I must confess to being a bit of a Chevy fanboy.
Well, mostly I’m a Corvette fanboy. I think I saw a Corvette C3 when I was seven or eight and decided, then and there: that’s what sports cars are supposed to look like.
Fast-forward twenty years, and I’m watching ALMS. When I’m not drooling over the RS Spyders, I’m drooling over the C6.R GT1s, because, again, that’s what sports cars are supposed to look like.
In all the kerfuffle about the auto industry buyout* I keep hearing the same line, over and over:
The Big 3 just don’t know how to make cars anyone wants to buy.
Bullshit. Those two ‘vettes are heaping piles of sexy. I want one.
It’s not just me, and it’s not just Corvettes, either. Megan McArdle dug up the top-selling cars in the US last January — you remember that, when oil prices were skyrocketing and Detroit’s lack of credible hybrids was killing them?
1. Toyota Camry: 31,601
2. Honda Accord: 23,957
3. Nissan Altima: 21,635
4. Honda Civic: 20,993
5. Toyota Corolla: 20,736
6. Chevrolet Impala: 17,544
7. Chevrolet Cobalt: 17,310
8. Chevrolet Malibu: 14,105
9. Pontiac G6: 13,942
10. Ford Focus: 11,600
See? Completely dominated by hybrids — in the fevered imaginations of dipshit pundits**. Out here in the real world, Sparky, things look a bit different. Sure, the top five cars are Japanese — but the next five cars are American. Going by these stats alone, Mitsubishi and BMW should be begging for a bailout, not General Motors.
It’s not just the US, either. McArdle again:
In other words, four of the top ten cars in Europe last year were small cars made by an American company (Opel is GM’s European marque).
Maybe there’s something else going on.
- Mismanagement at the Big Three (Mises blog)
It was a dead heat. General Motors sold 9.37 million vehicles worldwide in 2007 and lost $38.7 billion. Toyota sold 9.37 million vehicles in 2007 and made $17.1 billion.
That was the second best sales total in GM’s 100-year history and the biggest loss ever for any automaker in the world.
So. Toyota, that shining paragon of automobility (or that slant-eyed devil import brand, if you prefer), with its far-sighted hybrids and vaunted reliability and resale figures, barely managed to break even in vehicle sales with the decrepit stumbling giant of the Rust Belt, crippled by delusional management and out-of-touch designers… General Motors. But GM’s losses nudged into the territory normally associated with national governments, while Toyota made a handsome profit. Why, oh why, might that be?
Ralph Reiland, in the article I just cited, singles out the UAW first and foremost.
More specifically, the hourly compensation cost for labor, including benefits and retirees’ costs, at the Big Three is $73 per hour, compared with $44 per hour at a Toyota factory with American workers in the U.S.
Further, it takes fewer hours of labor to produce a car in Toyota’s U.S. plants than at the plants of Detroit’s automakers.
[...]
Under UAW contracts, additionally, laid off workers are transferred to a jobs bank and receive 95 percent of their full pay and benefits to not work. This year, the cost to the Big Three will be an estimated $478 million, about $70 million less than Honda spent to build a brand new factory in Indiana.
(There’s a lively debate in the comments, with plenty of numbers being slung around and almost immediately denounced as false. Now, everyone’s an expert on the internet, but I’d have hoped that a writer for Mises blog would cite his sources.)
Whether it’s all the unions’ fault or something else entirely, it seems pretty clear that the problem isn’t sales. It isn’t even revenue: the Big Three are making plenty of money. The problem is that they’re spending far, far more. The Big Three are wealth destruction machines on a scale normally reserved for government bureaucracy.
But of course that’s not what the pending auto bailout wants to address. They’re more interested in boosting advertising:
- Just when you thought the auto bailout couldn’t get any worse (Below the Beltway)
The draft rescue plan for Detroit sent to the White House by Congress yesterday calls for the appointment of a “car czar” who will oversee the Big Three automakers’ expenses over $25 million — which, by extension, would include media buys. Based on Advertising Age’s estimates of spending by General Motors Corp., Chrysler and Ford Motor Co., that would give the as-yet-unnamed car czar control over some $7.3 billion in marketing spending in the U.S. alone.
and developing “Earth-friendly” cars that either already exist or that don’t have a market:
- Bridge loan to nowhere (Wall Street Journal)
All three restructuring plans are heavy on promises to build the “green” cars that a Democratic Congress wants built. GM promises 15 hybrid models by 2012 and 37 miles per gallon on average for its cars. Chrysler commits to putting flex-fuel engines, which can run on ethanol or gasoline, in half of its cars. Ford promises to save 16 billion gallons of gas by using “advanced technology” and to invest $14 billion to improve fuel efficiency.
[...]One Congresswoman wanted to know why they couldn’t hit a 50-mpg fuel-economy target by 2015. Another asked whether, maybe, they weren’t selling enough cars because everyone in America was waiting with baited breath for the coming revolution in fuel economy.
[...]
Yet amid all the hopeful talk about the brave, new green car world, the men from Detroit were studiously silent on whether they can sell these new cars at a profit any better than they can their current lineup.
(This is as good a time as any to remind you that one reason we don’t already have those small, low-emission, fuel-efficient cars is none other than the fucking government. The Clean Air Act, for example, prohibits the sale of “Partial Zero-Emissions Vehicles” in all but eight states:
And California, that bastion of automotive environmentalism, only recently rescinded a four-year ban on the same sort of low-emission fuel-efficient diesels that Europeans have been buying for years now:
So as far as I can tell, the Big Three are being castigated in part for toeing the government line. Surprise, surprise.)
I have a feeling that this is just going to keep getting worse.
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* I’m writing “buyout” rather than “bailout” because, judging by the terms with which we’ve been presented, it’s closer to full-blown nationalization than to the finanicial bailout.
** I was just as wrong as they were, in this post among others. Here’s what I said about 2003:
The housing bubble market was in full swing, taxes were low, and the Big Three seemed to be doing fine despite the fact that no-one really wanted to buy their cars.
This is what happens when you post stuff to the internet based on “common sense” rather than doing your research.
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