If elected president, presumptive GOP nominee Mitt Romney said he would quickly sell off the government’s 26-percent share in General Motors, take a long hard look at pending fuel efficiency mandates, and presumably electric vehicle subsidies as well.
The U.S. Treasury has held onto its stake in GM for 35 months now, and if it were to sell its stock today at $21-something per share, well below its $33 IPO price, the country would lose around $16 billion, but Romney said there was no good reason to hold on.
Instead, he said President Barack Obama wants to avoid an embarrassing financial loss that stands to be a political check against him, thus Obama is not in favor of selling GM stock. But this Romney said he would do in short order, if he won the White House.
“There is no reason for the government to continue to hold (its GM stake),” said the Michigan governor in a lengthy interview with the Detroit News published Tuesday. “The president is delaying the sale of the shares to try and avoid the story that the taxpayer took another loss. I would get the company independent from government and run for the interests of the consumer and the enterprise and its workers – not for the political considerations of government officials.”
Furthermore, Romney said, he would review pending Corporate Average Fuel Economy (CAFE) mandates slated to put the industry on course toward a “54.5 mpg” fleet-wide average (actually about 40 mpg or so on window stickers) by 2025.
A comment offered by Obama spokesman Matt McGrath generally countered the views aired by Romney, who in 2008 famously wrote a New York Time Op-Ed urging the country not to bailout Detroit automakers, and let them go bankrupt.
“The last time Gov. Romney weighed in on the future of the auto industry, it was to suggest that we let Detroit go bankrupt, a betrayal no Michigander is likely soon to forget,” McGrath said. “As someone who was dead wrong about the industry’s present, Mitt Romney is the last person who should be offering advice about its future.”
Romney told the Detroit News his intentions and statements have been mischaracterized and Democrats are “distorting” his record.
“If they needed help coming out of bankruptcy and government support, that was fine, but I was not in favor of the government writing billions of dollars in checks prior to them going into bankruptcy,” he said.
But as of this week, Romney is still weighing in on an industry in the sphere of which he grew up as the privileged scion of former American Motors Executive George Romney, who’d climbed to the top of that now-shuttered company’s ranks decades ago.
Romney also said CAFE is not likely such a good idea, represents intrusion into the free market by the Obama-led government and he’d try to find “a better way of encouraging fuel economy” rather than solely relying on efficiency mandates.
“The best approach is to try and build vehicles that people want, rather than having the government telling the companies what they must make,” he said to the Detroit News.
“I would work with the manufacturers to find ways to encourage fuel economy on the part of the consumer. But trying to have the manufacturer push the product on the consumer — that the consumer doesn’t want — is not the right approach.”
The Obama administration has also been a major champion for plug-in electric vehicles and hybrids. It has pushed for even higher plug-in vehicle subsidies and incentives on the supply side and consumer demand side of the equation to get the fledgling industry flying on its own. Those plus CAFE requirements – not to mention European legislation beyond the purview of the American president – are expected to be key motivation in developing more electrified automotive solutions in coming years, but Romney said he sees failure written on the EV wall already.
The Obama-led government is, Romney said, trying to “to force a market to adopt a technology that people aren’t interested in.”
What do you think?
The post-bankruptcy New GM is now posting record profits, and the auto industry is on course to developing advanced-technology vehicles ranging from fuel-efficient conventional cars, natural gas, diesel, electrified, and even hydrogen fuel cell vehicles to meet CAFE – not to mention European – efficiency requirements.
The Detroit News offered other commentary saying Romney was off base, but what would be best regarding government attempts to influence the direction of the auto industry? If CAFE standards were relaxed, and EV incentives removed as one might surmise could happen, would the industry be better for it?
An oft-repeated appeal is to “let consumers decide” or variations thereof. However, in times past, the U.S. auto industry has not shown itself willing to as aggressively pursue advanced technology that could actually wean the world off of oil. If given the longer leash of a closer-to laissez-faire approach, do you think the industry might be more inclined to be like a junk food manufacturer and go for more expedient solutions that average consumers would still buy?
It’s well documented mainstream consumers have been slow to even grasp advanced-tech automobiles such as hybrids, and EVs. It has often been shown they overwhelmingly vote their pocketbook, and fuel prices have had a stimulus-response effect for hybrid sales.
As fuel prices crest generally upwards, if prices dip and appear momentarily more affordable, hybrid sales go down. If alarming price spikes happen, hybrid sales go up. This demonstrates a phenomenon that many consumers are reactive, and not carefully analyzing long-term trends in a world of finite oil, and ill effects resulting from hydrocarbon emissions.
What’s more, reasonably efficient conventional cars are in any case a far easier sell, and it will take a big push to develop affordable cleaner alternatives that have mass appeal while being sustainable in the long haul.
On the surface, it sounds enlightened and even democratic to say give the people what they want, but is relaxing regulations going to create for future generations what they will find themselves wanting, and is that the direction we wish to take as a society? Without strong mandates, would automakers attempt to as carefully research, develop and market the most efficient, low emissions vehicles possible? And will as many consumers gravitate to the best long-term solutions all by themselves as long as the most efficient choices are few, and on average cost more?
Further, at present all three Detroit manufacturers are on board with CAFE requirements. The rules are estimated to ultimately add $2,000 per vehicle on average and cost $157.3 billion to develop compliant vehicles, but would more than pay for themselves and net $1.7 trillion in fuel savings …
This is a highly complex topic, and now having raised only a few questions, we’ll back off, and qualify that we would not pretend to say we have all the answers that really, no one can offer with complete certainty.
Can you add to the discussion in a constructive way? We’re interested to know what you think the auto industry needs to see happen in coming years. What is best for the economy and environment? Is CAFE a good thing as proposed? Are EVs a worthwhile endeavor to continue to support? If so why? If not, why not?