Detroit takes grassroots efforts to middle America, "to educate people" about CAFE
Whenever we bring up the revision of CAFE standards that Washington is considering, it seems confusing that the automakers say that they support mileage increases but are still trying to convince people not to accept them. Remember, though, that there is more than one bill on the table to be discussed. The so-called "Hill-Terry" bill is the one that the automakers are backing, which is the weakest of the three possible bills. The Auto Alliance and others are supporting this bill because they say that it is fair and achievable, and would protect jobs that the more strict bills would eliminate. Perhaps the truth is somewhere in between the stances of the environmental groups like the Union of Concerned Scientists, which support the highest increases to the CAFE standards, and the automakers, who are supporting the lowest. Who really knows? But, at least a shift has been made by the automakers, who never would have supported an increase in CAFE rules a few years ago.
Do you have an opinion you'd like to share? If you live close to either Chicago or St. Louis, why not attend one of the rallies and let them know what you think.
[Source: Detroit News]
Reader Comments (Page 1 of 2)
Mark 9:42PM (8/17/2007)
I am disappointed that our corporate leaders prefer to drag their feet with improving their fuel economy. They pour money they could be using to improve their products at advertising to try to convince us that we need 2+ tons of vehicle to carry us around. I've given up on all of the domestics. I'm not planning to buy another new vehicle from one of the "Big Three." I want an electric car. While I may never convert one to electric myself, I am seriously considering one of the conversion shops that specialize in making EV's a reality.
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Peter 9:25PM (8/16/2007)
Looks like automakers here in US are waiting that competition start getting tougher from overseas manufacturers. (Good example is Toyota Prius)
Just let american automakers "convince" people how CAFE is bad for all of us, because then small electric car companies have actually chance to show how electric cars are actually made to work .
Hype around VOLT is just a another good example how
BIG 2,5 in Detroit screw us all over. They like Chevy VOLT as much as they did Saturn EV1.
Automakers just want to sell same old shit,and their so called "concept cars" are probably light years away from mass production.
By the way in Europe those same automakers
(BIG 2.5) are achieving or are very close to those tougher CAFE standards!!
(Automakers are getting there by using diesel engines)
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UH2L 12:43AM (8/17/2007)
It's not just the Detroit automakers that don't want unreasonable CAFE standards to be enacted so quickly. Few people who complain about the car companies have actually worked at one. It is difficult to meet such standards so within a short period of time.
CAFE is screwed up due to the fact that a car maker could offer 5 models that get 100 mpg, but if nobody buys them, the company still might not meet the CAFE bogey. Much of the blame must be placed on the consumers who pretend to want to buy fuel efficient vehicles, many of them instead feel they "need" a V6 instead of a 4 cylinder, or an SUV instead of a station wagon. If people had stronger self-esteem and more common sense, our country would be less dependent on foreign oil and oil in general. Some of the blame does go to the car companies for marketing SUV's to people in certain ways. But the Japanese and Euro companies do the same thing. The issue for the Big 3 is that people who buy domestics won't buy smaller more efficient vehicles from them. If you owned GM/Ford/Chrysler, what would you do? And yes, money spent on PR could be spent on product development, but that's a drop in the bucket. They shouldn't have fought CAFE standard increases in the past, but it's the Republicans (mostly) who didn't do their job and allowed the CAFE limits to remain stagnant for years.
Even after the requirement gets bumped up, you'll see that people still won't buy efficient vehicles as much as they must to allow companies to meet CAFE. That's because the more efficient vehicles will (have to) cost more. If the Japanese government continues to prop up the yen and support health care for their corporations while practicing protectionism, you can say bye bye to our auto industry and the millions of jobs that depend on it, maybe even those of the commenters above. And I'll guarantee that there will be a hot market for used vehicles that have lots of power and use lots of fuel. This will further reduce sales of efficient vehicles.
I'm actually an environmentalist, but I also know that rapid changes in regulations can be a death spell. If people made the right choices on their own, industry would gladly follow with products that were more efficient.
Atul
http://www.thingsivenoticed.com
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Jeff 8:20AM (8/17/2007)
Re: #3
I spent ten years doing ISO-9001 certification and general project management for Tier I suppliers, Ford, and GM (including, interestingly enough, a stint with Carlson Marketing where I worked next door to the Saturn Group - small world).
