Comments on: Confronting Slow Rate of Auto Technology Change

By: mikem6442002

mikem6442002 — Thu, 04 Jun 2009 00:43:02 +0000

This is a reply to Joe and Fred Smilek. I think you both have a good point, yet, the stimulus money given to the car companies was not really stimulus money, as anybody who owns a business knows that it takes time between purchasing an item and selling it, during that time the business must continiue to pay bills, electric, employees, advertizing, buy raw materials(for future manufacturing) etc.etc.
For that reason businesses maintain credit lines, just as the car manufacturers did. But because of the banking fiasko, banks either made credit lines immidiatelly due, or or simply stopped making operations loans, and they did so not only to small business but large companies too, some smaller companies went out of business right away (look at the number of lay offs), others like GM, CHRYSLER, lasted longer, at the same time the media went out of its way to paint a grimm picture and demonize the car co’s for asking the feds for operational loans, while starting their scary stories of bankrupsy, and eminent failures, and people standing on food lines because of the greedy car co’s. In the mean time the feds use this as a way to get rid of the car co’s CEOs and effectively turn over maximum % to the federal reserve. This was the begining of our new socialist government which now takes over private companies ” for the better good” OR for their own good. Yet a small question lurks—wasn’t it the federal reserve that caused the bank fiasko? Go figure. I sure hope americans wake up, sooner than later, and get those mutts out of office before we all work for the government.

By: RKRB

RKRB — Tue, 02 Jun 2009 15:50:57 +0000

This may help explain the slow turnover for newest-tech cars: fuel savings would be a small proportion of vehicle costs, and the current system provides huge financial disincentives to purchasing a new car.

Here are the hard figures for three years. Let's say I now have a 10 year-old car that gets 20 mpg on average, and I want to jump on the bandwagon and trade it for a new one that gets 40. Let's also say the car is driven about 12,000 miles per year. This means you save about $2700 for 3 years at $3/gallon for fuel. Not bad, but ...

Let's say the new car costs about $20,000 (given a $4500 trade-in allowance and a generous $1500 in whatever incentives the taxpayers decide to pay, courtesy of the government). First, the buyer also takes an enormous haircut -- say,$10,000 --- in depreciation costs over the first three years. Next, my state charges around $2000 in sales tax right up front. Add at least $400/year in higher registration fees, and about $500/year in higher insurance fees (assuming zero collision coverage on the old car), for those 3 years. If properly maintained, most 10 year-old cars will run well these days, but throw in another $500/year in repair costs (double or triple that for a German car). So ... to save about $4500 in fuel and repair costs over three years, one brings $20,000 in up-front fees, and then spends nearly $14,000 over those three years. Even the stock market does better than that.

Other solutions? Increase registration/insurance/ownership relative costs for older cars (Germany and Japan have done this), gradually (but predictably) raise the gas tax, examine the European and Japanese experiences, and drastically lower new car sales taxes (at least, for carbon-efficient vehicles). This will take considerable intelligent tinkering, more than we can expect from our esteemed lawmakers, and will certainly require financial compassion and breaks for many people (including incentives for those lower-income drivers who choose more fuel-efficient older cars).

Trading an older car for a new fuel-efficient one is no way to save money, in general. People (other than the bureaucrats) are smart enough to figure this out (hey, if I can figure it out...). If one needs a new car (and very few people NEED a new car), that's a somewhat different story, but the article discusses why people hang onto their old cars for so long.
Hope this helps explain why.

By: Max Reid

Max Reid — Tue, 02 Jun 2009 02:15:40 +0000

Yes, now Worldwide, there are

16 million Flex-fuel vehicles which can run on gasolene & ethanol

10 million vehicles which can run on CNG

11 million vehicles which can run on LPG

Nearly 2 million Hybrid vehicles.

Also the CVT transmission use is increasing.

Whenever we buy our next vehicle, we should look for alternative fuel.

Remember, a smaller hatch/wagon has more space than a bigger sedan. Lets buy vehicles that offer more mileage & space.

