By on June 6, 2012

The Detroit News interviewed presidential hopeful Mitt Romney on Tuesday, and the Republican candidate-to-be shared his thoughts on government ownership of GM stock and the future of CAFE.

Romney told the paper that he would like to see government-held GM stock sold as quickly as possible

“There is no reason for the government to continue to hold (its GM stake),” Romney, a Detroit native and son of an auto executive, said Friday…The president is delaying the sale of the shares to try and avoid the story that the taxpayer took another loss. I would get the company independent from government and run for the interests of the consumer and the enterprise and its workers — not for the political considerations of government officials.”

Also put on the table was the notion of revisiting the CAFE regulations and perhaps seeking ”a better way of encouraging fuel economy”. Romney suggested a market driven approach, with “…vehicles that people want…”rather than government mandates, as a means of spearheading fuel economy increases. Romney claimed that co-operation would be essential to such measures, and also said that electric vehicles are “…a technology that people aren’t interested in.”

Romney’s words will find praise with a certain element on TTAC, but lest we forget that increasing fuel economy also means less revenue for the gas tax…and who knows where that could lead.

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137 Comments on “Romney Would Sell GM Stock, Look For CAFE Alternatives...”


  • avatar
    threeer

    Until electric vehicles are priced within range of a “normal” ICE vehicle, and are more usable than the limited ranges currently available, on this point, Romney is probably correct. However, I’m not sure that simply allowing for market forces to decide on fuel economy standards will drive MPGs up, at least not anytime soon. That being said, if market forces continue to drive fuel prices higher and higher then it well might develop that the buying public’s demand for higher MPG would lead manufacturers to build higher efficiency vehicles. Left to our own current tastes (and from what the sales charts show), Americans aren’t yet clamoring loudly for higher MPG vehicles.

    • 0 avatar
      Pete K

      That’s total crap. Fuel economy is one of the top things people look at in a new car.

      • 0 avatar
        psarhjinian

        Well, yes and no. They say they do, but sales by segment speak volumes, and in America at least C/D-Segment cars, larger crossovers and half-ton trucks run counter to that argument.

      • 0 avatar
        geeber

        The best-selling cars in the United States are generally the Accord, Camry, Altima, Fusion, Civic and Corolla – not one of which is a gas guzzler. The SUV market has been shifting towards vehicles such as the CR-V, Escape, RAV-4 and Equinox.

        I would say that, yes, fuel economy is important, as long as the vehicle also delivers acceptable levels of performance, comfort and safety. The above-mentioned vehicles appear to have hit the sweet spot for those attributes.

        I would not want be a car company selling a family sedan aimed at middle-class buyers that gets 15 mpg (which was considered GOOD in the early 1970s). Nor would I want to be overly dependent on full-size pickups or SUVs for sales and profits.

      • 0 avatar
        daviel

        How about F-150s and Silverados and Ram trucks? Lot of them are sold, too.

    • 0 avatar
      Robert Schwartz

      Stop it. There will never be BEVs. Ever. They are obsolete technology. So just forget about it.

      • 0 avatar

        When it comes to most technologies, it’s dangerous to say “never”. I’m not holding my breath for BEVs, as it would take some sort of breakthrough technology to make them competitive.

        As for Romney, when he says “market-driven,” he’s not talking about a gas tax or a carbon tax. He’s talking laissez faire. And the way his views have changed depending on which election he’s running in leaves me queasy, as if I were in the back seat on the twisties with Baruth driving. (You go, Jack, and I’ll follow, even though I’m sure I can’t keep up, but I’m not riding with you, except maybe on the interstate.)

      • 0 avatar
        danwat1234

        Electric cars will get there. Battery technology will improve with nanowire technology and they will get more than twice the energy density per volume and per weight than right now. Electric cars will come but we rely on researchers and battery engineers to develop these future batteries.

  • avatar
    Sundowner

    I 100% agree with the CAFE statement. A market based approach is really the best way to affect fuel economy. This, in every other country in the world, is done by jacking fuel taxes to drive prices up and foster demand for more efficient vehicles, which is what I assume Romney meant. What other “market based approach” could he possibly mean?

    And while I don’t like the idea of government ownership of GM, I have to admit that GM does a pretty sucky job of running things themselves, and VW seems to be doing just peachy with the state of Saxony as a major owner.

    • 0 avatar
      darkwing

      The trouble is, to extend that analogy, that GM’s currently owned by Greece.

    • 0 avatar
      Astigmatism

      Check-plus. Hiking fuel taxes, or carbon taxes, used to be the conventional, fiscal-conservative approach to getting the market to come up with innovative solutions to increased efficiency (instead of government-mandated fuel efficiency that consumers don’t want at $2 a gallon), while addressing externalities caused by over-dependence on foreign oil and harmful effects of pollution. Somewhere along the line, both of these, much like a national health insurance mandate, turned from smart conservative policy ideas into socialist plots that threatened the very fiber of our national character. If Romney is willing to stand up to the head-in-the-sand crowd in his party, I’ll be all for him, but I strongly suspect that what he means is “Let’s open up Yellowstone to drilling and see if that gets us anywhere.”

      • 0 avatar
        Conslaw

        Astigmatism – You made the point that I was going to make much better than I would have made it.

        Here’s another way of putting it: (Condescending Willy Wonka) “So you want a market driven alternative to CAFE standards? Good luck getting a gas tax hike through Congress.”

      • 0 avatar
        golden2husky

        ……If Romney is willing to stand up to the head-in-the-sand crowd in his party…..

        Therein lies the risk with Romney. If he acted like the Romney that won Mass, he would be a viable alternative to Obama and could prove to be a President that would serve all Americans well. However, I strongly suspect that his past position as a “liberal Republican” will not be tolerated by much of the Republican Party. He will bend to the demands of true conservatives and tea baggers which will render him too far to the right to serve the best interest of all; he will become the fat cat president.

        Regarding replacement of CAFE, for all its flaws, without it the average economy today would be much lower than it is now.

      • 0 avatar

        Great commend Astigmatism. I would be deeply surprised if Romney had any intention of upping fuel taxes. I just don’t see it.

    • 0 avatar
      asapuntz

      I’m no fan of CAFE, but the general idea is about as much as can be achieved domestically – the US won’t impose enough fuel taxes to cover road maintenance, let alone motivate fuel efficiency.

      That makes this either disingenuous campaign talk, or a vague promise to get rid of CAFE while “studying” alternatives for higher fuel economy. I expect to hear about those alternatives just after we hear about the promised alternative health care coverage and cost improvement plans.

      As for selling GM now or later, I don’t have the investment insight to know what’ll be best for “the taxpayer”. But I’m not seeing any indication of gov’t meddling in the corporation’s activities, so I’m not sold on the “principle” argument.

      • 0 avatar
        replica

        CAFE has done a decent job of encouraging urban sprawl. That house 50 miles away from work starts to make a lot more sense when most cars get 30 mpg.

      • 0 avatar
        geeber

        That was largely driven by soaring housing prices. Most people don’t want a 100-mile round trip to work each day, even if their car gets 30 mpg and gas is $2-a-gallon.

      • 0 avatar

        Erm, interesting reasoning replica. I’m tempted to think people would purchase 50 miles away in any case. The only difference is that those people have very good reason to purchase 30MPG cars instead of SUVs.

    • 0 avatar
      28-cars-later

      I’m not sure what Romney meant exactly, but in the current climate CAFE has outlived its usefulness. Dot gov should not be forcing the automakers to drastically alter their product to meet a perceived need. If the market demands fuel efficiency, someone will step up and deliver in order to profit (which is what the Japanese have done for what thirty years?). If an automaker does an about face and goes against the market, then he won’t be in business for long.

    • 0 avatar
      icemilkcoffee

      CAFE is exactly market based. A few of the european makers have paid the CAFE fine throughout the years instead of meeting the standard.

    • 0 avatar
      dash riprock

      It could really be very easy to reduce carbon and increase average fuel economy. Fundamental economics will apply, if you increase fuel taxes, people will look for more economical means of transportation. Of course some politician would have to wear the badge of tax raiser. Easier to hide the tax increase behind gov’t regulations. Of course to do so you need a large bureaucracy to run a cafe, how much a year does that organization costs.

  • avatar
    mikedt

    “…vehicles that people want…”
    Without sky high gas prices (eeek! gas tax) as an influencing factor, Americans pretty much want the biggest, heaviest, most feature laden vehicle they can afford. And as soon as they get acclimated to the next huge gas price ceiling, they’ll go back to buying huge inefficient vehicles.

    • 0 avatar
      darkwing

      You left out the most important part of your explanation — why Americans, who are buying these Yank tanks with their own money, then paying to fill them up with, again, their own money, should give a rat’s ass what you think.

      • 0 avatar

        Except in many cases its not REALLY their own money anymore. Its credit. Which is one of the huge reasons the States is in the shape it is today. Canada (i.e. my country) is slightly better off, but only slightly. Personal debt is such a massive problem, and it seems that with continued accessible credit people aren’t sensible, they just maximize said credit in for the form of as much and as big as they can. And when that fails, that affects more than just them, as witnessed not long ago.

