Monday, May 30, 2011

Party's Over

Whenever I read a headline like this "In Its Rebound, Detroit Focuses on Selling Smaller Cars," I just want to bang my head against a desk.  How many times must this happen and happen late?  Detroit was surprised by the oil crises of the 1970s and then again and again since.  The lure of easy money by selling big cars packed with stuff always seems to trump the long term challenge--that oil is a scarce commodity subject to the ebbs and flows of international relations. 

Yes, these companies have gotten more serious about electric cars and hybrids, but only because they have been dragged here.  As I prepare to buy a new car (thanks to the maniacal inattentive school bus driver), I have only considered one company, Ford, and only if I cannot get a good deal from a South Korean company (Hyundai).  Sure, I would like to buy a hybrid, but they are out of my price range.  The good news is that the mileage (or, as I am always confused by here, litres per 100 km) is much better than it used to be, so the difference between Prius and Elantra is not so startk. 

Anyway, back to the point: short term profits seem to trump the long-term (which is not terribly surprising), but these companies hedge so very poorly that any price shock (plus a shock to capital markets) threatens their survival.  The funny thing is that Ford is said to have a "head start" by focusing on smaller cars five years ago.  Um, a head of whom?  GM and Chevy, yes.  Hyundia, Kia, Honda and the rest not so much.  The only good news is that Toyota has lost its sheen for being reliable and Honda is not so exalted these days either (plus as we found out, Hondas have been the target of thieves). 

This entire article is far too laudatory--the car companies are coming to the party after the party is over.  Yes, they can make a comeback and do ok, but they hav
He knew G.M. was on the right track when he parked one of the first new Cruzes off the assembly line at a supermarket in suburban Detroit, and a store employee rushed over to check it out. “She said, ‘I can’t believe Chevrolet is building a car this size that’s this good,’ ” Mr. Reuss said.e frittered away so much time and money that it reminds of the US effort in Afghanistan and Iraq.  Not good.
 Ah, the joy of low expectations!


Addison said...

If you can pick only one to rail against you’re right in picking the racists. The racism of certain hate mongering groups has and will continue to be a greater threat in the future. As you say the Westboro gang are small, good at getting attention and pretty much nothing else. With that being said I’ve always thought their protesting is much preferable to any brief and limited violence they could administer should they ever change their tactics.

Addison said...

Oops, wrong post. You'll figure it out.