Automotive Cooling
Along with lower car sales, the product mix hasn’t lived up to the expectations of EPA bureaucrats and the Obama administration. Kelley Blue Book reports that demand for large vehicles is up and sales of small cars are declining. This trend is due to a drop in fuel prices, the fact that many large cars are a better value, and that, given the choice, people like larger vehicles.
So if we recap the government’s cash-for-clunkers program, it looks like for our $3 billion we got a badly managed incentive program that spiked sales for two months, then collapsed and had little effect on buying habits. Of course, that hardly means our current administration, Congress, or environmentalists are through tampering with markets.
Just this week, Fisker, a declared producer of luxury “plug-in hybrid” vehicles, was awarded a $528 million federal loan to build an “affordable” version of its extended-range electric vehicle technology. Now, I like Heinrich Fisker and his $80,000 Karma model is a viable fit in the green luxury space, assuming it performs as promised. But isn’t the normal capital market the place to finance these ventures? After all, the company has willing dealers and more than 1,500 orders for its attractive, electric vehicle.
Fisker promises to build a car code-named Nina, a reference to Christopher Columbus’ discovery of the new world, and the projected price will be $39,900 after $7,500 in tax credits. I suppose that’s affordable, although it’s a lot more than the very efficient Ford Fusion Hybrid or a four-cylinder Camry or Accord. On the other hand, I’ll bet it looks really great when Heinrich puts his design talent to work on the styling.
Tesla, a producer of two-passenger electric roadsters that start at $101,500, received a remarkably similar loan to build its “affordable” sedan. In Tesla’s case our $465 million will help fund a pure electric that will retail for $49,900 after our $7,500 rebate. Buyers should stick to home base, since we’re not really doing much to provide public plugs for electrics to plug into. Gee, isn’t that a better place for stimulus? Just wondering …
There’s a teachable moment here. What if we canned all the unnecessary bureaucrats who keep busy doing the impossible job of trying to manage human behavior for what they believe is the public good? Instead, simply levy a carbon tax if the real goal is to increase fuel economy, lower our dependence on oil, and save the planet.
And electric cars do have a place in the automotive fleet, especially in and around major cities. But the government’s job isn’t to build them. Its best effort would be to encourage clean, nuclear power generation and help establish a smart plug-in grid in urban areas. That’s when I’ll take those efforts seriously and not as just another political gimmick.
Gee, car sales went down after that government bailout “cash for clunkers” (which destroyed perfectly good cars that could have been sold to the used car market – you know the one for buyers who can’t afford a new one. I thought obeyme was supposed to be the champion of the little guy who can’t afford the American dream?)
but with the economy in the tank (oh, forgive me, the won says it’s improving – don’t know where he’s getting his numbers), unemployment approaching 10% nationwide (and much higher in some places.), foreclosures still happening (yeah, those dems in congress demanded the banks make loans to people who couldn’t otherwise qualify and are now defaulting. Imagine that.)
of course the government takeover of two car companies and giving them to their union’s has had an impact. I know I’ve bought my last American, as well as, new car.
No figures to back this up, but I would guess that the “cash for clunkers” deal was a lot more harm than hellp to Government Motors (i.e. GM and Chrysler). Just at a time when the public was very much opposed to the government takeover of a major sector of the American auto industry, and so very disinclined to buy from either of these companies, we get free money dropped in our lap to buy pretty much any economical new car we want, as long as we have a clunker to turn in. As predicted, this really bumped auto sales for a couple of months. But people bought Toyotas, Fords, Kias, and a host of other manufacturers products. Because of the distrust of Government Motors, neither GM nor Chrysler achieved a jump in sales comparable to their competitors. And now that the surge of “pushed-forward” buying has passed, GM and Chrysler are in a very bad place with no buyers for their product. Yes, the other companies face the same problem with new sales, but at least they had a big surge in cash-flow to help get them through the dip in sales.
If Team Obama had waited until the public’s distaste for the takeover of GM and Chrysler to die down, they might have actually achieved what they wanted… to save those two companies (if only temporarily) from their own bad business plans. Instead, it was, to twist a phrase…too much, too early. Or, in Happy Days terms, they jumped the shark.
Who’d'a thunk?
Next year, we should trade in our clunker members of Congress, the ones who get us the least value per tax dollar. Rather than treat them as the auto-clunkers were treated, we can be merciful and let them ease into a well-deserved retirement, far away from us.
Speaking of federally-funded fiascos…
…or would that be fiasci</i?
Car sales went down? Gee who woulda thought. (Hint) Not Obambi and his crew of slavishly drooling boot heel licking acolytes!!!!!!!!!!!!!!
WOW, Car sales down… Who would have guessed that would happen??? Maybe the US Gvmt should run Cash-for-Clunkers in Europe? Or, better yet, Asia? The tag line could be, “Toast your buns in a new Beemer.” That’s what I call passing the money around.
Don’t worry …. wait until the bailout kicks in for those people who took on car payments they couldn’t afford.
8. A.M. Mallett:
Thinking the same thing. What happens when a bunch of the buyers of all those vehicles can’t make their payments?? Will it still be a success?
#8 and #9. Perfect!