    • 0 avatar
      replica

      mikedt

      Is that a problem? People that use gas pay for the gas they use. Until consumers care enough to motivate the market to make fuel efficient cars, this is the way it is. Manufacturer’s offerings are directly related to the desire of consumers.

      • 0 avatar
        mikedt

        No, it’s not a problem, until it is. The next time gas prices make a big jump, detroit profits will plummet and consumers and business will freak out. Part of me thinks the best thing to do would be to implement a gas tax that would slowly raise gas to a certain, high for us now, ceiling price and if the price of oil increases the tax should go down to maintain that steady price at the pump. Individuals and business could plan against that – buy fuel efficient vehicles or invest in solar power for example. Hard to make an argument for non-subsidized solar investments when natural gas/gasoline costs fluctuate like the winds. Unfortunately government would have to plan for up/down gas tax revenue and we all know how that would work.

        CAFE doesn’t work when Joe Bob has no problem sitting in his SUV with the engine running while his wife is in the store shopping for groceries. (rant)And yet Joe Bob still likes to bitch about gas prices and thinks we should invade another oil producing nation at a cost of a billion a month. We’ve externalized the real cost of gasoline. If we had taken the real cost of the Iraq/Afghan war and tacked it onto pump prices we would have been out of there in 10 weeks instead of 10 years.

      • 0 avatar
        28-cars-later

        “If we had taken the real cost of the Iraq/Afghan war and tacked it onto pump prices we would have been out of there in 10 weeks instead of 10 years.”

        I do agree with this comment wholeheartedly, and also at the lackadaisical attitude portrayed by ‘Joe Bob’ and his wastefulness. However I disagree on higher taxes, as taxes are never an answer. I just yesterday was related a story about a man in Greece who somehow accumulated a five million euro tax bill, he evidently went to court as was sentenced with having to pay back five euro a year for the rest of his life… which according to Calc amounts to a measly 1825 Euro a year assuming weekends are included. From what I have read tax dodging has become a serious problem in Greece as it has descended into economic chaos. The more taxes get out of control the less will be voluntarily paid, its really that simple, and the US isn’t exempt from this logic.

        If mileage is the real concern, I ask how much more efficient can the gasoline driven ICE really get (given current smog controls)? If it were really possible to get a practical 100 mpg etc., we wouldn’t need to see a new slew of hybrid technologies, CVTs, and 20 speed automatic transmissions being tossed in to meet standards. They are simply making tweaks to an existing technology in order to squeeze X percent more out of it. Higher fuel taxes will only stifle commerce and further growth, the only real solution is to knuckle down and create another cheap form of transportation to replace gasoline. Diesel is the first thing that comes to my mind simply because it doesn’t have to be powered by petroleum based fuel and is already a proven technology, but we’ll see.

        If you haven’t noticed when they monetized the debt they took away any real value the money the gov’t was spending still had, and showed it didn’t matter how much was taken in by IRS… they’ll just spend what they want because the Fed printing the money will just print more to cover it, and you’ll pay for it with a hidden inflation tax.

        Taxes equal control of your pocketbook and thus lifestyle, this is all the tax-and-spend crowd are really about.

      • 0 avatar
        geeber

        We didn’t invade either Iraq or Afghanistan because of the need for access to oil.

        While GM and Ford could be condemned for over-reliance on trucks in the past, I don’t believe that is the case today. Their passenger cars are now competitive with the Japanese and Koreans – even the smallest entries (Fiesta and Sonic).

      • 0 avatar
        28-cars-later

        Iraq was to secure oil supplies and maybe I’m too cynical but in my view Afghanistan other to vanquish a rogue state and ‘get the terrorists’, is/was about poppy.

        The statement regarding Iraq being about oil was made by Alan Greenspan in 2007, Google it, its on the Washington Post website.

      • 0 avatar
        darkwing

        I don’t suppose any of you have noticed that oil prices have remained relatively stable despite the latest round of Iranian sanctions? That’s entirely due to increased production from another country picking up the slack…Iraq. So, all things considered, that “externalized cost of the war” is actually quite a bit lower than you might think.

        But that doesn’t really matter — all that talk about cost is just a flimsy cover on some good ol’ fashioned bigotry against Joe Bob, for being born in the wrong part of the country and making the wrong choices in life. Yawn.

      • 0 avatar
        geeber

        What Greenspan said was this, according to the September 17, 2007 issue of the Post:

        “In the interview, he clarified that sentence in his 531-page book, saying that while securing global oil supplies was ‘not the administration’s motive,’ he had presented the White House with the case for why removing Hussein was important for the global economy.

        “‘I was not saying that that’s the administration’s motive,’ Greenspan said in an interview Saturday, I’m just saying that if somebody asked me, ‘Are we fortunate in taking out Saddam?’ I would say it was essential.’”

        He never says that ensuring access to oil was the Bush Administration’s motive. He says that would have been HIS motive.

      • 0 avatar
        28-cars-later

        Good point, Greenspan says it without saying it. His motive, not the then President’s… but if your the President and the Chairman of the Federal Reserve and likely your VP and staff all tell you something you may not be an expert to dispute, do you comply or disagree?

      • 0 avatar
        replica

        mikedt,

        Perhaps I’m missing the point, but how does giving the government money make my car more efficient? Any new subsidized technologies car companies come up with will be passed on to the consumer.

        There’s oil to be had here in the US correct? The cost of a war in the middle east has to be higher than the price of just buying all the oil there anyway. I liked the comment about reflecting war costs at the pump though. That would have been the fastest war ever!

    • 0 avatar
      gslippy

      Mr. Obama told us that the Volt was representative of ‘cars Americans want to buy’. For 14,700 Americans so far, that is true.

      The rest of us did the math and bought something else.

  • avatar
    harshciygar

    Last time we tried a “market” approach to fuel economy, we got two decades of gas-guzzling SUV’s dominating the market, inevitably leading to three crippled American automakers.

    The government can, and should, push automakers to make better, more efficient cars. It is a matter of economy, it is a matter of national security, and when we stopped pushing them in the early 1990′s, “market forces” demanded big cars until the day gas prices decided hey…lets go nuts.

    Gas prices will jump again, and automakers need to be ready. I don’t know why Romney thinks losing $16 billion on an undervalued stock is good policy, but I’d rather Obama & crew wait to get back as much of the government investment as possible, rather than dumping the stock at a loss.

    • 0 avatar
      geeber

      That wasn’t entirely because of a “market” approach to fuel economy. It was because CAFE regulations had effectively killed off full-size, rear-wheel-drive, relatively inexpensive sedans and wagons, so customers gravitated to first pick-ups and then SUVs as alternatives. Neither Democrats or Republicans moved to close this loophole because…they wanted to win elections. What you are complaining about is the result of government regulations, not the free market.

      • 0 avatar
        Pch101

        “It was because CAFE regulations had effectively killed off full-size, rear-wheel-drive, relatively inexpensive sedans and wagons”

        No, credit for that belongs to the Japanese and the oil shortages of the 70s, the latter of which provoked a substantial shift toward downsizing.

        Detroit shifted to trucks because it became increasingly evident to the American consumer that it had trouble building a decent car. Since large trucks are almost exclusively a North American product, there was no flood of large imported trucks to provide competition.

        If Japan also had a domestic market that could have supported full-size pickups, then Detroit would have really been finished. Detroit doubled down on the one thing that it had left, and oil prices were low enough for twenty years to allow that to work.

      • 0 avatar
        geeber

        The old GM full-size B-bodies and G-body rear-wheel-drive intermediates were selling well right up until they were discontinued in favor of smaller, front-wheel-drive versions. Which didn’t do nearly as well in the market.

        The Japanese really weren’t competing with the “old school” GM cars in the early and mid-1980s. Their entries were still too small.

      • 0 avatar
        86er

        “Pch101: If Japan also had a domestic market that could have supported full-size pickups, then Detroit would have really been finished. Detroit doubled down on the one thing that it had left, and oil prices were low enough for twenty years to allow that to work.”

        Objection, your honour! Speculation by counsel!

        I like how you pass this off as fact, while demanding “proof” of others who make similarly specious statements.

        Let’s not forget other instances of government intervention like the voluntary import restrictions (which backfired as they allowed foreign automakers to rapidly increase profits by selling for full-sticker (and the dealer mark-ups didn’t hurt).

        CAFE did indeed kill the full-size American car. It wasn’t just changing tastes. North Americans have short memories and were enjoying the profligacy of driving around in 15 mpg trucks just the same as their fathers enjoyed driving around in 15 mpg cars.

      • 0 avatar
        Pch101

        “The old GM full-size B-bodies and G-body rear-wheel-drive intermediates were selling well right up until they were discontinued in favor of smaller, front-wheel-drive versions.”

        During the 70s, GM gained US market share, but it did so largely at the expense of Ford, and to a lesser degree, Chrysler. Meanwhile, the Japanese were gaining share at the expense of the Americans and Europeans. The momentum was well underway.

