Blaming Detroit for Not Being Green Enough

Cassandra of the car-writers Edward Niedermeyer is at it again in the New York Times. The editor of The Truth About Cars website attacks the business practices of GM in particular and the auto industry as a whole for resuming their old ways in the face of falling sales, even as they received billions in government support.

A year and a half since the Chrysler and GM bankruptcies, he says, these companies are totally failing to give us the green future we were promised. Instead, the industry is selling too many fleet cars, hyping and selling SUVs and trucks over green products, stocking huge inventories, and reverting to the evils of incentives and rebates.

Well, you gotta give Ed some credit: A few of his arguments do ring true; others are bogus; and, per his usual practice, no solutions are offered. Never once does he mention that the U.S. provides some of the world’s cheapest gasoline—the factor that influences industry (and customer) behavior more than almost anything.

Let’s look at what he says.

After promising to lead the world in producing green cars, we are nowhere near ”the kind of transformation we were promised. …Despite rolling out the much-hyped Cruze compact and the Volt plug-in hybrid, G.M. still sells half again as many trucks and S.U.V.’s as it does cars. This year 73 percent of Chrysler’s sales have been light trucks.”

This is to say, first, that the transformation should happen overnight. Mr. Ed gives no credit to GM for its greatly improved quality and the engineering advances in the green cars it has built and has in the pipeline.

Further, he blames the industry for providing what consumers seem to want. The Asian companies are also producing cars like the Sequoia, Armada (photo, top of story), and Tundra—all gas hogs, all selling to their fans as long as gas prices remain low and small cars are denigrated as “sardine cans” or “econoboxes.”

The real question is whether the companies should build what the government wants them to build or what consumers, for the moment, demand. The government can push the industry through mandating and reinforcing CAFE and safety standards, which raise car prices, and they can encourage or discourage green car purchases through tax policy. But they can’t ultimately solve the problem of pollution and the environment this way or change consumer buying practices.

Ed complains that buyers don’t like fleet cars (they are “unsexy”), and the industry is pursuing short-term profits with things like rebates and incentives. They are building too many vehicles, he claims, and inventories on dealers’ lots are way too high.

He’s right about the inventory situation, which can only cause prices to fall, and incentives create merely artificial, short-term demand. Fleet cars, however, can and should provide new markets to the industry, and they are a boon to used-car dealers.

2010 Toyota Tundra Crewmax

In fact, one reason the used-car market is booming is because of rising new-car prices and the growing availability of fleet cars. And it is a better green solution than further clamping down on the U.S. auto industry, as Niedermeyer seems to want. A used car is already built, its carbon footprint is in the environment.

DealFinder can help you find the right car at the right price, even if it’s an older gas-hungry Tundra. My kid has one, loves it, and he’s a greenie. It all goes back to gas prices, doesn’t it?

Should the government finally consider raising the tax on gasoline, as many have proposed?

—jgoods

Find Used Cars in Your Area at CarGurus

Used Chevrolet Cruze
Used Toyota Sequoia
Used Nissan Armada
Used Toyota Tundra

3 Comments

  1. @jgoods

    Well said, well done Mr. Goods! I suppose both of us would agree that most of our differences are philosophical/semantic as opposed to dogmatic/ideological and/or macro/micro. The environmental/conservation spectrum is not as large as the electromagnetic spectrum and there is not much “wiggle room” there, so minor differences are largely exacerbated because of lack of space.

    That having been said, I suspect that you and I will never be on exactly the same page at the same time. Correct me if I’m wrong, but I would define many of your arguments as altruistic while I believe I lean more to the pragmatic, even when many of my rants don’t manifest themselves as pragmatic. IF my supposition is correct, then I would argue that we should be focusing more on policy rather than ideology. So then, how is policy generated and by whom? Now we must focus on political beliefs and succinct economic benefits and how to best distribute them. For me that is a huge issue. Allow me to digress.

    Perhaps a good example might be the good senator from Iowa, Senator Grassley. This clown gets billions for the ethanol and biodiesel industries to produce something that is a net negative in its environmental impact, ends up raising prices at the supermarket, reduces our exports, destroys natural habitats, and causes soil erosion. Yet government still subsidizes its insane ethanol policy. Almost everyone condemns this policy, yet just yesterday, the tax bill included billions for ethanol. Just an another example of politicians claiming they can do better than the free market in allocating resources and directing economic activities. Even Al Gore has admitted he was wrong to support ethanol subsidies!! More altruism or more pork?

    Unlike the majority of our citizenry, I don’t have much of a problem accepting the premise of “bringing home the bacon”. Here again, for me, this is a policy issue. Do I want my senator/congressman to allocate the bacon or do I want some unelected bureaucrat in Washington to do that?? If my characterization of your view is correct, you would allow that Washington bureaucrat to have that authority because the government is working to help all of us, where I would say “no way”, my crooks are local and that is more acceptable to me than the crooks in Washington. So for me, having government and its unelected bureaucrats making policy decisions is not the best way for our resources to be allocated. The government pushing GM to focus more on making more fuel efficient sardine cans as a requisite for bailout money, is closely akin to extortion, and to that, as a taxpayer, I willfully and dutifully object.