Even though I buy American (which doesn't mean a whole lot in an age of "domestics" made in Mexico and "imports" made in Kentucky) because 1) the quality gap is pretty much a myth these days, and 2) 1 out of 5 American jobs are directly tied to the auto industry, I have to say I have no pity for the "Big Three," I am rapidly losing my enthusiasm for the Unions, and I heartily disagree with your characterization of CAFE standards as unreasonable and blaming consumers for confusing wants with needs.
The Big Three have gutted their entire middle management tier to hire more "cost-effective" consultants - people with no loyalty to the organization and who have a vested interest in bleeding their employers white for OT. Worse still, once a project is completed the consultants go away, and there's no one left with any strategic knowledge of what was accomplished to carry-on, so the cycle of hiring consultants to reinvent the wheel perpetuates.
While it's true that the Unions aren't responsible for the Big Three's horrible product mix and multi-million dollar bonuses for executives leading failing companies, it is also true that up until very recently - with bankruptcy for Ford, GM, and Chrysler increasingly looking like a question of "when" instead of "if" - they did little or nothing to trim expenses, minimize their numbers in "job banks," reign in health care costs, or increase productivity by broadening the scope of job definitions on the plant floor. Unions and management don't have to have an adversarial relationship for both to prosper, and the proof is easy enough to find in Canada and Western Europe.
Finally, as much as I'd love to blame the Republicans for letting CAFE standards sit idle for the last 12 years, Michigan's own Democratic duo in the Senate have consistently voted against CAFE changes. I'm not naive - without election reform Michigan's Congressional delegation needs Big Three money - but lay the blame where it's due at the feet of the entire system, and not just the Republicans, loathsome neo-facist scum that they are notwithstanding.
As for advertising and marketing, I'd argue that the domestic auto manufacturers' budgets are a bit more than a "drop in the bucket," but even if I accept your argument that they're not doing everything they can to convince people they *need* an SUV I would still argue that it is the Big Three themselves that drive people to bigger, less fuel efficient vehicles when they over-produce them and then discount them to the point where a fully-loaded full-size sedan actually costs less than a nicely appointed compact.
Case in point: in 2005 I wanted to replace my 1999 Ford Taurus. I shopped Fairlane Ford (as in Dearborn), so there was no shortage of models available. I could have bought a Focus sedan with a moonroof, a six CD changer, cloth interior (they didn't have leather in the Focus at the time), and a four-banger for $19,500, or a loaded Taurus with leather, power seats, moonroof, Duratec V6, and premium surround-sound stereo *for the same price.*
Guess which one I went in to purchase, and guess which one I drove out the door?
As a few people have pointed out in this and other threads on this blog, the real shame in all of this is that the Big Three actually produce attractive, fuel efficient vehicles that Americans are clamoring for. Too bad they're almost all in Europe, and years away from being brought into the North American market.
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mk3 8:26AM (8/17/2007)
Nicely said Atul,
I would like higher fuel economy vehicles to be available but I oppose CAFE standards. I blame the consumer (for often choosing over-sized vehicles) and support higher gas tax in order to motivate less consumption of any kind of fuel.
Higher gas tax hurts low-income people and rural people worst so measures would have to be taken to reduce that burden.
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The Other Bob 8:34AM (8/17/2007)
Well said UH2L-
I could not have said it as well. I might add that environmentalists (of which I include myself) need to study the effects of increasing CAFE. What I mean is that few enviromentalists have asked how much increasing CAFE will help the environment. Cars in American account for less than 1.5% of the worlds CO2 output. Increases in mileage won't have big (if any) beneficial effects because of the old cars that are still on the road and the numbers of cars added to the road every year.
CAFE will damage the economy. As UH2L mentioned, we have created a marketplace that makes fuel efficient cars unprofitable. Most auto experts will tell you that the Prius is unprofitable and it's made by one of the most efficient automakers in the world.
If increases in CAFE go through, I fear it will damage industry to the point that you won't see any additional, reasonable environemntal regulations for decades. One industry cannot save the environment. Let's look at our total carbon output and do something about it.
This is where educating the public is a good idea.
Oh, BTW, Toyota and other imports are members of Auto Alliance. It's not just a "Detroit" thing.
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Bill 9:20AM (8/17/2007)
The more I learn about CAFE the more I come to the conclusion that the system is broken. I don't live anywhere Detroit, not in the UAW, and don't even own an American car. Fuel economy can't be legislated, and if US consumers truly care about fuel economy, then they need to put their money where their mouth is and buy a fuel efficient vehicle. There are plenty out there on the market, and the market has responded appropriately for the demand for them. Any economic incentives or disincentives should be on the demand side of the economic equation, so in theory I'm in favor of higher gas taxes, a carbon tax, or some sort of CAFE-like equation that classifies vehicle by weight class- NOT a "corporate" average, which is fundamentally unfair because different companies have different product mixes.
