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Auto Efficiency Screw-Up by US Automakers to Cost $30 Billion
by Stacy Feldman - May 28th, 2008
in
Detroit’s Big 3 automakers may finally be gearing up for the auto efficiency age.
Too bad it took so friggin’ long.
Last week, international consulting firm Global Insight, predicted that the Big 3 will have to pay over twice as much as Japan’s top three automakers to meet America’s interim fuel economy standard of 31.6 mpg by 2015.
About $30.6 billion compared with $14.85 billion. And General Motors alone will have to spend $15 billion.
It’s obvious why.
The auto efficiency "innovations" that the Big 3 need for their fleets to comply -- like hybrids, fuel-efficient engines and smaller cars -- are the sorts of things Toyota, Nissan and Honda have been doing for years.
But the Big 3 have been slow to embrace anything clean, green or even smart, it seems.
From Business Week's Auto Beat:
It’s worth noting here that while [$30.6 billion] sounds like a lot of money, and it is, Detroit has an astonishing talent for frittering away money.
The company reported today that the utterly unnecessary and ridiculous strike by the United Auto Workers against GM supplier American Axle will cost GM $1.8 billion in lost earnings.
You can’t make up how stupid a chapter in auto industry labor relations this was.
Waiting to build climate-friendly cars ranks up there on the stupid scale, too. But it's no longer an option for US automakers, not with today's efficiency rules and exploding gas prices.
So the question is: Will Ford, GM and Chrysler innovate themselves out of the mess they're in? Maybe even give rival Toyota a run for its yen?
Global Insight sure is positive about some things. It sees changing demographics and pent-up replacement demand for aging models pushing sales forward big time for Detroit around 2015.
And, new technologies like the hybrid are expected to gain a lot more market share.
Ford took a big step forward in April when it bowed to shareholder pressure and detailed its strategy for slashing its fleet emissions 30 percent by 2020.
And GM, it seems, is about to follow suit.
Promising.
With the auto efficiency age, comes a whole ocean of opportunities for the taking.
US automakers screwed up by not seizing those chances years ago. Expensive lesson to learn.
Maybe this time it'll even stick.
Source: Automotive News, sub req'd
Hat tip: Autoblog Green
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Detroit’s Big 3 automakers Screw-up
Back in the day, I bought a 1973 Ford Pinto and watched it dissolve into a puddle of red sludge on my driveway in a year - the year of the rusty Fords! My buddy bought a Chev Vega with an aluminum 4 cylinder engine. It burned more oil than gas from day one! He looked like he had a 2 stroke under the hood! Needless to say, we gave up on domestics back then, and bought VWs and never had problems since! I sometimes think that a certain class of spoiled brat 14 - 16 year olds, mostly executives sons, overly influence designs of the cars that Detroit builds. Detroit has been pissing away their hard earned market place since the days of the flat head sixes and I think it is because they are too well paid and too entrenched to be able to feel the demand of the real market, so we get Toyota easily kicking their fat asses, and cars like the Prius taking first place ribbons and stuff like the new 620 hp Vette sitting on car lots with "Reduced" stickers on them, and no takers - Detroit is letting America and its good name down!
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