  2. @ panayoti
    Ah, Mr. P., always good to hear from you, and I appreciate these thoughtful comments. Indeed, there are mixed messages here, because the predicaments we find ourselves in are very much mixed ones! One-sided arguments—whether they be like Ed’s about cars, or those about banks, government, the environment or economics—just don’t carry the day, at least for me. The realities are messy and multiple, and party-lines and one-note arguments don’t work anymore.

    Ed is a Cassandra because he claims to have a bead on the truth but is not to be believed. As I said, he makes sense on criticizing things like excessive inventories but ignores the elephant in the room, gas prices. You ignore this too, and it’s the basic reason why car-buyers want and will pay for bigger cars. Car-makers are in business to satisfy demand, not to transform it, and that’s the problem for them in a nutshell.

    I tend to agree with you that governmental attempts to transform consumer behavior are less than successful, if not sometimes harmful. There is nothing wrong with “giving the consumer what he wants” unless there are clear social detriments or dangers in allowing him that choice. You don’t (or the law doesn’t) allow Johnson & Johnson to sell tainted Tylenol and get away with it. How far the government is justified in regulating/controlling pollution is yet to be determined, and I suspect you and I will have different ideas on that score. But you should recognize that this is not the same thing as choosing between pork chops and T-bones.

    As a consumer, I have always preferred small cars over big ones, sporty over sedate ones, better-engineered products over the typical Detroit junk we all used to buy. So, like some others, I’m predisposed to buy sardine cans—IF they have these attributes. Yes, I’d buy a well-made hybrid because cost is not the only consideration, which is what your argument assumes.

    The dilemma is that the public at large has no motivation to buy these cars until and unless gas prices go up—when the cars will become better engineered, more cost-effective and more attractive to their lifestyle. The government can’t enforce this behavior and make smart cars cheap. But it can change laws to make gasoline-users pay for the damage they cause, rebuild the roads they run on for free, endow serious alternative-energy efforts, and so forth. You know as well as I that the “free market” is never going to do these things on its own.

    You are right about too little carrot and too much stick. Conservation and energy-efficiency don’t get nearly enough stress. Yet, the automakers ARE being offered incentives not to pollute, and most are taking advantage of them.

    Finally, my piece is really a defense of GM and the auto industry as much as it is a critique. The problem with Cassandras like Niedermeyer is that they write from a predictable agenda, which in the end makes it hard to take them seriously.

  3. @jgoods

    Geesh, what a bunch of mixed messages in this post!! You call Ed a Cassandra. If we both agree that Cassandra’s predictions were true but were never believed, then I have a problem if you’re saying that much of what he writes is unbelievable. Other than “green is good”, I pretty much agree with all the points he makes, even the “transformational” part to which I have always had a problem. As you correctly point out, government policy can be transformational albeit, sometimes to the detriment of consumers. EPA, Cap ‘n Trade, Ethanol and Agricultural subsidies, CAFE standards, etc are examples of policies that would appear to harm consumers more than help them.

    That having been said, I would ask what is wrong with giving the consumer what he wants?? You can’t make me buy veal chops if I prefer pork chops. I don’t like T-Bones, but love Haddock. So greenies would say that I should be eating beef because it is good for the environment and it would stimulate the economy and create jobs. That is denying me choice and until government mandates it, consumers will continue to buy what they’re comfortable with. (See mandates in Obamacare.)

    Your economics are usually strong and I generally don’t have problem with them because of the extensive and exhaustive research you use. What bothers me is the philosophical and social arguments that you (and Ed) often use to justify sound economics. Here I believe it is you that is Cassandra. I just can’t believe that you would prefer to drive a sardine can instead of a crossover if you weren’t an avowed greenie. I would think that most consumers would choose what gives them comfort rather than a backache and banged up knees. Why would anyone in their right mind choose to overpay for a hybrid that takes 5-7 years to recoup one’s investment, let alone save the world. Carbon footprints and tons of carbon dioxide are not quantifiable to the average guy who only looks at the monthly payment as the most important criterion for a car purchase.

    Your argument about technological advances made recently in the green auto world bear no fruit when the public refuses to buy those cars in any discernible quantity. Again, you correctly point out, the Feds can’t ultimately solve the problem of pollution and the environment this way or change consumer buying practices. I don’t like pollution either, but I am a Conservationist and believe that not enough has been done to encourage a rational approach to pollution. The government seems to favor the stick rather than the carrot. Perhaps offering incentives to industry to not pollute would be more rational than shutting them down. We offer incentives to consumers to buy sardine can they don’t want, but we don’t offer the industry an incentive to curb emissions. So despite the government bailout with a green kick in the pants to produce more green cars, people steadfastly won’t buy these cars. So what other choice do the automakers have other than to do what has always worked for them in order to sell more cars to pay off their government loans. Oh, by the way, both you and Ed forgot to mention carmakers getting back into the banking business to make loans to folks that can’t afford the price increases necessary to pay for the technological improvement in going green. Ironic isn’t it??

Leave a Reply

Your email address will not be published. Required fields are marked *

*
*
Website