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Icon149 10:20AM (8/17/2007)
Bill (#7)
"Different companies have different product mixes" That is exactly the problem. companies are rewarded if they sell small cars, but there are company's that specialize in selling automobiles that are not small or effiecent, but serve a need and meet a demand. why not fix the gas guzzler tax, and levy taxes, fees, on less effiecent dirtier vehicles. that doesn't give one automaker an advantage over another. simply puts financial pressure on the consumer to choose the more efficient cleaner vehicle. this isn't brain surgery, look at the European system of taxing displacement. the larger the displacement the more you pay. this forces automakers to develope smaller more powerful engines, lighter cars (to get similiar performance with less power and fewer cylinders), and it doesn't unfairly punish one any one automaker because they choose to fill a niche need rather than manufacture a full line.
CAFE is stupid, politicians shouldn't be involved with industry in anyway other than steering consumers with there pocketbooks. charge us more to drive dirty large vehicles. it's our choice. don't punish the industry because they build the vehicle that i want to buy.
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G_Heindel 7:34PM (11/29/2007)
How many of YOU COMMENTORS were around the domestic auto industry when CAFE standards were first implemented in the 70's? A look at history will reveal that when the beauracrats in Washington stuck their noses into the auto industry with year to year increases in Cafe standards the domestics sales numbers decreased rapidly. Imports increased!
IE: Who in their right mind as a consumer would purchase by a 1974 model when govt. mandated fuel
economy was to increase year over year in the coming 5 years.
This will most certainly happen again if we knowlegable consumers permit Federal Involvement
to micro manage our already depressed domestic auto
industry.
I complement those who oppose further intervention
of the Federal Govt. in deciding what the marketplace needs.
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Tim Russell 11:08AM (8/17/2007)
CAFE is stupid:
It gave rise to the SUV because of the lower truck MPG standard. Remember when CAFE was introduced trucks were mainly work vehicles and not something found in every 2nd driveway.
It does nothing to encourage fuel savings by consumers. For that matter some even say that because cars got better MPG but fuel stayed somewhat cheap it encouraged people to drive more.
It has distorted the product mix from the automakers, just like teachers, teaching to a standardized test and imparting little other knowledge. The auto makes sell just enough high MPG models, sometimes at a loss, to offset the lower MPG models that give them higher profits. I think CAFE was ment to get the automakers to improve the MPG of all vehicles.
I once heard years ago but can't confirm that Ford lost $100 on every Escort but then it let them sell more V8 Mustangs and other lower MPG cars at the same time. I don't know if the same is true of the Focus now being their small car but I bet they don't make much on them. Good for the CAFE numbers I'm sure.
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ThunderStik 1:15PM (8/17/2007)
It seems to me if sombody wants to drive an F-150 (which i do) that I already pay twice the amount of fuel tax and such as a person who drives a prius (19mpg vs 40+mpg).
Is this not fair?
It really comes down to what people want. If you could drive a prius and large suv for the same price and both got equal MPG which would you choose?
Why blame the car companies for what sombeody CHOOSES to drive? The only thing I blame the companies for is not giving us the all the choices that they have in other countries, that pisses me off. Given a choice most people would not choose a small econo car and as the evidence shows they dont.
My truck is pretty nice but I can pull a trailer, haul a little hay, hit the fishing trail, shop for a months worth of groceries at a time, pack up all the grear we need to go camping, picnic from the bed/tailgate and a host of other things that we do and I do it all carrying my family of 4 and get 19-20mpg. With one vehicle. Thats why many people have them, they are just great all around modes of transportation if you get out much or have other larger jobs that need be done. The only downside is fuel economy. They are popular because here in the USA we like to travel, and not by ourselves. We take family and friends on roadtrips to see parts of the country we have never seen before and of course we take our gear. From hiking to surfing to sking to sight seeing we like to travel. Look at how large the outdoor industry is in the USA, its huge.
I am not an enviro- maniac or anything but I think we should all help where and when we can. I see many people here bash and call people names for driving an suv or truck. But these same people are the ones that go out and get in their economobile and think they have saved the world and have the attitude everybody should be like me. When it comes down to it auto's are only a small part of the equasion. How effeciant is your home? Quit buying things that are shipped in. Lots of stuff we can all do.
