's manufacturing overseas. Consider this: Japan has made special considerations for its car manufacturers. Japan has high import tariffs which essentially protect its car makers. If it costs you 20% to ship a car into Japan, then you probably won't be shipping many cars into Japan will you? Also, Japan requires that the materials incorporated in such cars be produced in-country, protecting again, not only the car companies, but also other related industries.

The US? We only have a 3% import tariff. That means it has been literally encouraged for many years now that for profitability, you should ship your manufacturing to another country where labor is cheap and then ship your products back, nearly free of charge. Meanwhile, this leaves us high and dry, and strangely enough, the Ford Fusion is made in Mexico while the best selling Toyota Camry is made in Kentucky. Where does Toyota not have a plant? That's right, Mexico.

Another problem. GM has been squandering its time and money getting people to love huge inefficient SUV's and trucks while expending a modicum of effort to develop the kinds of cars any dense prophet (profit?) can see will be needed as the gas goes away. Now when they have one car that may actually change things, they are on the edge of bankruptcy and if things don't go right, that car may not even see the road. Ford on the other hand while not doing well is still doing better than GM and that is due in part to Ford licensing Toyota's hybrid system to put in the Escapes. At the final NASCAR race this season, Ford actually debuted the first hybrid pace car, a Fusion, ever to pace a NASCAR event. In a related note team owner Rick Hendrick begged the politicians to do the right thing for GM in an interview before the race.

What shall we do? This is not about a simple bailout. We've already seen the gross failure of the bailouts already put forth. What needs to be done is a restructuring of the way we think about business in America. We need to think like every other country in the world and that's US (pun intended) first. That's not to say us first in the current "we own the world" way, but in the way that we need not to bleed money because our business leaders are greedy. They get rich while the workers get kissed on the neck and then violated. The first thing that can be done is to raise tariffs to levels that are realistic. If Japan charges us a 20% tariff then we need to do the same. They protect their automotive industry, we must do the same. China too. This won't get rid of Japanese cars, they are already built here, but it will level the playing field. This is should not be a system where we are the consumers and the rest of the world are producers. Eventually the consumers will run out of cash.

Secondly and emphatically, the bleeding must stop. We cannot expect cheap "Made in China" products if we want long term health of our economy. If our workers don't have money because the jobs aren't here anymore, then they won't buy stuff, and we'll live in a perpetual depression while the rich get richer and the poor get poorer. Believe me, there will be more of one group than the other, and you aren't going to be in the group you want to be in.

This bailout possibility reminds me of the Chrysler bailout in 1979-80. It was a successful one. This one could be successful too if a few guidelines are followed. First, if the government is going to be loaning the taxpayers money, they should expect some stuff in return. The expectations should be a decent interest rate, and most importantly, cars people will want to buy and keep for a long time (read cars that get good mileage, and last long, specifically EV's and series hybrids.) But again, the most important factor is the US protecting its industry by raising tariffs. If everything is on an equal playing field and they still fail, then let them fail. We don't need them. I don't think however that a good solution is to hobble them and then let them fail, which is what has been happening for, oh let's say 28 years now.

Reaganomics needs to die.
WiredForStereo

GM Closing Four Truck and SUV Plants!

In a move that I have been waiting for, for a long time, GM is closing four plants according to the Associated Press in a story out this morning.

Rising gas prices have precipitated a dramatic switch from larger vehicles to smaller ones, and American car companies have been left out in the cold in a sense because their gas sipping options are far less populous than those of foreign car makers.

GM, the one responsible for attempted murder of the electric car not five years ago can now be seen as making amends for that. It now appears that the Chevy Volt just may actually happen. The shift away from bigger vehicles is even more dramatic when you understand that switching from a 10 mpg vehicle to a 20 mpg vehicle saves approximately 600 gallons of fuel per year while switching from a 50 mpg to a 100 mpg saves only 120 gallons. Think if someone switches from a Hummer to a Prius, they would save approximately 750 gallons of fuel a year, and at current prices, that's a hunk of change.

Speaking of Hummer, GM has decided to reevaluate the brand, possibly even selling it. This is the thing I am glad of the most, because Hummer means so much more than just a big SUV, it really represents something to the rest of the world. The rest of the world sees Hummers as small tanks, and here our moderately wealthy drive them as family cars or commuters.

GM says the change is permanent, let's hope so, and let's hope that other car manufacturers do the same. Toyota needs to get rid of Sequoia.

I think with the right impetus, we can transition away from fossil fuels without having a huge crash.
WiredForStereo

Dr. Gasoline, or: How Learned How to Stop Worrying and Love the Go-Juice.

Once again, necessity has me opening my fat yap to complain about something.

Actually, I am not complaining, I welcome higher gas prices, they prove I am right. Go ahead, look at some of my older posts, you'll find a number of references to higher gas prices, and the reason therefore.

Higher gas prices necessitate action, hopefully, it will get people to stop buying Escalades and Tahoes, and Sequoias. Get ahold of a Corolla, and Echo, maybe a Prius. I ride a motorcycle that currently gets around 47 mpg. My wife drives a Corolla that gets around 34. We've decided that with the children situation, our next car will be a Toyota Sienna Hybrid (or whatever they'll call it by then.)

As you may be able to tell, I like Toyotas. They are the kings in the hybrid biz, and they have been building very reliable cars for a long time. In fact, the most populous car in history is a Toyota, the Corolla. Toyota has most of the factory produced electric vehicles on the road, the RAV4 EV, though there are very few of them. Plus, they have some great plans for hybrids in the future. They plan to offer every one of their vehicles in hybrid form, and there are several much higher mileage machines in the works. The 3rd generation Prii are supposed to make 30% better mileage than the current ones, and there is some talk of nearing the 100 miles per gallon mark.

Anyway, the sustainable option would of course be a flex fuel type hybrid, or better, a biodiesel model, and best, an all electric car. Hopefully with the current state of things, those options will be nearer on the horizon.

Mark my words, gas will go up even more.
WiredForStereo