More thoughts on automobiles
I’m breaking with the Democratic leadership in my opposition to the Detroit automaker bailout even though I voted for them in November. I’ve already written once about the subject, but given the amount of attention it’s drawing from the press I think it warrants another go. But this time I’ll weave in another frequent topic from tadfad: suburbs.
In the decades since WWII, and especially in the last 10-20 years, the vast majority of new home construction came in the form of suburbs, exurbs, and fauxburbs. All these geographies have something in common : they require personal automobiles to function.
The critical infrastructure in suburban life (home, work, commerce, food, etc.) are geographically dispersed. A lack of public transportation makes automobiles critical–and in most families this means one car per driver.
Add to this a decade or two of cheap oil and easy credit, and you have an interesting equation developing:
Aggressive suburbanization + automobile dependence * (cheap oil + easy credit) = high automobile demand
In the last few years, all four of these factors have changed.
Oil quadrupled in price (it’s come down since but the damage has been done). Easy credit completely disappeared, removing the necessary means for suburban production. The suburbs that were already built suddenly became less populated as homeowners moved out (by choice or by foreclosure).
Which brings us to today : significantly decreased demand for automobiles.
The domestic manufacturers aren’t unique in their sales numbers–Toyota and Honda also saw sales drop–but they are uniquely ill-prepared for this unavoidable decline. GM has 7000 dealerships (Toyota has 2000). Ford is just now contemplating importing the small car models that sell well in Europe. Chrysler was recently taken private, making it much easier for them to hide their losses until now.
Now here’s the big secret : $15 billion won’t fix this. $30 billion won’t fix this. Hell, $100 billion won’t fix this–only delay the inevitable.
Demand for automobiles in the U.S. went through a boom and bust cycle. The American automakers made lots of money on the way up but weren’t able to recognize the peak until they collectively fell off the cliff
Filed under Uncategorized : Comments (4) : Dec 11th, 2008 by tadfad
December 11th, 2008 at 22:15
This is a test
December 12th, 2008 at 09:43
I’ve posted a reply to this unconscionable enviro-loon screed over at my blog.
December 12th, 2008 at 11:45
Sweden bails-out their auto industry.
http://news.bbc.co.uk/2/hi/business/7777395.stm
December 13th, 2008 at 17:38
I’m not debating the merits of the bailout, but if you bailout the banking industry, you have to do the same for the autos. Why give money to the industry whose employees shower before work, but not to the one whose employees shower after work? Why is the government half-assing these sort of things? It’s like they went 90% in on the River and then folded on the Flop. The bankruptcy of the auto industry will collapse our nation’s workforce and cause the $700 Billion to have been spent for naught.