The American major automobile manufactures have fallen on hard times. They are currently asking that the government step in and help them ride this wave of instability in the markets. Should the government help out the companies?
I think that a little help would be good. It would hopefully allow for the companies to shift gears toward more hybrids and more research into electric, natural gas and fuel cell cars.
But I don't think it is going to do much good, and here is why:
Consumers.
That is right, the auto industry can do whatever they want to try and make fuel efficient cars trucks and SUV's but in the end if they are going to fall flat, it is because of consumers. American Consumers, specifically, are an extraordinarily fickle lot. It is because of them that the automakers took such a hard hit. Lets look at the facts.
The American Automakers adjusted to a fuel shortage in the 1970's by creating small more fuel efficient cars. In 1980, you could buy a Honda CRX or a Geo Metro that got 50 mpg! What happened? When fuel prices dropped to manageable prices, consumers demanded more power, larger vehicles, and more pleasing (both visually and audibly) automobiles. Those that could push 50mpg out of their powertrains were abandoned as consumers would not buy them. In other countries, where fuel prices have remained higher due to taxes and other regulations, the MPG of vehicles stayed higher.
So why not bring in these vehicles from outside the US?
Two reasons. The first is regulations. Some safety laws and some environmental laws differ. Both of these can add weight to a car. Six airbags don't come free, in cost or in weight. Steel reinforced doors increase safety, but also increase weight.
The second is again, the consumer. These 50 mpg vehicles tansport people and good just fine, but they do so too slowly for American consumers. Would you like to drive a vehicle that took 15 seconds to get to 60 mph? That seems like forever to most American consumers. Since consumers don't like that kind of wait, they don't buy those kinda of cars. As such the automakers don't sell those cars.
Why don't the automakers just force it upon consumers? Because there is, or was, more money to be made from bigger vehicles. Why else would Honda, Toyota, and other oversea automakers make large trucks and SUV's for the American market? Toyota Tacoma or Honda Ridgeline anyone?
So what can we do? Not to much in my opinion. Because of the large reach back needed to get all the pieces together for a vehicle automakers will be unable to shift production at the speeds that oil prices fluctuate. From August 08 to November 08, fuel prices dropped from just under $4 to $2.30 average for gasoline. This is after fuel prices jumped up to $4 and stay there for many months. If automakers had shifted the majority of their stock to small fuel efficient cars, consumers would now be clamoring for bigger faster vehicles.
In the near future, even if fuel prices remain low, American consumers will continue to look for smaller more fuel efficient cars. But mark my words, if fuel stays low over the next year, possibly the next 6 months, and the economy appears to recover, sales of SUVs and trucks will jump up to near previous sales numbers.
Why? The American consumer will have forgotten about the fuel problems of before and shift back to where power and comfort are worth more than mileage per gallon.
In the end, we should help bailout the automakers to keep the workers going and prevent the collapse of the automible manufacturing capability in the United States. However, without a shift in consumer wants and spending, we may well be right back where we are now.
http://www.newsweek.com/id/130439
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