Of Mileage And Money
It’s snowing today in DC but it sure feels like spring. The Mexico City gag rule has been repealed, Guantanamo is going to be closed, and our leaders acknowledge that torture is a crime. Yesterday Obama ordered the government to
allow review California and other state emissions standards. It’s like we just crawled out of the dark ages.
But when Congress set a goal for the automakers to come back on February 17 and present them with a plan for being "financially viable" along with making more fuel efficient cars, they were in serious denial about the fact that doing one makes the other impossible, at least in the short term. And so here we are today, with the auto execs acknowledging that the big gas guzzlers are their most popular cars, and if they can’t sell them, they can’t be profitable. And the new order just makes things more confusing:
One concern automakers have with states regulating tailpipe emissions is that keeping up with a hodgepodge of standards would be difficult. They expressed support Monday for the ideal of cutting emissions but want their engineers to be concerned with meeting just one set of requirements nationally.
The Alliance of Automobile Manufacturers, which represents 11 carmakers, said it favored “a nationwide program that bridges state and federal concerns and moves all stakeholders forward, and we are ready to work with the administration on developing a national approach,” in a statement from the group’s chief executive, Dave McCurdy.
It’s certainly progress from the days when George Bush turned the entire country into an altar for Big Oil, but it’s only a first step, and one that creates more problems for automakers. Nothing has really changed I wrote last November:
When Harry Reid and Nancy Pelosi sent the Detroit automakers away and told them to come up with a plan, it made me want to put my head through a wall. Not because the automakers didn’t need one, but because they’re operating in a black box unless and until the government comes up with their plan.
You cannot create an effective business plan if you cannot project what the market for your product will be. A market for green cars can only be guaranteed by government action. It’s a simple and very basic business principle. If the automakers tell everyone what they want to hear and promise to make small, fuel-efficient cars and yet people continue to want SUVs, Honda and Toyota will supply that market and then everyone will bitch about how GM and Ford are not competitive because they’ve got shitloads of cars nobody wants.
You can ask them to be profitable, or you can ask them to be energy efficient. If the government wants them to be both, they have to create the market conditions for that to happen.
Does the administration have the courage to create the kind of policy that would allow the automakers to be both fuel efficient and profitable, like imposing a hefty and unpopular gas tax at a time when people are already struggling? Because if they don’t, they’ve set unreasonable demands that the automakers can’t possibly meet, and the public will get cynical when Richard Shelby and Bob Corker start preaching about the sins of wasteful government spending.
The public needs to know what the choices are. I actually think GM and Ford have done a good job preparing for a fuel efficient future on the engineering side, while Chrysler is just trying to make itself easier for Cerberus and their $2 million worth of lobbyists to unload. But if you explain to the public that the value of getting off oil is worth the price of the domestic automakers not being profitable in the short term, I think they’ll accept that. They’re ready for that.
If that case isn’t made early and often, however, Shelby and Corker will once again be in position to distort and sabotage the union and the automakers when February 17 rolls around.