Auto Execs Hit Links, Talk Climate

August 14, 2008

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The always-amiable Amory Lovins of the Rocky Mountain Institute offered his plan for an ultra-light-weight SUV-sized vehicle called the Hypercar—in tones that suggested that anyone who didn’t understand its obvious advantages and ability to transform the global industry completely was…well, perhaps slightly slow.

And Honda’s John German took a contrarian tack, suggesting that most consumers are risk-averse in adopting new technologies, due to uncertainties over future fuel prices and the lifetime costs of those technologies. And he noted that the new CAFE regulations no longer regulate fuel economy, but instead the “maximum feasible” efficiency for each class of vehicle—so that each company’s fleet mix will have its own, sales-based mileage requirement. A shift to smaller cars, he pointed out, will actually raise each company’s required mileage. “The new CAFE regulations will be much more dramatic than the ‘35 mpg in 2020’ that we think of,” he warned.

Without listening closely, an environmentalist in the audience might have come away from the session thinking that some automakers view better fuel economy as just an expensive irritation.

But the reality is far more complex. The US industry is now under stress it has never before experienced. Whipsawed by shifts in consumer demand, waiting desperately for new products to emerge from three- to five-year development cycles, the former “Big Three” know they must change to survive.

They feel the costs to do so, however, are being exacerbated by elected officials who have little understanding of the capital costs or lead times required to make those changes. So they will change—but the structure of the resulting industry remains unclear. So does the size of the resulting carmakers, and whether their suppliers (virtually all of whom are being restructured, bought, merged, closed, or changed, whether in or out of bankruptcy) will survive at all.

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Posted in Carmakers, Cox, Environment, Incentives and Laws, News
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  • Daniel O.

    I cant wait much longer till honda and toyota and even the Big 3 get more then 50+ MPG! Hybrids are the way to go for now and then hopefully plugin hybrids.

  • David Cabral

    Who paid for all this? The Big 3 are losing billions of dollars per year, laying off workers, but can still afford to send executives to play golf?

  • Gerald Shields

    Yeah. You think they would’ve realized how this “golf game” plays with the media, but they probably don’t care.

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  • TD

    Aren’t these guys supposed to be capitalists? All they can do is wine about needing more money from government and more solutions from government. Why don’t we nationalize the car industry and fire all of the overpaid executives, because they obviously are bereft of any meaningful solutions to business problems they inflicted on themselves.

  • Jerry

    They feel the costs to do so, however, are being exacerbated by elected officials who have little understanding of the capital costs or lead times required to make those changes.

    translated to “how can we get a tax bailout”

  • Pete Mulligan

    __________________
    Step 1): Play Golf
    Step 2): On Golf Course share w/ other executives how to reduce Fed Govt regulations
    Step 3): Leave Traverse City in monster SUV’s
    Step 4): At company press conference pretend that you attended the seminars and that you and your company actually care about the environment.

  • GregZ

    “The problem with government is that they’re ignorant, they need to be educated”

    Where is this coming from? Still having a hisy fit over increasing MPGs? Oh sorry you can’t produce 5MPG Hummers I’m crying. Yes it takes time but why does it seem when government puts pressure through policy or regulations, car companies respond fairly quickly.

  • Stevo_mr

    I’m glad all of you know how to run an auto company. You are as ignorant as our government. If a mistake is made it could ruin the company. You can’t just throw a car out there. If I screw up a dishwashr most likely no one will die screw up a car and people die and then sue. A carr has to be quiet, it has to brake, it has to have air bags, it has to be crash tested, the fabric has to wear right. You have to get tooling for a new factory which is an 18 month lead time. It isn’t as easy as other businesses. Cars are designed 4 years in advance and engineered in two years. There are 1300 parts in a car and all of them are made by suppliers. We all know the big three and Toyota are paying the price for developing large SUVs and depending on their profits. Yes Toyota is also laying off people and shutting factories. No one knew that gas would double in price in a year. NO ONE KNEW. The big three had plans in place to replace trucks and SUVs over the next few years but now they have to compress that schedule. Some of you need to work in the automotive business to truly understand what it takes to build 50,000 cars of one type in a year. I once thought like you guys but once I got in the business I finally understood.