        GM market share peaked around 1980, and fell steadily thereafter. Ford actually made some gains during the 80s, while Chrysler stabilized — the FWD Taurus was an obvious benefit to Ford, not a detriment. Meanwhile, the Japanese kept growing, and we all know how it ended up.

        “I like how you pass this off as fact”

        Give me a break — the comment was obviously speculative for anyone who was paying attention.

        But we all know from the data that TMC pretty much torpedoed GM in every segment in which they competed directly during the 70s and 80s, with TMC using cars that it also offered in other markets. And TMC got the long-term benefits of the 70s trend toward downsizing which contributed to the substantial demise of the full-size sedan segment.

      • 0 avatar
        86er

        “Pch101: Give me a break — the comment was obviously speculative for anyone who was paying attention.”

        I’ve been paying attention; too well perhaps. You expect to make a sweeping assumption that Japan’s automakers would have easily vanquished American automakers in the full-size truck market (they didn’t even do exceedingly well in the compact truck market until Detroit basically abandoned it) and everyone here is going to swallow that?

        Toyota entered the U.S. market in 1957. In 2007, which the data would indicate is 50 years, or one-half of a century, they released their first full-size pickup.

        Japanese automakers also heavily modified or designed completely new vehicles for U.S. “tastes”. There’s that word again you’re so fond of. Today, the Honda Accord is ranked as a full-size car by EPA interior volume standards, and it’s creeping up to the size of the dearly-departed Crown Victoria.

      • 0 avatar
        28-cars-later

        +1 geeber, could not have stated it better.

      • 0 avatar
        Pch101

        “they didn’t even do exceedingly well in the compact truck market until Detroit basically abandoned it”

        So the denial fest continues.

        Detroit hasn’t “abandoned” much of anything. It has gotten pushed unceremoniously out of segments by rivals who compete against them effectively.

        One of the reasons that we recently had two automotive bankruptcies was due to this unwillingness to give credit where it’s due. You can’t possibly learn from your mistakes if you won’t admit that you made them in the first place. But hubris ultimately backfires on the person or company that has it.

      • 0 avatar
        86er

        No, it’s just a river in Egypt.

        Your facile arguments about the prescient Japanese as it relates to trucks, even of the compact variety, is straining credulity.

        I give the Japanese automakers full credit for their successes in the marketplace, although that is mostly restricted to passenger cars, and my arguments are restricted to trucks.

        Your attempts to conflate me, a humble private citizen, with the GM bankruptcy is flattering, and your cherry-picking of my comments are amusing, but Japanese automakers have been in the U.S. marketplace for over 50 years. Surely they had enough time to overcome, as you state:

        “If Japan also had a domestic market that could have supported full-size pickups, then Detroit would have really been finished.”

        If you want to talk about trends, let’s talk about the trend of full-size trucks being increasingly private vehicles since the middle of the 1970s. Camper Specials and Little Red Expresses were showing that increasing numbers of private owners were putting a truck in their driveway as primary (or regular secondary) transportation. The emerging RV market was such that anyone could have seen where that was heading, especially those prescient and infallible Japanese automakers, who you seem to equate to the inevitability of a Russian village submitting to the Mongol horde.

      • 0 avatar
        Pch101

        “Your facile arguments about the prescient Japanese as it relates to trucks, even of the compact variety, is straining credulity.”

        The only person who mentioned prescience was you. I noted correctly that TMC didn’t have a problem selling compact trucks, contrary to your assertion.

        “Toyota entered the U.S. market in 1957. In 2007, which the data would indicate is 50 years, or one-half of a century, they released their first full-size pickup.”

        As I noted, there wasn’t much reason to push into the large truck market early on, since it’s an almost exclusively North American product. There were other segments to conquer first, and they succeeded quite nicely with those.

      • 0 avatar
        86er

        “Pch101:I noted correctly that TMC didn’t have a problem selling compact trucks, contrary to your assertion.”

        My assertion was to dispute your claim that TMC has “conquered” every segment it has entered. But I’m glad you’re only now stating that Toyota sells a lot of Tacomas. Good for them, nice truck I’m told. But they didn’t even become the top seller in that segment until the 2000s; so much for that theory.

        “Pch101: As I noted, there wasn’t much reason to push into the large truck market early on, since it’s an almost exclusively North American product. There were other segments to conquer first, and they succeeded quite nicely with those.”

        And it still is. I don’t know how you could have credibly asserted:

        “If Japan also had a domestic market that could have supported full-size pickups, then Detroit would have really been finished.”

        I’m debating your post hoc, ergo propter hoc that the Japanese automakers would’ve certainly had the American automakers for breakfast in the full-size truck segment had only they an actual vehicle that fit the bill. Yes, if only they had had several decades to conjure up such a thing!

        Look, I’ve been here a long time. If you’d been paying attention you might’ve noted that I have stated in the past that I believe everyone should be able to drive what they like, and as I earlier stated here I give the Japanese automakers full credit for their actual successes. I am not, however, about to credit them for imaginary or speculative ones.

      • 0 avatar
        Pch101

        “I’m debating your post hoc, ergo propter hoc that the Japanese automakers would’ve certainly had the American automakers for breakfast in the full-size truck segment had only they an actual vehicle that fit the bill.”

        I haven’t noticed much of a debate. What I’ve seen is some unfounded belief that the Japanese don’t do well in light truck segments, despite their successes with compact pickups, CUVs, compact SUVs and minivans. Full-size pickups are the final frontier.

      • 0 avatar
        86er

        “Pch101: I haven’t noticed much of a debate.”

        That’s because I haven’t noticed you explain yourself here:

        “If Japan also had a domestic market that could have supported full-size pickups, then Detroit would have really been finished.”

        “Full-size pickups are the final frontier.”

        We’ll see, but I won’t be the one making any smug predictions. As you say, don’t count your chickens before they’ve hatched.

      • 0 avatar
        Pch101

        “That’s because I haven’t noticed you explain yourself here”

        I’ve explained my position, you just don’t care for the answer: Detroit doesn’t cope very well with competition.

      • 0 avatar
        86er

        “I’ve explained my position, you just don’t care for the answer: Detroit doesn’t cope very well with competition.”

        What competition? The Tundra, the Malibu of the full-size truck market? That competition? Or, the Titan, the Mitsubishi Eclipse of the full-size truck market?

        Perhaps the Japanese automakers don’t cope very well with competition in that segment.

        I don’t call post hoc, ergo propter hoc logical fallacies much of a position. Perhaps that’s where we depart company, sir. Unfounded belief, indeed!

        How much do crystal balls go for, these days?

      • 0 avatar

        @86er

        Don’t waste your time. Pch101 tends to extract 1 sentence or 2 from the whole paragraph and elaborate his point – ” … “. That’s his way of casting the rod & hoping someone will bite the bait. It is utterly rubbish sometimes. BTW, he has to have the last word.

      • 0 avatar
        Ryan Paradis

        Wallstreet, hell hath no fury like a stubborn Frenchman!

        Oh sure, I could just “surrender”, but that wouldn’t be de rigueur on the internet… :)

        I don’t care if he gets the last word, I don’t care if he thinks I’m prickly about not subscribing to his Nippon Inevitability Theorem, and I don’t care if he thinks I’m incorrigible to his incorrigibility!

      • 0 avatar
        Pch101

        “Perhaps the Japanese automakers don’t cope very well with competition in that segment.”

        Another mistake made by the domestics is a consistent failure to take the long view.

        TMC needed decades to go from inconsequential to 300 lb gorilla in the US car market. Along the way, they’ve made mistakes, but ultimately became successful.

        The Detroit large pickup divisions would be wise not to assume that they’re immune from a repeat performance. If isn’t TMC that does it, then it could be the Koreans.

      • 0 avatar
        86er

        “Another mistake taken by the domestics is a consistent failure to take the long view.”

        In what of the current full-size truck offerings of the Detroit automakers do you ascribe a failure to take the long view, pray tell?

        And you’re right, the Asians needed decades to become successful in segments they *knew something about*. It’s telling that it took TMC 50 years to enter the full-size truck market, or was that on purpose, too?

        As Geeber noted way above, Detroit and Japan weren’t even directly competing in a lot of segments until the 1980s, nearly three decades after Japanese cars first docked on the west coast.

        By the time you venture that Kia will be selling more trucks than Ford, I’m not sure there will be a segment to break into, or it’ll be unrecognizable and thus moot. Or, the Detroit automakers will no longer be dependent on trucks as they are today and the point will also be moot then, too.

        So in sum, you extrapolated the line and made an assumption about how the Detroit 3 would be dead today had the Japanese automakers brought a full-size truck over. Well, they didn’t have one, and in spite of that today the Detroit automakers have competitive large pickup offerings that are doing quite well against their Japanese competition (using that term loosely).

        All in all, we’re two strangers arguing on the internet about hypotheticals.

      • 0 avatar
        Pch101

        “In what of the current full-size truck offerings of the Detroit automakers do you ascribe a failure to take the long view, pray tell?”

