Volt Birth Watch 42: It's a CAFE Conspiracy!
Published: April 24th, 2008
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Poetically enough, The Wall Street Journal's Holman Jenkins wants to know if "GM is a genius or a dolt for developing the Volt." Why would a company that's lost $4.3b in North America the last three years throw billions into developing a car they know will lose money? Jenkins notes that when gas prices dropped after the original federal Corporate Average Fuel Economy (CAFE) regs, the standards devolved into "an elaborate scheme engineered by Washington and the UAW to keep auto workers busy manufacturing small cars in the U.S. at a loss, subsidized by the profits of big pickups and SUVs." Jenkins reckons GM– "America's biggest near-dead car company"– plans a similar tactic with the new standards. "t's hard to see why a reformed GM would bother building such a car now unless it's planning to throw its lobbying clout behind a final set of CAFE rules designed to disadvantage its rivals." Then they'll "bribe consumers to drive Volts off the lot" because it'll let them "build and sell other cars bigger and more powerful than the cars its rivals can afford to build under the CAFE rules." And it's all because "GM intends to beat Toyota at its own game of selling bogus green symbolism to Washington and Hollywood." Let's hear it for the home team!
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I think that there is so much resentment for Detroit because we americans have been so poorly treated by them. Detroit always assumed we would go like sheep to the slaughter [Dealer] and ante up to buy their products. The Japanese have caused Detroit to wake up and start treating us customers better and not like sheep. IMO that is why Detroit gets no breaks and the Japanese do. There is a completely different set of criteria based upon the way we customers have been treated. Until Toyota/HOnda start taking us for granted and treating us poorly, Detroit is going to have to take alot of flack and work doubly hard for new business. They are reaping the crop from the seeds of discontent that they have sewn in the past.
While it is true that Toyota would love to sell as many cash cow trucks and SUVs as possible, the fact remains that Toyota is where it is today because of the fortune it made with its SMALL CARS, the same small cars GM says are "impossible" to make a profit with. If truck sales were to totally disappear tomorrow, Toyota would still be around and making (less) profits, GM would die almost instantly. GM is a truck maker that uses its profits to experiment with cars. Toyota is a car maker that uses its profits to experiment with trucks. Don't believe me? Here's an example: Toyota never planned for the Tundra to be its corporate savior like GM did with the GMT900. They probably knew they were going to actually LOSE money on it. They make so much money from their car sales that it didn't matter if it flopped or not. They could stop selling it at anytime and it wouldn't matter at all. Think GM could do the same with the Silverado and survive? Of course not.
Last time I checked Toyota was a mass market auto maker. They are in business to sell to as many and as varied a customer as they can. Customers come in all shapes and sizes, and so do the vehicles they want; from efficient small cars, midsized cars, SUVs to trucks. Toyota is just trying to please and market to all of them and do it as efficiently and profitably as they can, well except for us that like to drive since all they make is bland and not very sporty. I'm no Toyota lover but I think everyone is just upset because they beat GM at the game they created, "a car for every purse" and it's reliable and efficient.