Holman Jenkins once again explains that it is the government-imposed CAFE standards that have taken the Big Three automakers to the brink of bankruptcy.
Money Q:
"All this is dragged down by federal fuel-economy mandates that require them to lose tens of billions making small cars Americans don't want in high-cost UAW factories. Understand something: Ford and GM in Europe successfully sell cars that are small but not cheap. Europeans are willing to pay top dollar for a refined small car that gets excellent mileage, because they face gasoline prices as high as $9. Americans are not Europeans. In the U.S., except during bouts of high gas prices or in the grip of a Prius fad, the small cars that American consumers buy aren't bought for high mileage, but for low sticker prices. And the Big Three, with their high labor costs, cannot deliver as much value in a cheap car as the transplants can."
Of course, if you get rid of CAFE standards and raise the gas tax (as the rest of the article suggests) you are making gas more expensive which hurts the middle class disproportinately.
ReplyDeleteWhy can't American Car Companies make small cars cheaper? Labor and Legacy costs which they got themselves into. Let the companies fail and be replaced by companies without the legacy problems GM and Chrysler have.
People don't want the gas guzzling SUV's. They want the smaller, fuel-efficient cars, which is why Toyota is kicking our asses.
ReplyDeleteYep. Anyone who discusses the Auto bailout without mentioning the Liberal causes is either ignorant or lying. Just as anyone who intones about the mortgage meltdown is either ignorant or lying if they fail to note the Liberal causes there as well.
ReplyDeleteLiberalism killed the mortgage and the Auto industry. And permitting Liberals to come up with the cure is like sending the arsonists to put out the fire.
These anonymous sociology students need to take a course in economics.
ReplyDeleteThey should also learn how to read.
If they could they'd know American Car companies make plenty of small cars and sell them in Europe. But that the American consumers prefer bigger cars and SUVs - especially when gas prices are low.
People don't want the gas guzzling SUV's.
ReplyDeleteGee, they sure did well for the better half of this decade, wouldn't you agree? Or do you want to tell me it's a conspiracy and that the big three and big oil planned to get us SUV-hooked?
Le't get into basics so you and your sociology teammates can understand things. It takes Labor and Materials to build an automobile. Now, we know parts are coming from everywhere on the globe, as we spent portions of the 90s arguing about whether it meant American-built cars were truly "American" after all. The parts are coming in as cheap as possible, leading us to the other side of the spectrum - LABOR.
The big three builds union. Toyota/Honda's plants in NA are non-union. They build in area like rural Ohio where they can escape union demands.
How do you solve this difference, force the foreigners to go union? Raise prices across the board? Or dumpo unions, go with a right-to-work and extend the bleeding? Maybe we shoudl simply accept the higher prices because we need to "spread the wealth"