        The Tundra that you love to hate earns top marks in the JD Power Vehicle Dependability Survey. The GM equivalents get average or below.

        This should sound terribly familiar, and not in a good way. If they could divert the energy devoted to complaining about consumer surveys to more productive efforts, i.e. better parts and engineering, then this sort of vulnerability wouldn’t be ripe for exploitation.

        “As Geeber noted way above, Detroit and Japan weren’t even directly competing in a lot of segments until the 1980s”

        As I pointed out, that didn’t matter. The OPEC crisis had launched a torpedo into the hull of the full-size family sedan market. The segment was on the slide, as consumers downsized. As history makes pretty clear, the problems were suffered by those companies that relied on large sedans, not those companies that didn’t bother to sell them.

      • 0 avatar
        28-cars-later

        There is too much going on in this thread for me to address it all, but I do have a comment about the Tundra. I know next to nothing about the full size ‘work truck’ segment but I do know JD Power and the rest of those agencies more or less blow whatever Toyonda produces, I would never base an automobile purchase decision on such opinions. If I were in the market for a serious truck I would do my research based on actual owner stories and comments from models early in the current production cycle (but really that logic goes for any automotive purchase truck or otherwise). I doubt you’d see a catastrophic failure out of *any* full size truck in the warranty period simply because they are engineered to handle a significant load, and the American ‘Big Three’ have too much riding on the market to allow a mishap.

        The real question is which model/manufacturer is offering the best bang for the buck in the segment and which segment best meets your needs. Blindly assuming the Tundra, or any other model, is instantly superior due to branding is ignorant. Certain year Hondas have glass transmissions, some model Toyota’s have reported acceleration issues, some model Chryslers have severe oil sludge or transmissions issues, and some models of GM completely suck. I have said it before and I’ll say it again, pick your poison and drink it down.

        While I do agree the 1979 Oil Crisis had a profound impact on the automotive industry, I believe it was more CAFE and emissions regulations in the 70s/80s which killed the full size family sedan segment. Had those three events not occurred, or if they had occurred at different points in time, I don’t think the Japanese (as a whole) would have taken the automotive market share they did in the 1980s. Since two of those three events were self-inflicted on US industry by our own government, it could be argued the Nixon/Ford/Carter administrations and Congresses played a role in the decline of US automotive industry as much as a more effective Japanese product strategy and extremely low quality on the part of the Big Three (Carter’s administration especially for their bungling of the Iranian crisis, which prompted the ‘torpedo’ as it were), but I digress.

      • 0 avatar
        86er

        “Pch101: This should sound terribly familiar, and not in a good way.”

        Right, because the full-size truck market is exactly analogous to the passenger car market. You keep telling yourself that.

        Even if Japanese automakers had built this phantom large pickup long ago, would there have been dealer and parts support? Especially dealer support? I don’t expect someone who drives a German car in southern California to understand this, but a lot of people rely on these vehicles in rural and remote areas. Would Toyota have made the effort in 1975 to branch out to smaller population centres? Do they do much of that now, in 2012? Relatively speaking, not so much.

        The Domestics know this market well, they always have, and your claims to some vulnerability are unfounded and unconvincing. JD Power? Yeah, everyone I know who buys trucks looks that up first.

        If that vulnerability was so glaring it would’ve been exploited by now. Your “final frontier” sounds more like Custer’s Last Stand to me.

        Again, I give the Japanese automakers full credit for their actual successes, not for the imaginary ones you’re giving them.

      • 0 avatar
        Pch101

        “I give the Japanese automakers full credit for their actual successes, not for the imaginary ones you’re giving them.”

        Translation: “Let’s not worry about failure until we have already failed. Like before.”

      • 0 avatar
        86er

        “It stands to reason” is not a compelling argument that is going to pass muster.

        If you want to continue crediting the Japanese automakers for successes they haven’t actually achieved, be my guest. That was my original point of contention, and your attempts to obfuscate are unbecoming. We expect better from you.

      • 0 avatar
        Pch101

        Those who cannot remember the past are condemned to repeat it.

      • 0 avatar
        Ryan Paradis

        Yes, but your past is an illusory one where the Japanese brought over a full-size truck and it conquered the market.

        Even without the benefit of your admonishments, the Detroit automakers are casting a wary eye on their Japanese competition. It was no secret as to why the GMT-900 program was moved ahead, in order to pre-empt the Tundra launch. They are defending their position of strength vigourously. No one is putting a Cimarron stink-bomb into the market anymore.

        The Detroit automakers fell down in the passenger car market, there’s no doubting that. But the full-size truck market is a different beast altogether, and that is why you saw Toyota and others take very tentative steps into the market and are having a very difficult time chipping away at loyal buyers.

        Like 28-cars-later noted, a JD Power study is one thing, but real-world experiences are a different matter. Not everything shows up on those data spreadsheets you’re so fond of. I would be surprised if you could find me anything that tells me that even 5% of truck buyers, especially those buying 3/4 tons and up, consult a JD Power study. It’s more likely just the background noise in a truck ad.

        Know much about the 6.0L International Diesel that was put into Ford Super Duties from about 2004-2009? Lots of issues, but Ford was proactive in dealing with them and has since terminated its engine contract with Navistar and is making an in-house diesel that to date has proved more reliable. And Ford truck dealers by and large look after their customers.

        Toyota is never going to match a Ford, Dodge or Chevrolet for service, parts and sales support on the ground. In rural areas, the people selling these trucks know what they’re talking about because they probably have a truck at home and use it as one. They’re not selling an F-150 like they would a Fusion.

        And that doesn’t even mention the aftermarket!

        You’re making a terrible assumption that the Detroit truckmakers are somehow stagnant and unaware of outside competitive threats. Ford will update their F-150 twice before Toyota has updated the Tundra once.

      • 0 avatar
        86er

        Yes, but your past is an illusory one where the Japanese brought over a full-size truck and it conquered the market.

        Even without the benefit of your admonishments, the Detroit automakers are casting a wary eye on their Japanese competition. It was no secret as to why the GMT-900 program was moved ahead, in order to pre-empt the Tundra launch. They are defending their position of strength vigourously. No one is putting a Cimarron stink-bomb into the market anymore.

        The Detroit automakers fell down in the passenger car market, there’s no doubting that. But the full-size truck market is a different beast altogether, and that is why you saw Toyota and others take very tentative steps into the market and are having a very difficult time chipping away at loyal buyers.

        Like 28-cars-later noted, a JD Power study is one thing, but real-world experiences are a different matter. Not everything shows up on those data spreadsheets you’re so fond of. I would be surprised if you could find me anything that tells me that even 5% of truck buyers, especially those buying 3/4 tons and up, consult a JD Power study. It’s more likely just the background noise in a truck ad.

        Know much about the 6.0L International Diesel that was put into Ford Super Duties from about 2004-2009? Lots of issues, but Ford was proactive in dealing with them and has since terminated its engine contract with Navistar and is making an in-house diesel that to date has proved more reliable. And Ford truck dealers by and large look after their customers.

        Toyota is never going to match a Ford, Dodge or Chevrolet for service, parts and sales support on the ground. In rural areas, the people selling these trucks know what they’re talking about because they probably have a truck at home and use it as one. They’re not selling an F-150 like they would a Fusion.

        And that doesn’t even mention the aftermarket!

        You’re making a terrible assumption that the Detroit truckmakers are somehow stagnant and unaware of outside competitive threats. Ford will update their F-150 twice before Toyota has updated the Tundra once.

      • 0 avatar
        Pch101

        “Toyota is never going to match a Ford, Dodge or Chevrolet for service, parts and sales support on the ground.”

        I could have sworn that folks like you were saying that back in the 70s. Back then, it might have been believable; 30+ years and many defeats later, it just sounds hopelessly naive.

      • 0 avatar
        86er

        I’m sorry, did Toyota sprout another couple thousand dealerships overnight? In rural Wyoming, southwest Saskatchewan or maybe northern Ontario?

        If I’m driving a Tundra or a F-150 in Neville, Saskatchewan and I need a part, for which one do you think is going to be easier to secure?

        If you’re trying to argue that Toyota matches the Domestics on the ground for sales, service and parts support in every nook and cranny of North America, yes, even today, I wouldn’t be the one calling me naive.

        I don’t know what 30 years of defeats have to do with it. I think you’re conflating two different things. The Detroit automakers look after their truck buyers, they’re not complacent, and they work hard to keep the customers they have in tandem with their dealer body. Is everything they do perfect, is every dealer a saint? No, but even after the 6.0L Navistar Ford kept their customers as satisfied as possible and they rectified that issue with their 6.7L in-house diesel.

    • 0 avatar
      Jeffer

      My recollection of that period, was that the big three were trying to ram down-sized front wheel drive cars down our throats, and buyers started switching to pick-ups, so they could have the V-8 RWD configuration they wanted.

    • 0 avatar
      Lumbergh21

      So, basically you are saying the government should run the car companies because they are not competent enough to run themselves. As a couple of other posters have pointed out already, the big reason car manufacturers moved to SUVs and trucks was the loophole in the CAFE standards enacted by the all seeing, all knowing government. Elected members of the government are motivated by politics, i.e what will get me re-elected. Is that really the best motivation for making business decisions?

