Tuesday, July 22, 2008

Plight of the American Auto Makers

My last post on the auto makers was in May 2005 where I commented that GMs new truck line was a mistake and not likely to bring the additional revenue they expected because the market was shifting away from large trucks and suvs. Apparently GM and Ford received the same memo sometime early this year and are now scrambling to build as many new cars as possible as the US moves to join our European and Latin counterparts at doing more with smaller vehicles, not less with larger ones.}

Ford announced today it will close the plant that builds the Ford Expedition and Ford Explorer, and start building the Expedition alongside the F150. I do not know where or if they plan to build the Explorer, but my prediction is that the midsize body-on-frame SUV will end. GM is also cutting back production on their SUV models.

We have all heard the automakers want government help to build a new generation of fuel efficient electric cars. I am not convinced it is the job of the government to subsidize these products, and I am also not convinced electric cars are needed in the US. There were concerns that the Internet craze in the 1990s would drag down the nations electric grid - what in the world would happen if everyone was charging cars? We would need all kinds of new power plants along with more efficient transmission lines, both entities that have all sorts of NIMBYs upset. Thus, electric cars really cannot be a feasible option today.

The real solution is more mass transit. Many people will not take mass transit because it is not convenient - but this problem can be rectified by more availability and options for travel. I am not convinced that the US citizens are so much for personal trasit they would turn down the economics of mass transit that would save them a ton of money in gas, car payments, insurance, etc. Matter of fact, I will happily sign up for a convenient mass transit option if one becomes available to me. It is time we as a nation look at the possibilities of mass transit in a positive light, not a negative one.

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