  • Shines

    Stevo_mr:
    Are you saying that one must be able to play golf in order to run a car company? I admit: I DON’T KNOW HOW TO RUN A CAR COMPANY.
    It is just frustrating to see that Toyota and Honda seem to be doing a much better job at it than GM and Ford are these days.
    No one knew that gas would double in price in a year. NO ONE KNEW. Are you kidding??? Energy analysts have been saying for years that fuel prices were going to rise. You would think that auto makers would be looking at world consumption (especially China and India) and hearing the environmentalists (whether you agree with them or not) (and not the oil industry whether you disagree with them or not) when making decisions.
    The big three had plans in place to replace trucks and SUVs over the next few years but now they have to compress that schedule.
    Sure, – like Ford was going to release the 2009 F150 with the smallest engine being a V8?
    Some of you need to work in the automotive business to truly understand what it takes to build 50,000 cars of one type in a year.
    Some of you in the automotive business need to truly understand what it takes to build 50,000 reliable and efficient cars like Toyota does each year.
    Sorry to rant, don’t like being called ignorant when it’s not the real issue.
    I do give GM credit (as a consumer – not an automotive insider or expert) for moving forward with the Volt and other hybrid/fuel efficient technologies.

  • Anonymous

    Stevo, as a consumer, I really don’t care how hard it is to build a car. Now I’m just a lowly consumer, but I do know that some car companies have more flexible manufacturing facilities that can attempt to take the edge off rapidly changing markets. If your company does not have some of those, that’s not my problem. All I care about is buying a car from someone who delivers what I want. How does complaining about the difficulty in your industry help you sell cars to me? Am I spuposed to sit in the show room and say “this car doesn’t have what I want, but it looks like it was really hard to make, so I should buy it anyway”? The difficulty of the build has absolutely no influence on my buying decision. Complaining just generates negative PR. If one car company can do it, you can too.

  • Anonymous

    I am not saying you have to play golf to run a company and it is disappointing to see sometimes. Hopefully I can explain this point again. If you knew gas would double in price this past year then you must be a millionaire. If you have tracked oil prices over the years somewhere in 2012-2013 we should have run into gas at todays prices. So as a CEO of a company you make your decisions based on these facts. If it takes you 4 years to get a car to market when do you think the decisions are made. The F-150 is coming out with a V-6 and possiibly a turbo 4 cylinder, but yu are not inside enough to know this. Lets see who is winning JD Powers for reliability and fewest problems per car its Ford. Toyota shut down two plants for several months and is retooling 1 other plant ya they are so much smarter than GM and Ford. Ford has been building hybrids for almost as long as Toyota in the US market but you fail to even mention it. What is wrong with their hybrids? By the way I work for the domestic and import companies through a supplier so I do know both sides and how they operate.
    In manufacturing cars Toyota and Honda were well placed. GM, Ford and Chrysler have been moving to this manufacturing scheme as plants come up for retooling and cars and trucks can be put on the same “chassis”. As I said there is a long lead time and a heavy price when you build or retool a plant so you can’t do it all at once. For example there are approximately 36 cars and trucks worldwide that are built on the Camry “chassis”. Ford has approximately 15 cars and trucks built on the Fusion “chassis”. This makes the factory flexible enough to change production. Yes the US domestic makers are behind in this but if fuel prices had played out in a normal fashion this would not have been a problem.

  • Mr SUV

    Anonymous good points. I must say people always take sides as its all governments fault or automakers don’t want to respond. SteveO is right it does take awhile to get up to speed. But its not like CAFE or Cali regulations take affect tomorrow. There is always phased in goals. If Cali didn’t force EV1 and other electrics/hybrids in the 90′s we may never have seen the Prius. Yes government can be a problem, some say diesel cars have suffered bc of over regulation. Lets look at the Volt other car companies including Toyota laughed at the idea, now everyone is scrambling to beat GM to market. One last point some car companies have been more flexible then others. We see in the 90′s and mid 2000′s the cozy relationship with federal government and the car companies. Some did not want to adjust bc they were making huge profits with SUV’s. Every car company wants to sell boats, tanks, and huge trucks with V8′s, thats how they make the most money. But what is needed is EV and Hybrids car companies are going to lose money in the EV market for the first few years but with out government influencing future models we would never have cars that get over 40MPG

    Note to Stevo go to Europe live there and you would really complain about governments role in car companies.

  • steve sharp

    Low car weight (or mass) is the most important requirement for improvement in fuel economy. An electric car, a hybrid car, or a hydrogen car will be more fuel efficient if it is lighter.

    Light weight is dangerous in collisions.
    I have invented a way to make small cars much safer in collisions.
    If small cars are not perceived as death traps, more Americans will buy them.
    Please see my website

    http://www.safersmallcars.com

    Please help me get some car companies to talk to me.

  • Noz

    How nice of them to pretend they give a rat’s ass.

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