  • avatar
    Darkhorse

    Europeans also tax vehicles by engine displacement which can be correlated to fuel economy in most instances. Then you could apply tax credits to lower income folks so it wouldn’t be as regressive as a big gas tax.

    • 0 avatar
      geozinger

      I’ve been advocating something similar. A tax break to folks who purchase a vehicle with greater fuel mileage than the one they’re replacing.

      If I as a consumer replace my current vehicle with a higher fuel mileage vehicle, a tax break on my taxes (Fed, State, whatever) would be an incentive to do so. Of course, for folks who need a larger vehicle (a growing family for example) there would be no penalty for scaling up. The incentive length and other details could be worked out by legislators. I would like to see a long term one, that would last the length of the loan, for folks who need it.

      This way we encourage higher fuel mileage and more fuel efficient vehicle production, without penalizing the folks who need/desire a larger vehicle.

  • avatar
    dejal1

    While I’m going to vote for Romney, I not sure dumping the stock most likely at a loss is smart. Dump it and you lost it. Keep it, and you “Might” break even or make a profit.

    Sad to say that $16B is pocket change these days.

    While I’m still against the whole auto bailout deal, it is what it is, and we are stock holders, like it or not. If you think it can bounce back keep it, if not dump it and say so when it gets dumped.

    • 0 avatar
      darkwing

      I’ve been assuming “dump” means “replace with non-voting shares and remove our director from the board”. I agree that simply selling is a weak option, but at this point I’d be happy merely to see us do what we can to minimize government interference on the company’s operations.

  • avatar
    JCraig

    The Gov’t should hold onto the stock until the price improves enough to not lose money, or at least lose less money.

    Dumping it now is just a political move to ‘prove’ how much the government lost on the deal. There’s no sense in selling it now to ensure a loss.

    • 0 avatar
      Robert Schwartz

      Clearly you guys are not investors. Sitting on stock waiting for it to come back is a muggs game. Cut your losses is smart investing.

      • 0 avatar
        gslippy

        I agree with you.

        But as you know, the government’s intervention wasn’t about financial investing; it was about jobs and politics. Getting out of GM also won’t be about smart investing; it will be about politics.

        Unfortunately, anything the two candidates say about the bailout will be bathed in politics from now on. If they produce numbers to support their arguments, it will only make matters worse.

  • avatar
    philadlj

    “Romney Would…Look For CAFE Alternatives”

    No doubt. Romney is a Mormon – they don’t drink coffee.

    Seriously though, I would like the eventual selling of GM shares to be returned to taxpayers in the form of checks – similar to how Alaska pays its citizens their cut of state oil revenues. I know, wishful thinking.

    • 0 avatar
      Robert Schwartz

      The US government is so far in the hole that there is no sunlight until next April. f they sell the stock, it will defray the deficit — for a few minutes.

      • 0 avatar
        highdesertcat

        @robert, in order to be able to sell the GM stock that the Treasury is holding, Romney must assume that there are buyers. There aren’t!

        No one in their right mind is going to buy depreciating GM stock that has no future. The buyers during the IPO were bailed out banks coerced by the Obama administration to buy this overvalued new-GM stock.

        And we all know how that worked out for them. Like buying a new car, it was instantly worth less when the transaction was completed.

        Then again, those were taxpayer bailout bucks the buyers used. One of the biggest rips in history, just like FaceBook. They may make money for their investors someday. Just not during their lifetimes.

    • 0 avatar
      28-cars-later

      “No doubt. Romney is a Mormon – they don’t drink coffee.”

      +1 haha.

  • avatar
    drivelikejehu

    Some of the “B&B” seem not to realize that holding onto the stock does nothing to prevent taxpayer losses. Those losses have already occurred. Whether you lose cash or stock value doesn’t really matter, and of course taxpayers have lost plenty of both.

    So the real question is whether the US government should be in the business of speculating in securities. Obviously it shouldn’t, but even if the answer is yes- is GM really the best stock to own?

    Obama is holding onto the stock for political purposes. At the rate he’s piling up debt, a few billion here and there don’t really matter, but a sale would help his opponents demonstrate how bad a deal the bailout was for the taxpayers.

    • 0 avatar
      Advance_92

      The issue of the government’s involvement in stock and ownership aside, when it comes to defining gain or loss I think you are way off base.

      • 0 avatar
        Lumbergh21

        How would you define profit and loss? If the government gave x for GM shares and can now sell them for y, then it is a loss if y is less than x. I don’t know about you but if I buy a stock at 30$ and sell it for $20 I consider it a loss and so does the IRS, but maybe we’re just a bunch of simpletons.

      • 0 avatar
        Pch101

        “I don’t know about you but if I buy a stock at 30$ and sell it for $20 I consider it a loss and so does the IRS, but maybe we’re just a bunch of simpletons.”

        Except that if you hold onto it, no loss is reported to the IRS. Which is the analogy that most directly applies to the current situation.

      • 0 avatar
        drivelikejehu

        See my reply to Pch101 below. A loss has occurred regardless of the fact it hasn’t been “realized.”

    • 0 avatar
      Pch101

      “Some of the “B&B” seem not to realize that holding onto the stock does nothing to prevent taxpayer losses.”

      That’s false. Gain or loss is realized at the time of sale. As of today, there is an unrealized (paper) loss, which of course means that no loss has been realized.

      • 0 avatar
        drivelikejehu

        Whether a loss has been “realized” is irrelevant to the taxpayer. The comparison here would be to a corporation holding trading securities, which decline in value and thus reduce retained earnings. That is a financial loss (of equity) for the shareholders. Realization is a tax issue that doesn’t really pertain to government-held securities at all.

        Technically taxpayers don’t have an equity stake in the government, so it is more accurate to say the government suffered a financial loss while acting on behalf of taxpayers.

      • 0 avatar
        Pch101

        “Whether a loss has been ‘realized’ is irrelevant to the taxpayer.”

        According to whom? You?

      • 0 avatar
        drivelikejehu

        According to anyone who knows basic financial terminology.

        Taxpayers have suffered what is called a “financial loss.” Look it up.

      • 0 avatar
        Pch101

        “According to anyone who knows basic financial terminology.”

        I think that I just explained the difference between unrealized and realized losses. I realize that this doesn’t do any favors for your narrative, but it is what it is.

        You’re sidestepping the relevant point, namely whether it makes sense to lock in the current paper losses or if it would be preferable to wait. If you want to offer something more cogent, then take a stab of the benefits of hold versus liquidation.

      • 0 avatar
        drivelikejehu

        You seem to have trouble with the fact that an unrealized loss is still a loss. Whether it is on “paper” or not doesn’t matter unless there is a liquidity issue (which there isn’t here).

        Whether the government should continue to hold GM shares is a separate issue that I addressed in the original post. Holding them in the hopes they increase in value is speculation, which is not an activity the government should undertake.

        Even if it should, why GM shares? Why aren’t private investors flocking to them?

      • 0 avatar
        Pch101

        “You seem to have trouble with the fact that an unrealized loss is still a loss.”

        I tend to avoid counting my chickens before they hatch. I don’t write checks based upon unrealized gains, nor do I bank losses based upon unrealized losses.

        “Holding them in the hopes they increase in value is speculation, which is not an activity the government should undertake.”

        The Treasury did not acquire GM stock with the same motivations that a day trader buys and sells shares in a trading account. The decision to acquire equity was not driven by a profit motive, and there was no intent to speculate.

        In any case, I see where this is going. Your argument is disingenuous — you simply didn’t like the bailout, and you’re just looking for another chance to grouse about it.

      • 0 avatar
        drivelikejehu

        “I tend to avoid counting my chickens before they hatch. I don’t write checks based upon unrealized gains, nor do I bank losses based upon unrealized losses.”

        Well I’m not your accountant, but I’m close to 100% sure this is false. Do you have a credit card? If so, and your balance ever exceeds your cash holdings, then you are effectively writing checks based on unrealized income and/or gains. In most borrowing situations (e.g., mortgage, car loan) the income hasn’t even been earned, let alone realized.

        “The Treasury did not acquire GM stock with the same motivations that a day trader buys and sells shares in a trading account. The decision to acquire equity was not driven by a profit motive, and there was no intent to speculate.”

        Initial motivations are irrelevant. As of today, the government owns the stock. They can sell or hold. If they hold, it is theoretically based on the premise it will increase in value, which is speculation. Like I said, while I don’t think they should ever do that, at the very least they should have a good reason for it. I haven’t heard one yet.

      • 0 avatar
        Pch101

        “Do you have a credit card?”

        I have a few.

        Credit cards are a form of debt. Stocks are equity. Debt isn’t equity. Your comparison doesn’t work.

        There’s no particularly pressing need for the Treasury to sell the stock. There is no issue of default if the stock isn’t liquidated by a particular date. The government isn’t managing an investment portfolio and incurring opportunity costs by holding an underperforming stock.

