Why Did Detroit Need to Be Forced Into Fuel Efficiency?
Detroit automakers successfully lobbied to keep the 27 mpg CAFE (Corporate Average Fuel Economy) standard from increasing for nearly 30 years.
Publicly they argued raising it would be bad for their business as the gas guzzlers have higher profit margins than smaller, thrifty fuel efficient cars and hybrids. Despite decreasing market share and massive layoffs for the last 10 years they (Ford, GM, Chrysler) still lobby against increases to CAFE.
In light of Toyota’s and Honda’s tremendous sales success with fuel efficient cars the public and federal politicians have largely begun to disagree with Detroit’s point of view and to the automakers surprise the Senate passed a bill in June 2007 to increase the CAFE standard to a whooping 35 mpg by 2020.
Why is Detroit so adverse to running a successful business. Do they prefer to keep their stock value high by laying employees off rather than selling lots of cars people want?
P.Fezziwig, author for GreenCarsNow.com , a website promoting environmentally friendly vehicles & CarRepairRatings.com , a website for consumers to rate their mechanics work.
Glory Days for Big Three are Gone
It's true that the SEC requires publicly traded companies to maximize shareholder value. What the SEC does not say is how a company goes about doing that. It also doesn't tell a company how long it must be before shareholder value is acceptable, and to that extent, what is exactly an acceptable share value.
Unfortunately, the "leaders" at the Big Three have historically only looked to the next quarter when making their decisions. Toyota and Honda look far ahead, and this writing has been on the wall a long time.
Recently, GM and Ford both announced a profit for last quarter and Wall Street is saying "Yippee", although the smart money is buying short leaps!
It's sad when you hear senior executives (at GM) state that they're going to "leap frog" the gas-electric hybrids to develop hydrogen based fuel cell vehicles. While they spend millions of dollars developing this technology, Toyota and Honda are gaining and have already gained a tremendous amount of knowledge in the real world of hybrid power systems. This fact will become very evident when or IF the Big Three start to produce a real world hydrogen hybrid.
Just like when we experienced the oil embargoes of the late 70's the Big Three were caught with their pants down. Instead of pulling their pants up and making a real effort to produce smaller more efficient cars, we got B.A.'d as consumers and were sold some of the crappiest cars ever built!
Toyota, Honda, and most of the other manufacturers made a real effort and produced higher quality vehicles and have never looked back.
Are the Big Three dinosaurs destined for extinction?
Ford recently announced that they're producing an "L" version of their Expedition which will be even longer than the standard behemoth and get about the same hideous gas mileage. What do you think?
Great comment ex-EV1 drive.
Great comment ex-EV1 drive. I believe this is what they have in plan.