Bailout Watch 489: Feds Buy 17,600 Bailout-Mobiles
As predicted here, the Obama administration is about to buy 17,600 “fuel efficient vehicles” from The Big 2.8. Uncle Sam will spend $285 million of the $787 billion stimulus bill to prop up ailing American automakers. Coincidentally enough, the deal will now go down by GM’s June 1 restructuring deadline. “By swapping out less [Ed. less?!] efficient federal vehicles for new hybrid and fuel efficient ones, this strategy will reduce gasoline consumption by 1.3 million gallons per year and prevent 26 million pounds of carbon dioxide from entering the atmosphere,” the White House said in a statement. So, you ask, what constitutes fuel efficient? Hybrids? Don’t be silly. The D2.8 don’t have enough production capacity for that action. And the answer is . . . ANYTHING! Just as long as the new vehicles are A) built by Chrysler, Ford or GM and B) at least 10 percent more efficient on average than those being replaced. Whoa! Ten percent! If I worked for any of the transplants, I would be angry as NSFW right now. They did everything right and the government rewards the guys who screwed the pooch. Yes, I know: the governments have been buying domestics for years. But still.
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Even I can support this sort of bailout. Also, as long as the price is fair, I have no problem with buying domestic as a policy. I don't think anyone but the French would argue it's unfair to favor the domestic player. Of course, whenever they do it, it's because their domestics are the best!
I worked in a Naval shipyard for years. It is about two miles long and 500 feet wide on average, and a high proportion of the government vehicles that are used there never go out the gate. Usage requirements there don't have much to do with the world at large. You have trucks to haul big parts of ships from the ship in drydock or at a pier to the shop, and back after they're refurbished. Buses to help move people, mostly at shift change. Vans to haul work crews and tools where they're needed in a hurry. (The rest walk.) Little Daihatsu etc. rigs to move one or two people and small parts and packages. Pickups for public works people etc. A few cars for chauffeuring bigshots. Top speed on base is 20 mph. You can guess for yourself what the average gas mileage is, and how resistant to efforts to reduce fuel consumption it would be. The shipyard used to buy its own vehicle fleet, but nowadays most of them are GSA vehicles. I suspect, with other B&B commenters, that this announcement is just a puff piece; the number of vehicles involved is well under a normal year's purchase. And, I'd also suspect that most of the vehicles will be used a lot more like normal fleet vehicles than the ones in my old shipyard.
Oh the irony. Let's use Ford as an example: Rather than buy their most profitable products, even at fleet prices (Crown Vic, Grand Marquis, Town Car), the Government is going to buy vehicles that Ford loses money on at RETAIL prices (Escape and Fusion Hybrid). How is that helping again?