        “If they hold, it is theoretically based on the premise it will increase in value, which is speculation.”

        I would suggest that you look up Benjamin Graham’s distinction between investing and speculation.

        As it turns out, the Treasury did neither. This was a bailout undertaken for broader economic reasons, not a profit deal. There was no speculation, and there is no speculation going forward; the stock wasn’t acquired for the purposes of making money.

      • 0 avatar
        drivelikejehu

        “Credit cards are a form of debt. Stocks are equity. Debt isn’t equity. Your comparison doesn’t work.”

        Huh? I was just pointing out that you were wrong when you claimed not to write checks based on unrealized sums. You do it all the time, like almost everyone else. You just do not understand what these terms mean.

        “There was no speculation, and there is no speculation going forward; the stock wasn’t acquired for the purposes of making money.

        OK, so the initial purpose was already served. Making money doesn’t matter. So why not sell? That’s my whole point.

      • 0 avatar
        Pch101

        “I was just pointing out that you were wrong when you claimed not to write checks based on unrealized sums.”

        If I wrote checks without funds to back them up, then I’d be writing rubber checks. I don’t have a habit of doing that.

        In any case, I get it — you don’t like the bailout, so this is your way to complain about it. It’s a way for you to attack the bailout without dealing with the substance of why it was necessary in the first place.

        The Treasury didn’t acquire GM stock because it believed it to be the next Google, but because GM couldn’t have a clean balance sheet if all of that government money was repayable in the form of debt. Since the Treasury’s best hopes of a reasonable recovery requires GM to do reasonably well as a business, it behooved Treasury to accept equity instead of debt.

        Romney wants to talk about this because he’s trying to critique the bailout without being accused of being a job killer or out of touch. If the stock was liquidated at a loss, he could refer to the bailout as a “failure” without unwinding any of the benefits. Pretty good politics for the GOP, but not particularly smart for the country.

      • 0 avatar
        drivelikejehu

        “If I wrote checks without funds to back them up, then I’d be writing rubber checks. I don’t have a habit of doing that.”

        Yes, you do, through the credit card company or bank. They extend you credit based on money you will receive in the future. How many people go buy a new car with cash? The bank writes a check on the buyer’s behalf and, in exchange, is granted the right to a portion of the buyer’s future income. This is how the entire economy works, in fact.

        You clearly didn’t understand my original post and wanted to argue for political reasons. There’s no point in that. Everyone is entitled to an opinion, but yours is not an informed one.

      • 0 avatar
        Pch101

        “They extend you credit based on money you will receive in the future.”

        And if I don’t pay it back as agreed, then I’m in default and I have a problem. That’s what a loan is. But a loan that is current is not a loss, either realized or unrealized.

        First, you were trying to equate unrealized losses with realized losses; now, you’re trying to compare unrealized losses with debt. Neither point makes any sense.

      • 0 avatar
        drivelikejehu

        Well if you know better than me about such things, surely you can answer this very easy question: What is a common situation where a gain is realized but not recognized?

      • 0 avatar
        highdesertcat

        drivelikejehu asked, “What is a common situation where a gain is realized but not recognized?”

        LOL! I recognize that question from Intro to Business 101 and Acct 101. It was part of the lesson plan at the colleges where I taught those undergraduate classes way back in the eighties and nineties.

        Nice to see that no matter how much things change, the more they stay the same.

        I won’t spoil your fun.

      • 0 avatar
        Pch101

        Predictably, you’ve got HDC on your side. That alone should make you nervous.

      • 0 avatar
        highdesertcat

        drivelikejehu, rest assured that I am not taking anyone’s side, just reading everyone’s comments on a topic that holds my interest.

        I believe that there’s room for everyone’s opinion because everyone is different and we’re not all afforded the same life-experiences and opportunities. If I had walked in another man’s shoes, my values may be different.

        I merely observed a question that was part of my lesson plan to evoke some thinking on the part part of my undergraduate business and/or accounting students (decades ago).

        At the end of the semester, each one of them knew the answer and carried it with them for the rest of their working life.

    • 0 avatar
      Lumbergh21

      Yeah, I guess everybody saying that the government can’t sell GM stock now because it will be at a loss are buying as much GM stock as they can. They seem so certain GM stock is headed up.

    • 0 avatar
      KixStart

      Or, it might actually go up. At the moment, GM’s P/E is 6.5 or so. Toyota’s is 33. Is GM really that bad?

      Of course, one of GM’s price problems is that it has one significant owner who would like to liquidate and this sits like a weight on the price. And I believe GM has additional liabilities and I don’t know how they’re progressing on that.

      On the other hand, Ford is currently at a P/E of 2.something. Yikes! Maybe it’a the judgement of the market that the auto industry is a bad place to be.

      • 0 avatar
        Pch101

        “Maybe it’a the judgement of the market that the auto industry is a bad place to be.”

        Auto stocks are usually boring. The companies have modest returns at best, and as the industry is largely mature, the growth prospects are modest. Any fears of a US double dip and/or ripple effects from a Eurozone crisis aren’t going to help in the short run, either.

  • avatar
    schmitt trigger

    “That wasn’t entirely because of a “market” approach to fuel economy. …………………..What you are complaining about is the result of government regulations, not the free market.”

    100% agree with the whole of your statements.

    The basic problem is that, when Congress enacts a law, it will almost always has a loophole included in the bill because some special interest group lobbied for it.

    In the case of CAFE, the decision not to include light trucks in the legislation, was most likely -as other posters have already noted- a concession to Detroit, as trucks were not a market segment which the imports dominated.

    • 0 avatar
      geeber

      CAFE was passed in 1975, when trucks really were used as work vehicles. Most people didn’t drive trucks as personal vehicles at that time. The loophole was a concession to contractors and farmers.

      Most people still wanted to drive cars. Around 1977, GM studied phasing out Suburban production to increase production of the F-bodies (Camaro and Firebird) because demand for the latter was so strong!

  • avatar
    Advance_92

    A true free market solution would be an increased tax on gas and an end to the many indirect cash we spend – military and aid related – to keep oil producing countries afloat (granted oil producers themselves spend a lot of money doing this too).

    But until Romney specifically says this is his plan, he’s just stunting for the audience that’s already bought his tickets.

    • 0 avatar
      darkwing

      I’ve been scratching my head at this spurious logic, repeated here multiple times, that somehow reconciles the “free market” with heavy-handed government interference. Finally, I realized what I was missing — you assume that, if you forcibly remove every option you dislike from the marketplace, it’s still free.

      It’s like those haggard old women I see prattling on about “choice”: they care less about your right to choose, and more about your right to choose one and only one option.

      • 0 avatar
        gslippy

        +1.

        Government intervention is working well in Europe. Or not.

        Let’s try raising the price of gas to $8. Two things will happen:
        a) The economy will tank and the price of everything else will rise, too. Unemployment will go up. Today’s $4 gas is a shadow of this.
        b) Economy car sales will rise for a year, and then F-150 sales will recover the following year.

      • 0 avatar
        KixStart

        “I’ve been scratching my head at this spurious logic, repeated here multiple times, that somehow reconciles the “free market” with heavy-handed government interference.”

        The automobile market would then be free.

        The oil market would not be free. However, the oil market would be shifted to match oil’s real costs (strategic defense requirements, ultimately limited supply, environmental impact).

  • avatar
    renkeyes

    I don’t have any major problems with his proposals, but I’d love to ask Mr. Romney at which point prior to government ownership he considered GM to be “run for the interests of the consumer and the enterprise and its workers”. Maybe that era preceded my birth (circa 1970)…

    • 0 avatar
      highdesertcat

      Romney does have a history-by-association to the US auto industry because his dad was an integral part of the US auto industry and ran a now-defunct auto manufacturer at some time in the past.

      One of the reasons Americans are so polarized about the bailouts, handouts and nationalization is that the US auto industry has a rich history of failures, among them Packard, DeSoto, Nash, Rambler, AMC, Willy’s, Hudson, Studebaker and of course Tucker and DeLorean. There were more, but they were not major players at any time.

      It can be argued, and will be argued by some, that many of those now-defunct brands were inconsequential, redundant and obsolete prior to their failure. But for many taxpayers of today, so were GM and Chrysler.

      So we got rid of Chrysler, bribed Fiat to take its carcass, and Sergio turned it into a cashcow for Fiat. Good for them!

      Not so GM. Bush bailed out GM and Chrysler until March 31, 2009, so Obama would have time to decide what to do about GM and Chrysler and the UAW.

      Obama doubled down on GM and gave them a free pass in perpetuity with bailouts and nationalization. But Obama decided that Chrysler was not worth saving and bribed Fiat to take it for $1.3B.

      What I find worthy of note is that Chrysler is now actually making money for Fiat, its new owner, while GM is merely limping along, claiming to make enormous profits which are almost immediately drained off by troubled operations in Europe and Asia.

      To me it seems that Romney merely wants to say what most Americans are already thinking: divest the taxpayers from GM stock.

