Obama Nails the Coffin Shut (on automakers)
http://www.freerepublic.com/focus/f-news/2254607/posts
By Car Guy Eric Peters on 5.20.09
Can you hear that? It’s the sound of the final nail being hammered down onto the coffin lid of the U.S. car industry.
President Obama wields the hammer — in the form of a massive uptick in federally required fuel economy standards that will require each automaker’s lineup of new vehicles to achieve an average of 35.5 MPG by 2016.
But what could be so bad about forcing the automakers to make cars more fuel efficient? Dig deeper and you’ll see.
Even the Obama people concede the new mileage standards will cost American consumers about $1,600 per vehicle by 2016 — in effect, a massive tax increase in the middle of a neo-Depression. The difference is this tax increase will be optional. People can avoid it by avoiding new cars — which will make it that much harder for the car industry to recover from the catastrophic state it finds itself in right now, with sales down anywhere from 30-50 percent depending on the make.
Pure genius!
Boosters of the 35.5 MPG standard talk up the fuel savings (current cars must meet a 27.5 MPG average), but if the car costs $1,600 more to buy, the roughly 8 MPG uptick is probably a net wash, at least until the car is several years old and the fuel savings amortizes the considerably higher up front costs. Obama and Co. are millionaires, so this is small potatoes from their point-of-view. But ask most Americans whether they think $1,600 is chump change.
But all this is secondary. The real killing aspect of CAFE (the federal government’s cutesy acronym for the fuel economy standards) is that it will mean the summary execution of perhaps one-third to one-half of all the vehicles in GM, Ford, and Chrysler’s product lineups — including the best-selling and most profitable models, virtually none of which achieve close to 35.5 MPG.
The law doesn’t say an automaker can’t continue producing cars that don’t meet the 35.5 MPG cut. But it does impose “gas guzzler” fines on any automaker (and individual car) that doesn’t. And since the fuel economy standards represent average mileage — the presence of just one “gas guzzler” has the same effect on an automaker’s overall CAFE ratings as a D- has on a high-schooler’s overall GPA.
That means automakers (and not just American ones — Toyota makes many “gas pigs,” too) will be under tremendous pressure to cancel countless models — including models just now coming to market (or soon to be here) that represent huge sums of money in the form of R&D, tooling, assembly lines and so on.
The 2010 Chevy Camaro is one example.
Say sayonara.
Normally, the huge investments in the development of new car lines would be amortized over the life cycle of the car “platform” — which is typically 5-8 years, on average. But at the stroke of Obama’s pen, a vast fleet of barely-born cars will be rendered economically untenable. All the money poured into them will be flushed straight down the pipes — adding to the vast ocean of red ink that’s already sloshing around.
The industry can only take so many hits below the waterline. This might be the coupe de grace. And if it’s not, the 35.5 MPG’s follow-up will definitely do the job.
Obama also wants to cut new car “emissions” by another 30 percent. Sounds good — except that it’s a hugely dishonest number.
Most people innocently assume “cutting by 30 percent” represents a substantial cut.
In reality, all 2009 and newer cars are already virtually pollution-free in terms of their exhaust emissions.
Literally 98 percent of the gases coming out of the tailpipe are just water vapor and carbon dioxide. Only about 2 percent constitutes “emissions” — things like carbon monoxide and the remains of incomplete combustion (unburned hydrocarbons).
It is this remaining 2 percent that Obama wants to cut by 30 percent. Work that out. The number is very small.
But the cost will not be. These minor, incremental “improvements” in exhaust emissions grow increasingly expensive. It is the law of diminishing returns.
The majority of the “easy” improvements/reductions have already been achieved. Getting at that last 1-2 percent will involved Herculean effort and huge sums — and probably will never fully be realized since the act of internal combustion necessarily is going to produce some unhelpful byproducts, however minor, no matter what we do.
The question is — or ought to be — is it worth it to kill the industry in the process of going after these final few vapors like a latter-day Inspector Javert?
Obama shows his ignorance of both economics and engineering by these potentially devastating diktats.
If he really wanted to improve the fuel efficiency of new cars without killing off the car industry in the process, all he’d need to do is rescind federal bumper-impact standards, which have increased the curb weight of the average new “economy” car to around 2,500 pounds (vs. around 2,000 lbs. 20 years ago).
Cars that weigh less burn less fuel. They cost less, too. In the ‘80s, there were dozens of cars that got 40 mpg.
Today, only one or two achieve that mark — despite all the technical advancements of the past quarter century — because they are so much heavier, courtesy of the federal government.
Would lighter cars be less “safe”? Maybe. It depends, for one thing, on whether you have a major accident. Most of us don’t. Maybe we’d like to exchange the very real, everyday advantage of 40-plus MPG (probably 50-plus, given modern engine management technology) for the hypothetical advantage of a “safer” car weighed down by government-required argle bargle.
Shouldn’t it be our choice?
Apparently, not. The Great Engineers in DC know best. And they’re not stupid enough to let a good crisis go by unexploited.
But they won’t pay the price. The car industry will. And then, so will we.
Eric Peters is an automotive columnist and author of Automotive Atrocities: The Cars You Love to Hate (Motor Books International).
http://spectator.org/archives/2009/05/20/obama-nails-the-coffin-shut
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And more, here: http://www.rushlimbaugh.com/home/today.guest.html
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Dodge Dealer begs: “I beseech your help” (See “comments” at end of article below)
May 19, 2009
Letter from a Dodge dealer
letter to the editor
http://www.americanthinker.com/blog/2009/05/letter_from_a_dodge_dealer.html
My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida.
My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.
We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.
I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.
On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY
This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.
This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.
HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?
I beseech your help, and look forward to your reply. Thank you.
Sincerely,
George C. Joseph
President & Owner
Sunshine Dodge-Isuzu
There are 233 comments to this letter to the editor so far. Here is one of them:
“Two things are extremely unfortunate about this letter. First, the fact that Mr. Joseph and his family will be forced into bankruptcy and lose their ability to operate their business, feed their families and provide an opportunity for 50 other families is certainly a tragedy. Second, the fact that Mr. Joseph is operating under the delusion that we are operating under a “free market economy”. Mr. Joseph and his family and his business are among the first casualties of the Marxist state that Chairman Zero has brought to this country, but are by no means the last. If you think this is fun, just wait until The Chairman takes control of the air conditioning switches in your house and car, confiscates your 401k and takes control of the health care decisions you used to make on your own or with your doctor. Still think we’re free market? Elections have consequences, folks. ...”
Click for more comments here: http://www.americanthinker.com/blog/2009/05/letter_from_a_dodge_dealer.html