Saturday, December 06, 2008

Myopia and the Auto Industry

Don't get me wrong, I think the auto industry ought to be rescued, not because I like autos, but because of the ripple effect on the economy.

The US auto industry is getting its just desserts, as the Guardian's Will Hutton points out:

Detroit has resisted every regulatory measure aimed at making more energy-efficient cars for decades, but it was particularly successful during the Bush administration. It avoided introducing the fuel-efficient cars the big three manufacture in more tightly regulated Europe, opting for high-margin gas guzzlers for the US domestic market. Now it is paying a fearful price....

Detroit has mocked climate change, assumed cheap petrol is an never-ending and unchallengeable American right and shared the neo-conservative agenda that government is necessarily and always bad. Now, as GM's submission to Congress acknowledges, the lack of an American welfare system means that American companies have to assume crippling obligations that their competitors do not. Moreover, the dysfunctionality of free American finance means that the reviled federal government must become Detroit's banker.

Moreover, it was only a few years ago that GM's vice chairman Bob Lutz could pronounce that the theory of climate change was 'a crock of shit', a view that animated Detroit's resistance to developing energy-efficient cars. Detroit's world view, like Wall Street's, has proved cataclysmically wrong. GM's chief executive Rick Wagoner acknowledged last week that he was in Washington because his company 'had made mistakes'. It was an understatement.|Detroit has run out of road. The car's future lies in Europe - Guardian |
I totally agree. The handwriting has been on the wall for decades about oil shocks and the need for alternative energy and an improved transit system.

But the US auto industry has been surviving strictly on the oversized profits from SUVs and trucks and has been designed vehicles to be more massive, not less.

Captains of industry indeed.

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