      • 0 avatar
        28-cars-later

        I think part of the giving away of Chrysler was its much smaller size and portfolio, in addition to a higher perceived value of GM by the dot gov for keeping it. Even if Chrysler had been a stinking failure with Fiat, (1) they were paid to take it, (2) Jeep could still be spun off or sold at a reasonable price, and (3) a liquidation of Chrysler assets plus any associated IP could have helped them break even if not profit on the venture, Gordon Gekko style. I’m sure someone on their board thought this through before agreeing to take it over.

        The lasting effects of a GM liquidation would have left a much larger footprint on the American landscape than losing Chrysler, especially if they both occurred around the same period. The GM situation is much more convoluted, especially given the impending Opel implosion and Volt fiasco. Getting out of GM might be the best move for the Treasury, but without gov’t backing they may end up in another bankruptcy in five years. If GM could shake their loss making operations in a reasonable amount of time, their might be a future.

      • 0 avatar
        highdesertcat

        Yeah, you’re probably right in your analysis. There are lots of ways of looking at an issue and lots of ways each of us is affected. No doubt the UAW is ecstatic with the bailouts and the taxpayers as forced-shareholders. The taxpayers themselves not so much.

        My objection to the bailouts, handouts and nationalization was the selective picking of who would live and who would die in business.

        There were a lot of other failed businesses that did not receive a financial influx from the government. Many of those in the financial industry would have been better candidates for ROI than GM will ever be.

        But the precedence has been set. If GM ever needs further infusions of taxpayer money, or another bailout, our government will step up to the plate and bail them out again (no matter who’s in power at that time), just like the airline industry, the postal service, fannie and freddie.

        There’s just no way that GM is ever going to fail in the future. That would be tantamount to an admission that the whole bailout mess was a mistake and that C4C was a failed attempt to sell more GM cars.

        Most Americans understand that keeping the 6% of the US auto industry living large at the expense of the other 94% is just not the American way. We live and die in business on our own merits. I know people in my area who did everything right and still lost their business because of the recession.

        When government has undue influence over an automaker (or healthcare) it can pretty much dictate what you and I can buy. Remember when the Volt was THE CAR that Americans wanted to drive? I never had any such notions. Nor did MOST Americans.

        As in the case of Chrysler, I would like to have seen GM pimped to anyone who would take it. It would not have cost us the $50B we have ‘invested’ now and chances are GM would be doing as good as Chrysler is doing now.

        The only thing that really does matter to me is that my brothers have sold their dealerships and they are now living the life of the rich and famous.

        Now, if I can break my decades-long habit of reading up on the auto industry I may even break my uncontrolled urges to comment on topics that hold my interest.

      • 0 avatar
        28-cars-later

        I agree there are a number of businesses who never received gov’t money and could have succeeded with a little bit of help. I do also agree it’s not the best business sense, and un-American, to keep 6% of the population ‘living large’ as it were at the expense of the rest. I can’t think of any failed businesses however which touched as many parts of the economy *and* had such unique political circumstances as much as GM/Chrysler. I may not have agreed with what the administration did, but I can see why they had to do something, especially in the midst of a deep depression, er recession.

        Chrysler is a bit like a cockroach, the Fiat adventure is something like the third or forth time since 1973 they were supposed to die, and then they come back strong for another decade until the next downturn. Will Chrysler continue to elude the boogeyman the next time something happens? I think even a black cat has only has nine lives so probably not, but the better question is will it economically matter in five or ten years if Chrysler goes back in the red and parts of it are shut down or spun off? Probably not, especially if Chrysler never develops a presence outside of North America. This part of the bailout worked remarkably well.

        I think we both agree GM was another kettle of fish. I followed the GM bailout with great interest and I think the corporation is worth far more in pieces than as a whole, which is probably another reason why it would have been difficult to turn it over to another company whole such as the Fiat-Chrysler deal. Oddly wowever when they had a chance to sell some of those pieces (Saturn, Pontiac, Hummer, and majority stake in Opel) they pulled back at the last minute, I believe the Saab deal to Spyker was the only successful sale of one of their large assets. I remember there were several plans for Saturn, the one that springs to mind was Rodger Penske’s plan to buyout the brand under the agreement GM would continue to manufacture Saturns for two years, and then Penske was going to shop for a new supplier of Saturn cars. From what I’ve read on Wikipedia there was a Michigan GM dealer who expressed a serious interest in purchasing the Pontiac brand name and logos and explored a similar plan to continue production of of the cars in shuttered plants. Both plans of course did not come to fruition, as well as a speculated sale of Hummer to various Chinese firms. Selling off the majority stake in Opel (I believe to Magna, correct me if I’m wrong) was also in the cards although I do recall reading sometime in 2009 or 2010 that deal fell apart and GM wanted to retain control of Opel for R&D reasons. For a company in bankruptcy they didn’t seem to want to let anything go.

        Personally I see GM entering another bankruptcy in ten years, and I can’t even advise them on what to do differently. Opel is an becoming an albatross around their neck (as is Europe in general), but probably half of GM’s total model offerings are derived from Opel’s designs, the rest being Daewoos and a mix of old truck platforms and some Holdens in international operations. The Cruze has worked remarkably well but its doubtful this is going to become the next K-car (unless the Sonic/Spark is based on it and I’m ignorant) and save them. If they can divest from Opel (or turn it around which I see as unlikely, esp given Volkswagen’s strength in Europe) and center their R&D around a stable (possibly North American) brand, I’d say there might be hope beyond 2020.

        I think you may still see GM pimped out yet HighDesertCat, I figure the Corvette name and IP is worth a billion dollars alone, even at a fire sale. I just hope Ford doesn’t run afoul after Mulally retires and ends up in a similar conundrum.

      • 0 avatar
        highdesertcat

        28-cars-later, you have some interesting takes on the auto industry. And although I can respect the decisions made by Bush and Obama re the US auto industry in 2008/2009, I also find that the way it was handled (selectively) is diametrically opposed to my way of business thinking.

        I watched with interest Alan Mulally’s address to the shareholders regarding his appearance before Congress, and how he responded when he was asked if he would take a pay-cut in exchange for bailout bucks.

        And as far as Chrysler is concerned, I always thought they made junk. Never envisioned myself paying good money for a new Chrysler or Jeep product, other than maybe something used at a price that was too good to overlook.

        My wife loves her new Grand Cherokee, loves it as much as her 2008 Highlander which has been relegated to being our ‘spare’ car for now.

        I think you are being too optimistic about giving GM 10 years before the next forced-bankruptcy. At the current rate of unwinding, unless there are some major changes made, I see GM needing another infusion of taxpayer bucks by late 2014, early 2015, with money coming from any number of sources or governments, in North America, Europe and/or Asia.

        Economically, the US is the strongest of all the global trading partners but it is equally dependent on them for its own prosperity and wealth-building.

        Any kind of upset in any part of the globe can lead to catastrophic results for America’s exports, including its cars. The uncertainty is amplified because America has its own unique set of problems with current and projected future unemployment, the volatile housing market, and politically-driven obstacles to small businesses like Obamacare.

        I don’t want to drag out politics here but each of those influences can exert a great effect on an already shaky recovery. For Romney to say he would sell GM stock held by the Treasury is a crock.

        Who’s gonna buy it, and at what price? If it is such an easy sell why isn’t GM buying it back with all the profits they claim it’s making? The answer of course is that the current administration would like to continue its control over GM for the sake of its political partners, the UAW.

        So the bottom line remains. Those who can, DO! By that I mean people with money will remain largely unaffected while the people without money will bear the brunt of uncertainty and added costs to carry the US economy forward.

  • avatar
    fredtal

    I would like Mr Romney to tell me WHY he would sell stock at a loss. Does he GM is going to fail? Like all politicians big words little meaning.

  • avatar
    KixStart

    It’s good to see Romney’s reaching out to those voters who think Obama’s wrong, no matter what it is that Obama is doing because it’s enough for them that it’s Obama who is doing it.

    Rock on, Mitt!

  • avatar
    el scotto

    A full size Japanese truck? Naw, I’ll buy mine in the mens department

  • avatar
    Crosley

    It is a disgrace that the government is still a controlling stock holder of GM.

    Basically, the President of the US is CEO of a car company, all because he doesn’t want to admit to voters what a colossal loss GM was to the taxpayer. Remember, the “bailouts” were sold to the public as a loan, not a handout.

    You know, there’s a word for the type of structure where the government actually takes over businesses. It’s called corporatism, and it was a favorite of fascist regimes.

  • avatar
    DearS

    54mpg works for me. I’m poor. $8 is crazy. Aren’t cars getting more efficient? While being the same size and price?

    • 0 avatar
      28-cars-later

      There is the law of diminishing returns to contend with… or as Wikipedia puts it “diminishing returns (also called diminishing marginal returns) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant”.

      In other words you can only get so much fuel economy out of the ICE without something having to give. If you want 54mpg out of an automobile, you might as well switch to a scooter.

  • avatar
    stuart

    Sigh.