By: tom

tom — Mon, 01 Jun 2009 22:03:08 +0000

It’s really pretty simple. If it is in our country’s interest to lower greenhouse gas emissions, pollutants, and improve energy independence, then it’s our government’s job to promote such vehicles with significant INCENTIVES. They can take various forms: tax credits, lower taxes/costs for fuel efficient vehicles, etc. With cheap gas and no incentives for fuel-efficient vehicles to speak of (the introductory ones for hybrids have essentially run out), of course the adoption will be slow. Higher gas prices and/or significant incentives could greatly speed up that rate. Our government needs to stop talking fuel efficiency, and start taking straightforward steps to encouraging it.

By: JohnM

JohnM — Mon, 01 Jun 2009 13:32:59 +0000

In 2008, the average car on the road in the US was 9.4 years old. The number of years that half of all cars are not longer on the road is 14 years (from WSJ). This half-life number includes those lost from crashes and thefts. If you trade in a 10 year old vehicle for one with much better mileage, the old car is still around for another 8 years or so.

If We (The People) buy old cars that run, we're being taxed to raise the price of cars to poor people, destroying capital (and sending more out of the country). 25% of energy is used in vehicles; how many houses should we tear down to build more efficient ones.

By: BMW Enthusiast

BMW Enthusiast — Fri, 29 May 2009 18:01:23 +0000

I agree with RKRB about the disincentives for buying a new car.

I would love a new car, but the cost of depreciation, taxes, insurance, registration, etc. is insane. My heart says "go get one" but my brain says it is pure foolishness. So I will probably continue to maintain and drive my 12 year old car as long as is reasonable. The difference in how much you would "save" on gasoline really pales in comparison to the other disincentives for buying a new car, all things considered.

By: fred smilek

fred smilek — Fri, 29 May 2009 17:15:44 +0000

I totally agree with Joe…the ones that needed the stimulus were the consumers so they can trade their old cars…

By: Joe

Joe — Fri, 29 May 2009 13:18:20 +0000

The Government was dumb giving stimulus money to car companies! They should have gave the consumer a stimulus to trade in old gas guzzlers for newer efficient vehicles they want! Also in order to get the stimulus towards a new car, it must have been built in U.S regardless of what company built it. Let the consumer decide what they want, not Government going in the GM car business to decide for you!

By: steved28

steved28 — Fri, 29 May 2009 03:33:08 +0000

RKRB, No one ever said a car was a good investment. It's always been just the opposite, as soon as you drive it off the lot. So I think it's unfair to assume that a hybrid is any different. But a hybrid is the only one that at least has a benefit or returning SOME of your money to your wallet via larger fuel savings.

It never ceases to amaze me that suddenly you have to justify the higher cost of saving fuel, but you never had to justify the higher cost of using more. In other words, if someone gets the big V8 (at an additional cost) no one ever says "It will take 10 years to recover that cost". Because you NEVER recover that cost. But it's OK because you can go faster???

I drive a hybrid, and I never considered a "return on my investment". I simply would rather pay (Nissan, in my case) the extra 3 or 4K than the oil company.

By: fkramer@calcars.org

fkramer@calcars.org — Thu, 28 May 2009 21:31:17 +0000

This is all absolutely on target. The win is all about the speed of market penetration, and it will take a long time Even if we declare an end to “business as usual” and plug-ins arrive at a rate 10x faster than hybrids, they won’t have much impact in the next 10-15 years–and we need to start addressing energy security and greenhouse gas emissions now!

There is another approach, so far mostly overlooked, but CalCars.org and our allies are starting to make waves about converting 20-30% of the vehicles of the US (and of the 900+million globally) to run 20-30% on electricity). This can make a big difference –especially if we focus on the large vehicles, the worst gas guzzlers, that happen to be the easiest ones to convert to plug in. We can also address many other goals, including green jobs, that the “cash for clunkers” bills are trying to address.

For our eight-page white paper, which includes numbers showing all these issues of adoption speed, see “Research Analysis: Scrap Or Retrofit Clunkers” http://www.calcars.org/scrap-or-retrofit.html

– Felix Kramer, Founder, CalCars.org