If you want suvs off the road then keep raising gas prices and they will be off the road and will be dirt cheap in the used markets.
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bioburner 1:23PM (8/17/2007)
I agree with #10 above. Back in the 1970 almost nobody was driving a pick-up or suv. The problem is trucks and cars are tallied separately. Cars, truck and SUV should all be tallied togather. That would solve the problem of allowing poor fuel economy trucks/SUV to get way poorer fuel economy. Oh ya the big three will fight that cause they have higher markup on the trucks than the small cars and they don't know how to change their price structure.
Adding gas guzzler taxes to any vehicle that gets less than 30 mpg sounds like a good idea and Yes I support increased gas taxes to encourage conservation.
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mlhm5 1:25PM (8/17/2007)
Let me take on the posters who assert that somehow the consumer is at fault. That type of reasoning is the reason Detroit is behind the 8-ball right now.
Instead of producing cars the public wanted to buy, Detroit produced cars that they wanted to sell and Americans voted with their pocketbook and bought from Toyota, Honda, Nissan, etc.
American car buyers know Detroit cars to be unreliable in the long term, which is a real handicap for Detroit when you are trying to compete against top rated Japanese/German reliability.
Detroit, as far as I know, lives on the same planet as I do, yet as gasoline has risen steadily over the past 6 years saw no reason to introduce fuel-efficient vehicles.
The #1 selling car for the 4th year in a row is the Toyota Camry which gets 36 MPG with the v-6 engine.
There is no way that Detroit markets anything that comes close to the Camry in initial quality, long term reliability, fuel efficiency for the price.
The argument against outlawing CAFE standards is ridiculous.
European fleets already average 43 miles per gallon and Japanese fleets are reaching 50 miles per gallon.
There are only two car models in the United States that achieve greater than 40 miles per gallon (both hybrid vehicles), there are more than 113 such vehicles in Europe.
The most astounding fact is that many of the European high fuel-economy vehicles are produced by US car makers.
Yet Detroit will do anything to convince Americans that a fuel economy of over 35 miles per gallon is difficult to achieve.
Any rational person should not be willing to accept these manufacturers' excuses
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TSTIK 2:18PM (8/17/2007)
(#13)
Did Detroit make you choose your auto or did you choose it?
We have cars from every size on the road here in the USA. There seem to be quite a few trucks and SUV's. Chances are most people chose the auto they are driving. NO?
You say they would not build cars the "public" wanted. But look at the roads. Please do not classify yourself as "the public". You are a small part of the public as am I.
The public does vote with its dollars some vote big,some vote small. Some chocolate some vanilla.
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mlhm5 3:44PM (8/17/2007)
...continuing ...
Also, while the government can set emission standards far in excess of Europe's 2010 standard, posters here argue that it is wrong for the government to set CAFE standards.
Doesn't anyone else think it is odd that the US restricts particulate emissions on vehicles that burn the least amount of fuel?
That argument shoots you in the foot. The reason we don't have diesels in the US market is not because "we don't like them and they are smelly" as Detroit had claimed for years, but they have been legislated out with Detroit's blessing and glee.
Detroit has great if not outstanding diesel technology yet they will not bring it here to the USA. In 2008/9 Honda, Hyundai, Toyota, VW, and Nissan are to the absolute chagrin of big oil.
You pick-up drivers who think you need a 6+L diesel engine to pull your boat, well Toyota, Nissan and Honda have surprises planned for the truck market with smaller and larger diesel engined trucks. Who knows maybe the indestructible Hilux will finally make it to the US after 25 years of being tested in every other country.
There must be a reason why Detroit is keeping all their diesels out of the USA other than "Americans don't like diesels, they are smelly."
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mlhm5 4:05PM (8/17/2007)
For that poster who thinks I don't know what the public wants, well neither does Detroit.
Who is the largest manufacturer of vehicles in the world? No one in Detroit. Who was the largest manufacturer of vehicles in 2005? It was GM.
Detroit is losing market share to Toyota, Honda, etc, and Detroit has less than a 50% share of the US vehicle market. I would call that a marketing catastrophe.
GM can't make enough money selling cars to pay for its overhead, upkeep, salaries and dividend payments.
To solve this problem GM has taken on more and more debt, rather than spending its cash reserves. That allows GM to show a "profit" on quarterly income statements. GM has $22 billion in profit and $450 billion in debt. The interest on the debt is GM's profit.