    I don’t understand why everyone is so wound up about the GM bailout. The Wall Street bailout dwarfs it; the original TARP bill authorized $700B (that’s 35 GM bailouts), and when you include all the money the Fed created and already loaned to various banks, the total is over $3T (that’s 60 GM bailouts). If you include all the money we expect to lose on bad mortgages that haven’t been settled yet, it could top $8T (160 GM bailouts).

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/26/MNVN14C8QR.DTL&ao=all

    The GM bailout was less than 2% of the entire 2008 bailout (so far; it may go lower). Focus your anger where it belongs: Wall Street and the big banks.

    stuart

    • 0 avatar
      drivelikejehu

      I don’t agree with TARP or Fed money-printing in general, but you can’t compare the bailouts purely in terms of scope. Though Wall Street financial institutions are private firms, in reality they are an integral part of the government’s financial structure and policy. The Fed’s monetary shenanigans are only possible with the close cooperation of the big banks. Problems with large financial firms therefore can disrupt government activity in a way no other sector could.

      Too often people create a false narrative that the only choices were a massive bailout and the total liquidation of GM. That was never the reality. GM held plenty of productive assets and had very large revenue streams. A firm in that situation would never be liquidated. The problem was debt- something bankruptcy is fully capable of addressing without outside intervention.

      Legitimate bankruptcy proceedings would have allowed GM a fresh start. Instead they were left with a lot of the same baggage they had before. It would have been far cheaper to simply hand out suitcases full of cash to employees who were laid off during the process. The problem of course is that millions were losing their jobs all across the country; the bailout was basically a way to cloak the unfair preferences given UAW members.

      • 0 avatar
        stuart

        “but you can’t compare the bailouts purely in terms of scope.”

        Sure I can. :-) I’ll do one better: I believe that GM needed its bailout due to mismanagement (or incompetence, if you prefer). Wall Street needed theirs due to fraud. (Citation: watch the movie “Inside Job”)

        “…Problems with large financial firms therefore can disrupt government activity in a way no other sector could.”

        Well, maybe. We’ll never know for sure. All of our top governmental regulators (Paulson &etc) *came* from Wall Street, and they assure us that Wall Street is basically perfect as-is. “It’s too big to fail, so just bail it out today, and it will be self-regulating forever.”

        Actually, I suspect that Wall Streeters say this because their paychecks are maximized in the current low-regulation environment.

        Honestly guys: when GM and Chrysler begged for bailout money, we didn’t believe their stories; we bailed them out, took their companies, trashed their stockholders, and fired their leaders. When Wall Street came begging, we believed everything they said, lent them money, bought most of their “toxic assets.” Nobody was fired, and everyone got new bonuses. (O.K., AIG and Lehman were treated worse than Detroit, but everybody else on Wall Street is still there, collecting massive bonuses.)

        GM’s bailout was peanuts compared to Wall Street, and by focusing on the trivial (GM) and ignoring the real problem (Wall Street), we’re helping derail any meaningful regulations that might avert the next collapse. The fraud that caused 2008 isn’t being prosecuted, and the old safeguards (Glass-Stegall) aren’t being reimposed (Volcker rule), so I’m expecting another meltdown.

        Forget about GM, guys. Wall Street is the problem.

        stuart

    • 0 avatar
      Crosley

      The difference is, all the major banks REPAID the short term loans. GM and Chrysler did not.

      http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajg_JwIwnQ0c

      I was against TARP entirely, but I at least understood the federal government stepping in as a short term stop gap for the sake of liquidity. The auto bailouts, however, were pure graft to pay back the UAW.

      • 0 avatar
        stuart

        Not every major bank paid back their TARP loans in full. Quoting from your link:

        “The government previously sold warrants back to New Jersey’s Sun Bancorp for 32 cents on the dollar, and to Louisiana’s IberiaBank for 46 cents, according to Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette.”

        But the TARP *loans* were only the tip of the iceberg. For example, the Fed bought billions of “troubled assets” (bad mortgages) from those big banks, and the Fed still owns those “assets” today. Imagine that you bought GM stock at its peak, the price dropped, and the Fed bought your stock for your purchase price “to help clean up your balance sheet.”

        We don’t even know how much money the Fed has funneled into Wall Street, because they deliberately hid a bunch of it:

        http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html

        Quote: “When you see the dollars the banks got, it’s hard to make the case these were successful institutions,” says Sherrod Brown, a Democratic Senator from Ohio…”

        (FWIW, this was uncovered after Bloomberg sued the Fed and won.)

        I recommend the movie “Inside Job”; it shows that thousands of people on Wall Street committed fraud on a massive scale, and nothing was done because all our regulators are from Wall Street. And no meaningful reforms have been enacted, so plan on a repeat of the 2008 crash in the near future.

        The GM bailout is peanuts when compared to Wall Street. Get over it.

        stuart

  • avatar
    300zx_guy

    CAFE, like the whole tax code, should be rewritten from scratch to be sensible, predictable and free of extraneous clauses that are there for no other reason than to please industry lobbyists or a favored group of voters. Why not just a straight gas-guzzler tax, based on fuel economy, at time of sale. For the most fuel efficient, maybe even a tax credit (indexed to sale price, so there’s no tax credits on luxury priced cars). This will give fuel efficient cars an advantage in the marketplace, without telling manufacturers what mix of cars they need to sell or which technologies they should use to achieve better fuel economy. Businesses that need gas guzzling trucks will get some of the tax back by writing off the cost of the vehicle, while consumers who really want a gas thirsty vehicle will make the choice to pay for it. This is just one idea off the top of my head, and already it is better than CAFE, which is full of mandates and contradictions that have skewed the car market in ways that were never intended.

    • 0 avatar
      28-cars-later

      …or you could simply repeal CAFE altogether without a replacement along with another thousand senseless and outdated laws on our books. Amazing to me no one audits our criminal and civil codes for redundancy or obsolete statutes, and simply repeals them. John Stossel did an eye opening piece on the subject called ‘Illegal Everything’ you should check it out on youtube if have the time.

      • 0 avatar
        300zx_guy

        I love Stossel. I was just suggesting that if there MUST be a CAFE type of regulation (and I don’t deny there is merit to encouraging increased efficiency faster than the market would do on its own), the law should be as simple as possible and market driven. No need for specific requirements on manufacturers and the added bureaucracy for enforcement that continually creates even more requirements. Honestly, why should a company that wants to market luxury cars have to also offer smaller cars just to meet some arbitrary corporate average? (Aston Martin Cygnet *cough cough*).

        Following on your idea, it would be nice if every new page of law/regulation/taxes would require removing three pages from the books. Same with new gov’t jobs, get rid of three useless jobs for every new one that is created.

  • avatar
    TomHend

    Get the US government out of everything.

  • avatar
    Luke42

    “Romney suggested a market driven approach, with “…vehicles that people want…”rather than government mandates, as a means of spearheading fuel economy increases.”

    Easy!

    Just add a 25% gasoline tax (about $1/gallon at present prices), and repeal CAFE. Done!

    Fuel economy is encouraged(but not required), and people can still buy whatever vehicles they wish, in whatever quantities they wish. The proceeds can be used to fix our aging highways, develop EVs, and deal with pollution related to oil extraction and climate change. Perfect!

    It’s a market-driven solution with greatly-reduced regulations, but the Republicans would never go for it.

    • 0 avatar
      28-cars-later

      Taxes are never the answer. Toyota (and I believe Hyundai) already laud fuel economy in their marketing, I doubt this is something they will drop given a sudden drop in oil prices or CAFE change. Dot gov should not be collecting funds from my pocket to fund EV development, deal with pollution or non-existent climate change, we are taxed enough already. With regard to infrastructure, I agree funds are lacking but more due to misappropriation (to non-highway costs) and waste than any other single factor. Here in Pennsylvania, the main route from east to west is the PA Turnpike, which was originally set up as a toll road in order to pay for the construction costs dating from 1940. By the early 1980s the bonds were paid for and the original plan was to remove the toll booths and treat it as any other state road, but this never happened. The highway is still a toll road and collected funds go directly into the state’s coffers. Why? Spending is a serious addiction, and politicians have no incentive other than personal conviction to stop. Gov spending on all levels needs a serious dose of Weight Watchers but until there is a serious push to do so they would rather spend us into an abyss then step up and do whats right for the nation.

  • avatar
    jsal56

    “I think our country is in need of a revolution,” Ray Bradbury told the Los Angeles Times in 2010.

    “There is too much government today. We’ve got to remember the government should be by the people, of the people, and for the people.”

  • avatar

    United State is not the first or last multicultural empire in human history. All empires sooner or later collapse because inhabitants cannot agree about anything and have no common values or purpose. America is not nation state like Germany or Japan. It is more like Soviet Union and Roman Empire. Internal conflicts and cultural incompatibility forces government to handle conflicts and try to resolve issues and government eventually grows out of controls. Government growth is like law of gravity or cancerous tissue – nothing can stop it. It grows until it is out of control and finances collapse. In Russia government became too large, collapsed and become smaller but now it rapidly growing again. Yes America was a shining beacon of freedom and hope for people around the world but it was hundred years ago when America had opens spaces and Americans had certain values.


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