Detroit's Chickens Coming Home To Roost

The domestic auto industry is getting its own bailout to the tune of $25 billion. Remember George W. Bush’s bleating 8 years ago about tax dollars being the people’s money? The people’s money is going to subsidize and prop up a lot of businesses that have made trillions taking the taxpayer, flipping him/her over, and doing very bad things to him/her.

I’m not banker or Wall Street whiz, so what little I know about what’s going on over there hardly makes me qualified to go into any detail about it.

But the auto industry – the domestic auto industry, to be specific – has been operating under a 60s mindset over the last decade. Build it big with lots of mostly-needless “features”, without regard to gas mileage. While Honda and Toyota were busy developing hybrid powertrains – even when gas was $1.50/gallon – GM, Ford, and Chrysler did nothing of the sort. They made their money off Silverados, Tahoes, Explorers, F-150s, Rams, and Grand Cherokees. Those vehicles are lucky, each of them, to pull in 15 MPG in combined city/highway mileage.

The use of petroleum products is a national economic and security issue, at this point, and the federal government since the 70s gas crises has mandated that the corporate average fuel economy (CAFE) of passenger cars sold in the United States meet some median MPG figure. Until very recently, the CAFE rules exempted most pickups and SUVs from the calculus, so the big three were happy and free to build idiotic gas guzzling megatrucks with impunity, and relegated passenger car design and sales to almost exclusively rental fleet sales. Anyone out there own a mid-90s era Chevy Malibu or Ford Contour? How about a Dodge Stratus? While Honda’s Accord and Civic, and Toyota’s Prius and Camry became the state of the art of passenger cars, Detroit concentrated on trucks and SUVs, foisting on us the craptastic Chevy Cobalt, the made-with-Matchbox-car-plastic Dodge Caliber and the now decade-old Ford Focus in order to meet CAFE standards.

The trucks and SUVs were cheap to build, used identical chassis and powertrains, and made the big three a whole lot of money. Domestically, anyway.

Until 2007, CAFE required cars to get 27.5 MPG, and light trucks 20.7 MPG. In the meantime, average fuel economy in other parts of the world is pretty routinely 30% higher due to the use of clean diesel and other smaller-engine technologies. In 2007, the US government passed a law requiring entire fleets – including light trucks – to meet 35 MPG on average by 2020.

When you consider that the domestic market reached its peak fuel economy in 1987 at 26.2 MPG, and by 2006 had fallen to 24.6 MPG, you have to ask yourself why the hell Detroit deserves a bailout of any kind.

It strains credulity and boggles the mind that the auto industry, which so opposed tightened CAFE standards for many years is now coming to the US taxpayer, hat in hand. The biggest slap in the face is the fact none of the big three have any excuse whatsoever to be in the position they’re in. Like a broken record, I will direct you to the websites for Ford UK, Opel/Vauxhall (GM Europe), and Daimler-Benz, (which until recently owned Chrysler). All three domestic automakers are quite capable of making modern, fuel-efficient, low-CO2 producing motor vehicles. The problem is they kept them away from the US market and sold them in countries where fuel is more expensive and regulations are more stringent on mileage and emissions.

The last time a US automaker came to Uncle Sam begging for a handout, it was Chrysler in the early 80s, facing bankruptcy and astonishingly turning itself around with the craptastic K-Car. Then, as now, it was a domestic automaker that kept on making shitty, gas-guzzling vehicles during a gas crisis, and found itself with cars that no one wanted. One might have thought that the lesson had been learned. Now, all three are in big trouble, as evidenced by the stock prices for Ford and GM, which are at historic lows not seen since the 1950s.

You can now buy one share of Ford stock for about 60% of the price of a gallon of gasoline:

There is talk of Ford merging with Chrysler. All I know is that the domestic automakers are caught in a disaster of their own making, and it’s beyond offensive for taxpayers to bail them out of their own dumb and short-sighted decisions in a country where, e.g., working people go bankrupt trying to pay medical bills.