In other words, GM is kiting checks all over town, using its MasterCard to pay off its Visa, burying itself ever deeper under a crushing mountain of debt.
GM has had its chance to save itself. It has taken liberal advantage of plentiful cheap, easy capital, and matters have only gotten worse and now GM is effectively bankrupt.
Ford is in just as bad or worse shape. Ford's car business would have to be worth $23 billion simply for the stock to have zero value. In order to justify Ford's current market cap of $16 billion, its car business would have to be worth close to $40 billion.
We all know it is not worth $23 billion let alone $40 billion.
f I value the business at 10 times its annual pretax income, that means Ford's car business is worth about $24.4 billion based on pretax earnings. Subtract the $23 billion deficit from the rest of Ford's balance sheet, and you're left with a valuation of $1.4 billion. Subtract taxes, and Ford is worth less than zero.
How did it get this way? Simple. Detroit was manufacturing cars (not SUVs or trucks) that no one wanted to buy and were selling them at a loss to subsidize their more profitable SUV and truck models.
In sum, Ford and GM are both effectively bankrupt. Whether they end up declaring Chapter 11, or undergo a massive "restructuring" that amounts to the same thing, is hardly material and they got that way by making stuff no one wanted to buy.
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ThunderStik 4:44PM (8/17/2007)
MLHM5
Much like most things the truth will be somewhere in-between.
Generally I feel exactly the same way you do when it comes to deisels. I feel they are a great option. But we (you and I) are enthusiasts. Much of the general public though is ignorant to the progress of deisels and normally only have bad memories of earlier rabbits and the like spewing black soot into the air and stinking to high heaven. They also generally associate deisel with big rigs and once again the black soot , smell and noise. So Detriot is somewhat correct when they say USA doesnt like them. Ignorant is it may be there is some truth to it. CalI has had alot to do with there being no deisels also.
I hate that we dont have the selection that they have overseas. But once again it comes down to choice. While I drive an F-150 most of the time its in the garage. Daily my wife and I drive 2 CNG cars.
You stated earlier Detroit could not buld a car like the beloved Camery. You only show your ignorance in stating your opinion as fact. I have a GM cavalier that gets between 35 and 40 mpg daily and runs on cng which costs me .94 a gallon. I have 45k on the car and has been problem free as has my wifes. I also drive that by choice.
It seems all you want to do is blame Detroit for the problems of the world but you have import blinders on. I am not loyal to any of them until they start paying my bills.
I think Cafe will cause problems in our industry. I also think all it will do is what it has done before, make vehicles that get great mpg and encourage more driving.
I am all for reform on this issue but I dont believe CAFE is it.
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TSTIK 5:04PM (8/17/2007)
I also agree with your bad business issues. As gas prices have risen and spiked people have voted with there wallets. Thats why Toy has taken over sales. If gas suddenly went down to 1.50 a gallon I would bet you see Detroit piling up the sales.
Remember we can trade a car in faster than a large company can turn its product line over. The public got tired of getting jacked at the pump and looked for better mpg. Toy just did what they always did make small efficient cars. They and other imports have gained largly due to gas prices.
I like imports also, I own a toyota tacoma double cab. Great truck with a V6, it gets worse mpg's than my full size ford with a v8.
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ThunderStik 5:06PM (8/17/2007)
I also agree with your bad business issues. As gas prices
have risen
and spiked people have voted with there wallets. Thats why Toy has
taken over sales. If gas suddenly went down to 1.50 a gallon I would
bet you see Detroit piling up the sales.Remember we can trade a car
in faster than a large company can turn its product line over. The
public got tired of getting jacked at the pump and looked for better
mpg. Toy just did what they always did make small efficient cars.
They and other imports have gained largly due to gas prices.I like
imports also, I own a toyota tacoma double cab. Great truck with a
V6, it gets worse mpg's than my full size ford with a v8.
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ThunderStik 5:29PM (8/17/2007)
I also agree with your bad business issues. As gas prices
have risen
and spiked people have voted with there wallets. Thats why Toy has
taken over sales. If gas suddenly went down to 1.50 a gallon I would
bet you see Detroit piling up the sales.Remember we can trade a car
in faster than a large company can turn its product line over. The
public got tired of getting jacked at the pump and looked for better
mpg. Toy just did what they always did make small efficient cars.
They and other imports have gained largly due to gas prices.I like
imports also, I own a toyota tacoma double cab. Great truck with a
V6, it gets worse mpg's than my full size ford with a v8.
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